Growth hacking isn’t exactly a new trend, it’s just that the term wasn’t coined until 2010 explains Peter Decaprio. The very first mention of growth hacking is credited to Sean Ellis.
Sean was charged with figuring out how Drop box could acquire millions of users fast (Drop box was paying $500 per customer at the time). So what did he do? He created an incentivized referral program which gave 500MB extra space for each friend invited, plus another 500MB if they signed up and used it. They also added a link directly in their desktop folder that said “Get more free space”.
As a result, referrals skyrocketed. Word-of-mouth became one of their most powerful user acquisition channels reaching tens of thousands of new users within weeks of implementing the Growth Hacking strategy.
Today’s post aims to cover what growth hacking is, how it can be applied in today’s market and most importantly, how you can get started with growth hacking your startup. So if you are interested in learning more about this topic, read on!
Before we continue… What exactly is A Growth Hacker?
A growth hacker is a person who wants to identify new avenues for sustainable organic growth at minimal cost by using creativity, analytical thinking, and social metrics—to drive marketing and user acquisition efforts.
The Difference between Growth Hackers vs Marketers:
Marketing has been around for centuries as a mechanism to grow business revenue through advertising campaigns. The basic concept is to increase brand awareness, define a target market and send targeted traffic through paid media advertisements.
Growth hacking, on the other hand, focuses more on product usage or sales that are driven by clever marketing tactics rather than solely focusing on advertising campaigns. Growth hackers use creative strategies, analytical thinking and programming to achieve their goals of attracting customers.
Here’s an analogy for better understanding the difference between these two: Imagine you have a jewelry store. You’ve already built a website and made some social profiles but there is no one coming in to buy anything from your store says Peter Decaprio.
A growth hacker would look at conversion rates, what people do when they get to your site, where most of them bounce off etc., then try to improve these metrics to make more people come in and explore your store.
A marketer, on the other hand, would look at how to get more people into the street where you have your store, then put up billboards, flyers or whatever it takes to bring new people into your business even if there is no specific interest of buying anything from you.
As growth hacking is becoming more popular these days, it’s important for startups to understand that they don’t need a growth hacker when they are just starting out explains Peter Decaprio. Often times founders get excited thinking about scaling their startup through marketing strategies but here are some key questions you should ask yourself before reaching for this solution:
Are there enough customers who are looking for my product? Are they willing to buy my product/services at the price I’m offering?
And most importantly, can I attract them with less money than it would cost me to hire a growth hacker?
This doesn’t mean that you should stay away from hiring a growth hacker. You just need to know when and why you actually need one. If you are unsure of these questions, it may be smart to build your product first before tackling this problem. Once you have the answers to all the questions above plus extra cash in your bank account, then it’s time for you to reach out to a growth hacker or agency that specializes in startup marketing strategies. Now let’s dive into some of the tactics used by Growth Hackers! Targeted Marketing Tactics
Nowadays word-of-mouth is one of the key components that many startups and businesses rely on to promote their products and services. According to this research, 98% of consumers trust recommendations from people they know.
Growth hackers take advantage of the fact that humans are social beings. By using targeted marketing tactics to drive user acquisition campaigns. These campaigns focus on generating organic growth where users come in through referrals. Rather than paid advertisements such as Facebook ads or Google Adwords.
Here’s a best referral program used by Growth Hackers:
Drop box – Get Space, Give Space
As Dropbox was just starting out, it turned into an early adopter strategy that incentivized existing customers. To refer new ones by offering additional space for free if a referral is accepted. The company was using a cost per acquisition (CPA) model for this supply-side program. And they were spending about $233 on average to get each user who directly signs up with Dropbox.
At the same time, users who sign up through a referral link can earn more free space. Depending on how many people they successfully refer to Dropbox. Which provides a strong incentive for them to share their unique link widely says Peter Decaprio. These motivated early adopters of Dropbox to effectively recruit new paying users. From their personal networks and it drove tremendous growth for the company over the years.
If you have a product with a high per-user value such as Dropbox. Then it may be smart to incentivize users to refer their friends and family. Via offering more space or some other utility for each new signup especially if your product is requiring payment.