With the continuing rise of social media — and the changing ways in which we consume TV — a shift has occurred relating to the effectiveness of historical marketing techniques.
The metrics which show how effective these campaigns are have always been flawed
Take for example a toy shop advertising a product via newspaper or television. If the advert coincides with a rise in purchasing is this because the advert was successful or because those people would have bought the toy anyway?
It’s impossible to tell through standard metrics and methods alone
Step forward growth hacking
Defined as a marketing technique which utilizes creativity, analytical thinking, and social metrics to sell products and gain exposure. Measuring the success of campaigns and optimizing to make them more effective.
It dispels the myth that for a product to be successful it must be seen by as many people as possible
Instead, it needs to be seen by the right people
Growth hacking means that the marketing of the product is programmed directly into the product itself creating a cyclical process whereby success breeds success
Growth hacking isn’t a recent development
What you probably weren’t aware of was every time you sent an email from Hotmail you were acting as an advertisement for the product
At the bottom of each email was a “Get Your Free Email at Hotmail” tag appended to existing user’s outgoing mail. The recipient could then click on the link and set up their account.
As a result, the companies grew users to over 1 million within 6 months.
This was one of the web’s earliest growth hacks
Growth hackers utilize quantifiable data to undertake campaigns which are often both cheap and highly effective
If done successfully the effect is meteoric and has ushered in the birth of almost every large technology company in the last 5 years.
Its growth hacking was achieved through the ingenious idea of providing additional storage to those who referred friends
Instead of acquiring a large number of disengaged users they cultivated a hardcore customer base that we’re happy to assist in the growth of the company for the reward of additional storage. The result saw its users grow from a few thousand to millions almost overnight and it hasn’t stopped.
The use of a scheme which rewards loyalty is an incredibly effective solution as it feels legitimate and sincere. You are counting on the joy your users feel about the product leading them to tell other people about it.
Product Market Fit
Product mark fit is a prerequisite for growth hacking — without it exponential growth is impossible
History tells us that in marketing we distribute the product we are given not the one we want.
This is stupid
In today’s world, we are exposed to data as often as we want. We can learn from our customers whenever we want which provides us with insight into the minds of the people we are trying to reach and ultimately sell to.
It’s incredibly simple: You have to make things people want
Product creation should always be a highly iterative process involving the engagement of existing users to learn how to make your product a “must-have.” Often this leads to significant product revisions — or even having to hit reset — but this is essential.
What’s the point in taking a product to market nobody wants?
“the life of any startup can be divided into two parts — before product/market fit and after product/market fit. When you are before product market fit, focus obsessively on getting to product/market fit. Do whatever is required to get to product market fit. Including changing out people, rewriting your product, moving into a different market, telling customers no when you don’t want to, telling customers yes when you don’t want to, raising that fourth round of highly dilutive venture capital — whatever is required” — Marc Andreesen
And virality is essential — it is rocket fuel
The goal of growth hacking is the answer to how you turn 1 in 2, 2 into 4 and 4 into 1,000,000.
Understanding the semantics of what leads to something going viral is not quite the exercise in futility it used to be. Whereas before this was luck we now we have an abundance of data to reflect and draw conclusions from.
Through the distillation of data, we can understand better than ever the things which lead to virality. The effect images or video has on views, the success of specifically color buttons and even the time which information is shared; literally, anything you want to measure can be defined to the nearest unique view of your site.
All sound overly simplistic?
It undoubtedly is
Building a legitimate viral loop that works is just about impossible, hence the reason such a small number of companies have achieved it. For it to succeed it has to be a fundamental part of your product.
It has to be entwined within the fabric of your products DNA from conception otherwise it seems insincere and forced
Skype provides the most basic example of a network effect.
For you to use all its features you must have a network to do so which leads you to encourage your friends and family to join. As they download the product to connect with you they will go through a similar process of spreading the word to their friends to do the same with them.
Skype gets bought by Microsoft for $8.56 billion
When a product produces a viral loop, unimaginable growth becomes a possibility. Skype’s effectiveness has seen it evolve not only to millions of personal users but has been embraced by business professionals the world over as well.
Retain existing users then optimize
A customer you already have is intrinsically more valuable than those you are chasing.
This means you can extract more value through optimization rather than by acquiring new users.
According to Bain and Company, a 5% increase in customer retention can mean a 30% increase in profitability
Furthermore, the probability of selling to an existing customer is 60–70% while to a new prospect it’s just 5–20%. Retention trumps the acquisition of new customers.
Twitter provides an interesting example of this
Through analytics, they quickly realized that they were acquiring a lot of users without that leading to the expected increase in ‘tweets’.
Without users ‘tweeting’ they would eventually have reached a point where there wasn’t enough content being created for the users they have to consume
Their analytics pinpointed the tipping point whereby engagement from their users was greatly increased heightening the likelihood that they would become active contributing members not just consumers or worse disengage.
If the person followed at least 9 people upon sign up they were far more likely to stay around and Tweet themselves
To encourage this twitter developed a growth hack
They moved to recommend which people to follow for new users which steered their growing userbase towards the statistics which highlighted increased use.
This optimized incoming traffic for success and has led to their growth to 350m users worldwide
Growth hacking is about breaking free from historical precedent
It is about being conscious of future growth at the moment of product inception
Growth-hacking is more than a buzzword — it is the processes in which decisions are made with a specific purpose in mind derived from quantifiable statistics.