What can established businesses learn from Growth Hacking?

Does your business need a Head of Growth Hacking?

Have you noticed the emergence of the term “growth hacking” for describing a marketing approach. I did and dismissed it as a fad most relevant for SaaS (Software as a Service) / single product startup businesses. But recently, I’ve noticed some new job descriptions in this area which prompted me to take another look. In particular, I noticed that The Guardian is currently advertising for a Head of Growth Hacking

The Guardian is committed to a “digital-first” strategy and in order to support this, we are seeking a Head of Growth Hacking to manage a virtual, cross functional team focused on GNM’s growth hacking plan. This role is responsible for finding innovative ways to accelerate adoption, use, and retention to drive up audiences to the Guardian’s digital product portfolio”.

There are other jobs available too in UK-based startups such as Gumtree, MyBuilder and VZaar and many more in the US…

This seems to be a trend! So it prompted me to learn a bit more, and this is my take. If you’re not a fan of buzzwords which describe a concept that isn’t new, you may prefer to read: Is Growth Hacking nonsense?

What is Growth Hacking?

To answer this, it’s best to turn to Andrew Chen who brought Growth Hacking to prominence by asking “Is the Growth Hacker the new VP of Marketing”. He describes a Growth Hacker this way:

“Growth hackers are a hybrid of marketer and coder, one who looks at the traditional question of “How do I get customers for my product?” and answers with A/B tests, landing pages, viral factor, email deliverability, and Open Graph. On top of this, they layer the discipline of direct marketing, with its emphasis on quantitative measurement, scenario modeling via spreadsheets, and a lot of database queries”.

I think this iceberg from Mattan Griffel is a better way of summarising some of the techniques – all should be in the digital marketers toolset already, with analytics and optimisation at the core.

So, it’s direct marketing right? And applying digital analytics? Certainly not new… But if you’ve read the Horror Story that is the Boo.com startup failure, you will realise realism can be missing in startups, although that tale is a long time ago now.

I think the reference to a coder is misleading. This may be true in some cases, but you don’t need to be a developer to be a growth hacker, although you certainly need an agile approach to developing and implementing tests, so devs are needed there. The Guardian role is a more senior role. I do like the word “Hack” though; it’s not about hacking systems, but shows a willingness to repeatedly try new approaches to get better results.

Although the principles won’t be new to marketers that doesn’t mean we can’t learn from them, it’s seems to me, that’s it’s really a mindset that many existing companies could benefit from.

What can Growth Hacking offer to existing companies?

I think Marketing Directors or Product managers won’t find much new in the focus on growth through reaching and engaging prospects and retaining them as active customers… It’s more the growth hacking approach which is novel. It is already practiced under another label of “conversion rate optimisation” by many companies I’m familiar with who are advanced in applying digital marketing, but certainly not all. The Growth hacking approach is valuable since it expands the scope beyond CRO to look at ongoing user activity and engagement.

Here’s a great example from 37 Signals describing their AB Testing for the Highrise service.

What else can we learn from Growth Hackers?

  • 1. Seeking sources of viral growth.

Growth hackers seek to emulate the viral growth of startups such as Facebook, Groupon and Pinterest in their early days. In fact, their poster-child, often referenced is Hotmail you will know grew rapidly due to sharing of its “PS: I love you. Get your free e-mail at Hotmail” signature.

Today encouraging sharing through social sign-on and social sharing is more an approach sought by Growth Hackers. Thomas Schranz shares this example from a recent Growth Hackers conference where Elliot Shmukler’s described the lessons learned while growing LinkedIn from 13 to 175 million users.

  • 2. Understanding and optimising the value of cost-effective referrers.

Not much new here, we have covered the relative value of different digital channels in our Digital Marketing: Strategy, Implementation and Practice book many years ago. Dave McClure is often referenced for his way of summarising the channel review, and rightly so. This is a great way to summarise the value of different channels to a startup or a small business.

Source: Dave McClure of 500 Hats, 2008

  • 3. Understanding and optimising the path to purchase in a Freemium model.

Startups, particular tech startups offering software as a service often offer a free trial or tier, so encouraging sign up to these services and conversion to a paid model. It’s at the core of their business model.

Here’s Dave McClure again, again not new, this is from 2007. It’s new to me though and has more detail than some of the RACE conversion models we use.

I’ll be recommending it to the students who I teach who are interested in creating a startup. It’s also relevant to the many businesses who still apply this analysis to improve what we called Epermission marketing based on Seth Godin’s lead back in 1999!

Source: Dave McClure: Metrics for Pirates, 2007

  • 4. Onboarding.

Onboarding is the process of welcoming prospects or customers and is often delivered by email, so as the example above showing understanding event-triggered emails is important. An approach that’s important so we have written a lot about in our series on Event-triggered emails.

  • 5. Cohort analysis

Cohort analysis in the freemium context is the process of understanding groups of customers through the conversion process. Here’s an example from Kissmetrics applied to signed-in users.

Alternatively you can review this for existing customers:

  • 6. Ongoing testing and optimisation

This is has really been available since the first websites if you analysed log files. More recently I’ve seen focus on this by companies like Anazon, Dell, Expedia and Skype I’ve seen present their optimisation approaches back to founding of the Emetrics Summits and Digital Analytics Association in 2005. Even then these weren’t startups and shows that these techniques were first used in large companies who had the foresight to create teams to focus on these. Following on from this, I remember I was keynoting at Technology for Marketing in 2007 urging focus on MOA, that’s Modelling, Optimisation and Automation!

I hope this post will help some develop a more analytic, entrepreneurial approach and it’s lifted the lid on growth hacking for some. I’ve found it interesting to take a few hours comparing the Growth Hacking approach to Marketing Optimisation. If you’d like to see more examples,  take a look at this slideshare from Mattan Griffel.

  • Simon Hawtin

    Hi Dave, thanks for posting this and raising awareness of this new buzzword. I personally think “Growth Hacking” is an entrepreneurial shot at success within the tech start-up industry. From going through the slideshare post you included it’s evident that this and other agencies are setting up shop purposely to pitch at an one of the most discussed industries in the world, and one that attracts a heck of a lot of investment. It might be a bit of a cynical comment but who better to pitching to than companies ambitious for growth with big VC money behind them. It’s still digital marketing to me but perhaps niche in terms of the targeted clients and the fact that it’s a drive for user growth, not necessarily digital sales. What are your thoughts?

    • http://www.smartinsights.com/ Dave Chaffey

      No problem, thanks for your comment. I think it’s always useful to ask what established companies can learn from startups since they often don’t have the legacy systems and tend to use newer tools and techniques. Of course, some of these may not be right for larger companies and many high-tech startups tend to copy other approaches in the sector so definitely not relevant for all.

      It’s good to be cynical :), but I think the concept has grown out of the founders of companies wanting to share approach within high-tech startup. Sure it will increase their awareness and profile, but I don’t think that’s where the “movement” originates for most involved – it’s about finding the best way for growth in the sector.

      Cheers, Dave

    • http://www.smartinsights.com/ Dave Chaffey

      Hi Simon,

      No problem, thanks for your comment. I think it’s always useful to ask what established companies can learn from startups since they often don’t have the legacy systems and tend to use newer tools and techniques. Of course, some of these may not be right for larger companies and many high-tech startups tend to copy other approaches in the sector so definitely not relevant for all.
      It’s good to be cynical :), but I think the concept has grown out of the founders of companies wanting to share approach within high-tech startup. Sure it will increase their awareness and profile, but I don’t think that’s where the “movement” originates for most involved – it’s about finding the best way for growth in the sector.
      Cheers, Dave

  • sealeyd

    As Simon said, this is a great write up on the techniques used by “growth hackers”.

    The title still makes me cringe though. It’s a like programmers calling themselves Ninjas or social media types referring to themselves as gurus.

    Hacking is such a poor word choice too. It feels temporary and unprofessional. Perhaps it even defines the current market trend where we’re seeing large swathes of VC funded start-ups who are forced to grow a user base quickly so that round one’s VC can sell on to a bigger firm.

    Having worked through the last dot-com bubble, I am getting a sense of deja-vu.

    Thanks,

    David

    • http://www.smartinsights.com/ Dave Chaffey

      Hello again David, glad you liked my writeup.

      New labels are the name of the game we’re in though, so don’t think we can criticise. I think it’s a great label since it’s more attention grabbing than when we talk about “Marketing Optimisation”, but you’re right, it is a bit cringeworthy.

      I thought that when I first heard about it last year, but I’m warming to it now I know a bit more about the concept.

      As I have been learning about it, it’s strange since there’s little talk of researching value propositions, segmentation and positioning, although I’m sure the best test these rigorously. But I think it does represent an improvement on the last dot-com bubble since it’s got that focus on lifetime value and following cohorts through.

      Still, I’m glad I don’t have to tell anyone I’m a Growth Hacker at parties…

      Dave

      • Liam Reynolds

        Hi David, great post and collection of Growth Hacking links all in one place. Sorry I’m bit late in replying but thought I’d also chip in as I’ve just launched True Up, London’s first Growth Hacking consultancy (hope you don’t mind the plug).

        I also noticed The Guardian were recruiting for a growth hacking position and thought that was quite a sign of the times. Am sure we’ll see similar positions being created in larger organisations over time.

        As for the term, I quite like it. The growth part is great because it simply says what it is on the tin. Having worked in around London marketing / advertising agencies over the last 15 years, its amazing how convoluted the solutions agencies dream up can be. Most of the time they’re to solve non existing issues or are complete ego driven, to make someone famous, win awards etc rather than create real change. However saying ‘we help you grow your business’ is a bit of a no brainer.

        The ‘hacker’ bit is what I’ve found creates most interest. Thankfully most people don’t associate this with Anonymous but do realise that a hack is just a clever way of doing something, usually using technologies, SaaS, APIs etc. Its also about cutting to the chase, doing something quickly and dirty enough to get the job done and learn (doesn’t have to be beautiful to work as a starting point). I actually prefer the term ‘bending’ which is using the available tools (tech, data, platforms etc), bringing them together and using them / bending them together in ways that they weren’t necessarily designed for.

        Although there’s a lot of buzz I think the principles behind growth hacking are sound and therefore here to stay. The idea of being lean, agile, creative, analytical and experimental but then validating all decisions through rapid test and learn make good sense and been proven to work well.

        At the end of the day, its customers that make a business, not the product. So getting under the skin of what makes customers tick, why they make the decisions they do, why they visit your site, bounce, don’t bounce, sign up, purchase etc is the key to successful business growth. Growth Hacking just provides a good suite of tools to help understand this and relate it back to the business as a series of solutions.

        being agile, creative, utilising data and the multitude of tools available. And then relating it back to the business

        I appreciate the term ‘Growth Hacking’ is generating a lot of buzz at the moment and t

        • http://www.smartinsights.com/ Dave Chaffey

          Hi Liam,

          That’s interesting you think there is a market here – will you be offering this to startups or existing companies too?
          If you fancy sharing your views – particularly on process and more examples of companies using this – maybe expanding on this comment in a guest post, please get in touch via the Contact Us.
          Thanks, Dave

          • Liam Reynolds

            Hi David,

            Thanks for the interest. True Up offer this to both types of businesses. I know the hype and heritage surrounding Growth Hacking is with startups but there is no reason why this can’t be equally applicable to more established companies too.

            We have a little checklist we use and find it works best with companies meeting the following criteria:

            - A decent product & happy customers
            - Focus on growth & desire to scale
            - Openness to testing, experimenting and not being afraid of getting it wrong (as this will happen a lot)
            - Believe there’s life outside Google Adwords.
            - Technical / development / creative resource to make relevant & speedy changes.
            - Have budget (doesn’t have to be huge)

            This naturally lends itself towards startsup as by their nature they are leaner, more agile and experimental. However we’re also having success taking Growth Hacker approach and applying it to more established businesses. The most important element is access to data and ability to create a space where rapid, fast fire tests and experiments can occur. As a result, it lends itself best to companies where there is a strong digital focus, regardless of size.

            We genuinely do believe there’s a market for this. Part of the reason for starting True Up was the recognition that there are very few people with a genuine blend of data, tech and behavioural economics skill sets out there. And that many companies simply can’t afford to take such a person on full time. So True Up has to some extent ‘packaged’ Growth Hacking making it readily accessible to a wider array of businesses. The world is only becoming more digitalised so its a good space to be in but as its still relatively new, obviously some hurdles to get over on route!

            Thanks

            Liam

            http://www.trueup.co.uk

          • http://www.smartinsights.com/ Dave Chaffey

            Thanks for the details of the service Liam – a good example of social media in action hopefully – let me know if you have any leads and whether there are any case studies or best practices on process you can share via Smart Insights.
            Dave

    • http://www.smartinsights.com/ Dave Chaffey

      Hello again David, glad you liked my write-up.

      New labels are the name of the game we’re in though, so don’t think we can criticise. I think it’s a great label since it’s more attention grabbing than when we talk about “Marketing Optimisation”, but you’re right, it is a bit cringeworthy.
      I thought that when I first heard about it last year, but I’m warming to it now I know a bit more about the concept.
      As I have been learning about it, it’s strange since there’s little talk of researching value propositions, segmentation and positioning, although I’m sure the best test these rigorously. But I think it does represent an improvement on the last dot-com bubble since it’s got that focus on lifetime value and following cohorts through.
      Still, I’m glad I don’t have to tell anyone I’m a Growth Hacker at parties…
      Dave

  • tripti

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  • http://twitter.com/Don_Gil Gil Benchetrit

    Wow Dave, I’m amazed by the amount of information and knowledge you have managed to craft into a single post. You did a brilliant job. This is extremely interesting and essential for professionals marketeers , ,startups, entrepreneurs and hackers!

    • http://www.smartinsights.com/ Dave Chaffey

      Thanks Gil – glad you like it – I got interested in it last weekend so nice to be able to share!
      Dave

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  • Will Sansom

    Let’s be honest, ‘optimisation’ is a far more accurate word for this than ‘hacking’. It just doesn’t sound as sexy and wouldn’t garner as many column inches.

    • http://www.smartinsights.com/ Dave Chaffey

      Can’t disagree with that Will – I’m running a webinar series for a client at the moment called Digital Sales Optimisation – there’s a new TLA right there which is really what we’re talking about here.

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