The goal of businesses is to grow, and preferably as fast as possible. But how do you do that as a business? How do you tackle such a thing? Where should you start? What is the best strategy? These are all questions that can be answered with the concept of Growth Hacking. A concept that is not very well known yet, but certainly emerging.
Sean Ellis introduced the term Growth Hacking in 2010. Freely translated, Growth Hacking is a trick, which makes a company grow very fast. To make the explanation easier to understand, I will start right away with a success story, after which it will be explained how Hotmail got this success story.
Succes story
An example of a company that used a great Growth Hack without spending anything on it is Hotmail. Hotmail started an email platform because they saw that everyone had an email account, but it was very scattered. In addition, the cost of having an email address was quite high. Growth in the start-up phase of Hotmail was very slow, so they started doing research. This is how they found out that 80% of their members were approached through friends. The Growth Hack they used on that was very simple and hugely successful. Under every email sent from Hotmail they placed the sentence, “PS: I love you. Get your free email at Hotmail.” 18 Months after launching this phrase, Hotmail had 12 million members, remembering that there were only 70 million Internet users at the time. This resulted in tremendous growth in both customer acquisition and conversion rate through 1 phrase.
Expert in the field
In order to explain exactly what Growth Hacking entails, I contacted Maarten van Kroonenburg. Maarten studied “small business and retail management” at Avans University of Applied Sciences. Furthermore, he is now completing his part-time MBA program. As his graduation project, he investigated whether it is possible to achieve 100% sales growth within six months. This introduced Maarten to the concepts of Lean Startup and Growth Hacking. At the time of his research, he was running his own business where he started experimenting with Growth Hacking. He succeeded, which made his thesis project very popular. People were very interested in how he managed to do this. As a result, he started writing blogs, giving lectures and working as a consultant for startups and corporations. Maarten can now be found, among others, as The Lean Doctor, where he shares all his blogs.
The search
But as a business, how do you start the search for your Growth Hack? It all starts with finding a product that fits the market, or, the product-market-fit phase. A lean startup helps you find this fit. The idea of a lean startup is that the entrepreneur starts with a vision: The entrepreneur wants to change something. From this vision, the entrepreneur starts to see if there is a problem that can be solved. It is very important to start with a vision, because this vision provides the framework in which to work and which the entrepreneur can stand behind.
Once you have found a solution to a relevant problem of your customers through lean startup techniques, the growth hacking can begin. Through conducting both online and offline experiments, you’ll search for your Growth Hack. But how do you start these experiments? In this phase, creativity is needed to come up with and create ideas. Then there is IT that provides data, information and easy tools to analyze this data. The combination of IT and creativity is essential to finding a Growth Hack. Experimentation often involves optimizing content marketing, a bit of SEO (Search Engine Optimization) and a bit of SEA (Search Engine Advertising). This is not enough for finding a Growth Hack; it is precisely the combination of online marketing and measuring offline marketing where important information can be found. A golden tip is to start small. Things like environmental factors are completely irrelevant at this stage. Just testing small things can give a lot of insight and does not have to cost a penny. Furthermore, it is important to make assumptions and test them immediately, so that facts can be made of these assumptions. We are used to developing complete products immediately, before testing whether there is a market for them at all. Turn this around, and everything will become a lot more effective and efficient.
The structure of today’s corporations often prevents them from operating efficiently. There are three subject that are very important within an organization: Team, Traction and Technology. To grow fast, it is important to have a dynamic team. Traction focuses on bringing in customers. This requires technology to work as efficiently as possible. To grow fast, two factors are very important: customer acquisition and conversion rate. Here it is essential to look at how these percentages are for the business at the moment and what trick, or “Hack,” can cause sales to grow tremendously. This may mean improving customer acquisition, but perhaps just the conversion rate alone will do. This is different for each company; in some companies, even both factors can be adjusted.
Case examples are very important to show the impact of Growth Hacking. These case examples arise from the experiments done. For some this means 5 experiments, for others maybe 30; this cannot be determined in advance. The purpose of the case examples is to show what the inputs and outputs will be. This is very interesting for investors, as it significantly reduces the risk of the investment and makes it less of a “lucky shot.”
Actually, the name Growth Hacking is not quite right. It does imply a trick, which can be anything, that makes a company grow very fast. However, this does not refer to the concepts of experimentation, testing and the entire acquisition funnel.
Maarten’s last advice
“The search for a Growth Hack is always the same, the Growth Hack itself is always different.” In other words, get started. Create a bunch of ideas and get to work. Start structurally testing the factors and assumptions made in them. It’s not just about the big picture, in fact testing every detail within the framework that has been set allows the big picture to be determined. Growth Hacking is a different way of thinking, turn 180 degrees and find your Growth Hack!
