Growth hacking isn’t new. In fact, there have been lots of companies doing it for years. Think about a new restaurant. Maybe they sponsor some local sporting events with food. Maybe they have a “cook off”. Maybe they have a “bring a friend, get 50% off night”. What they don’t do is take out ads and throw lavish parties and contribute to the general, interrupting noise of traditional marketing and advertising. Why? Because it’s expensive, hard to measure, and usually performs pretty poorly. More importantly, though, is that when they do those things, they aren’t all about getting new customers. They are about forging connections, about creating a network of people that will rave about their food, their service, and how awesome of an experience they provided. They are Growth Hacking and exposing the ultimate thing that’s important about any kind of marketing (including GH): building relationships.
What is Growth Hacking?
The idea behind Growth Hacking is simple. Instead of putting tons of dollars into traditional marketing, where you are hoping to gain attention through sheer volume (whether offline or online), you approach the growth of your business as an engineering exercise. Growth Hacking, then, is a fundamental shift that affects all aspects of a business including product development, market development, marketing/advertising, sales, and customer engagement. Perhaps the best example of GH ever was Hotmail. When they originally launched their free email service, the had one of two choices. Take out a bunch of ads and try to get people’s attention OR turn the rabid early adopters into transparent marketers. They chose the later by putting in the simplest of content, “this email sent by hotmail. get your free email today” at the footer of every email sent from their system. The result was epic growth in a short amount of time. Other companies have followed suit. Google and Gmail (with their invitation-only approach), Apple and iPhone (with their “sent from my iPhone attached to every email going out from their devices), Groupon/Living Social (with their “$10 credit for a referral” and “refer 3 friends and get this deal free” approach respectively), and others.
Some of the fundamental tenants of Growth Hacking
In order to Growth Hack, companies have to abandon the cost model of traditional advertising for methods that turn their early adopters into raving fans. Here are some of the tenants:
It’s too hard to get everyone’s attention. Go after early adopters. So for tech companies, it’s the geeks who want to use the latest-and-greatest service.
Focus on retention, not acquisition. With a limited focus on targeted first adopters, it’s all about engaging with them constantly. What do they need? What kind of features do they want? The more that a company appeals to them, the more likely they are to share it and spread the word. In fact, according to some industry stats, the probability of selling to an existing customer is 60-70 percent while to a new prospect is just 5-20 percent. In the words of Ryan Holiday, author of Growth Hacker Marketing, “retention trumps acquisition”.
Try, measure, try again. The cool thing about building a business in today’s world is digital. The technologies enable us to test the effectiveness of our growth methods, tweak them, scrap them, try over, with very little cost. In fact, it costs almost nothing for me to tweak a product (to help something gain virality; like including a message at the footer of outgoing emails) or build a new landing page or develop a bunch of content. And with the kind of data we can return, like how many people shared it, liked it, commented on it, etc. we can constantly assess the efficacy of our efforts.
But Growth Hacking isn’t just about growth
In delving into Growth Hacking (and realizing that I have been doing it a long time without a name for it), I began to realize that Growth Hacking was really about one fundamental objective: building relationships. In my upcoming book penned with Kirby Wadsworth titled Help! The key to building relationships, engaging online audiences and fostering raving fans, we argue that everything an organization does creates or destroys relationships (well, we actually argue that there is a continuum of relationships, a digital relationship pyramid, that users move up and down depending upon how a company engages with them or vice-versa). When you think about the fundamental tenants of Growth Hacking that I outlined above, that’s what GH is really trying to do: find the right people with whom to establish a relationship, engage with them in a very personal manner, and turn them into raving fans. And what do raving fans do? Well, when they are at the top of that digital relationship pyramid, when they are your BFFs, they engage with their networks and, BAM! You’ve got growth.
The key thing here, though, is not focusing on acquisition at all. It’s focusing on the relationship. It’s ensuring that those early adopters feel like they are part of the process, not just a means to an end (i.e., growth). If they feel they are being used, well, they will probably bail and there are lots of companies that have experienced good early growth only to peter out and collapse.
Why are relationships so important?
The thing about relationships is simple: they can’t be copied, they can’t be fabricated. Just like Growth Hacking is a mind-shift in thinking about how to growth the business, so too is realizing that everything a business does (from changing their product to sending out messaging) is all about developing relationships. The successful companies will be those that can combine the tenants of Growth Hacking with this understanding of the importance of relationships. Because their growth won’t be about growth at all. It will be about connecting with people which, if you haven’t figured it out, is about as fundamentally human as you get.
Image courtesy of pandodaily.com.