Growth hackers are often put up on a pedestal — they’re people who are thought to have a magic formula for rapid business growth and success. Want to double your customer signups, increase retention, or obtain a better ROI?
Call some growth hackers — they’ll have the answer. Or will they?
“This event was off the charts”
Gary Vaynerchuk was so impressed with TNW Conference 2016 he paused mid-talk to applaud us.
Growth hacking has become a controversial and polarizing term — it’s defined as the process of rapid experimentation, in regards to marketing and product adjustments, to find the most effective ways to grow a business. And there’s a myth that unlike marketers, growth hackers hold the secret key to driving growth.
However the reality is, growth hacking and online marketing are remarkably similar — and marketers will argue they’ve been doing it for years.
When Dropbox founder Drew Houston said the company had increased customer signups by 60 percent after giving users free storage for inviting others to Dropbox for example, it was praised as a ‘hack.’ But really, it was just referral marketing.
That’s nothing new.
So before trying to ‘hack’ their way to business success, it’s better for entrepreneurs to first focus on the fundamental principles. But what principles should entrepreneurs target to grow their businesses? And how exactly should they do it?
Make sure your product is ready for growth
If your product isn’t ready, anything you do to drive growth will be a wasted effort. It’s a bit like pouring water into a bucket with a hole at the bottom. No matter how much water you fill it up with, the water will eventually leak out.
Before you begin focusing your efforts on growth, make sure you have the fundamentals down.
The first fundamental to check is activation. Your website should make it easy for people to sign up for your service, or request a free trial. Next, you need to set your product up to engage people. It must do a good job, so your customers keep using it regularly. And finally, you need to uphold a good retention rate. Your product should deliver on its promises to ensure there are minimal cancellations.
To track how well your product is keeping up with these three focus areas, it is best to define metrics for each. Your activation metric could be the percentage of visitors to your website who sign up for a free trial. Your engagement metric could be how frequently your customers use the product, and your retention metric could be the percentage of cancellations you see each month, for example.
Once the metrics have been defined, you need to use the insights: make the required product changes to ensure that metrics stay at a healthy level. For example, if you aren’t signing up enough new customers, run A/B testing on your landing page. Or if you find your retention metric is on the low side, survey the people who have cancelled to find out why they did so, and to address their concerns.
Understand your customers
Before you approach growth hacking or online marketing, you need to understand your customers — who they are, what their problems are, what products they use, and how they feel. Once you know this, you’ll do a better job at getting your customer’s attention.
You’ll be able to write more persuasive copy for your ads and landing pages — and ultimately, be more effective at converting sales leads.
Begin to understand your customers by speaking to existing ones.
Creating an online survey to put on your website is a good practice to get qualitative data (try using Survicate or Qualaroo, as both companies provide surveys for website visitors). However, this all needs to be followed up with a phone call or if possible, an in-person interview, to develop deeper insights about things like why customers use your product, and how they describe it to others.
Next, use LinkedIn to connect with potential customers. Search for people by job title, industry, and company size, and join the LinkedIn groups these people are members of. Pay attention to what’s being discussed in those groups, and focus on helping people solve their problems, rather than pitching your solution. After this, it will be a lot easier to follow up with individuals to learn more about them.
Even more, 50 percent of LinkedIn users say they’re more likely to buy from a company after connecting with them on the site.
Identify the top tactics to reach potential customers
If you’ve seen your competitor get featured on a big publication, you may be tempted to try to do it too. But, following the ‘hacks’ that have worked for other companies isn’t always the best way to approach growth.
It’s easy to waste time and money by focusing on the wrong strategies – like SEO, SEM or PR – as you’ll find not all of them will provide the best gains for your company. Instead, you should identify and prioritize the most relevant marketing tools for you — by knowing who your customers are, and where they spend their time.
Let’s say you have a CRM product. You use keyword research to determine how many people search for “CRM software” each month. It’s a lot. So, investing in SEO and SEM will likely help you to reach the people looking for your product.
However this channel won’t work for all companies — sometimes company pages get pushed down in search because others are using the same popular SEO keywords. Additionally, not everyone may be searching for the solution a company offers. For example, Dropbox didn’t see results from SEM because nobody was necessarily searching for alternatives to USBs at the time.
So how can one get around this? Try alternative marketing channels, such as partnering with more established brands. Payment processing service, Stripe, partnered with ecommerce software Shopify. It was a product their target customers were already using, and through the partnership, Stripe gained access to over 200,000 Shopify customers.
Focus on your number one growth metric and test continuously
When trying to grow your business, it’s tempting to track a whole slew of metics. But most are irrelevant. Instead, it’s better to focus on just one metric to really see results you’re looking for — this could be the number of people signing up for a trial, the amount of paying customers you have, or the amount of revenue you’re generating.
Let’s say you’re really focused on the amount of people buying your product. You’ve been doing outreach on LinkedIn, and find that 50 percent of people who receive a free demo end up making a purchase. It’s a sign you need to increase the number of people you’re scheduling demos with, and even a sign you need to hire more salespeople who can help generate leads.
So, in focusing your energy on just this one metric and marketing channel, a clear opportunity for rapid growth emerged to help you achieve business success.
However, it’s important to test the channel rigorously to see if it continues to show signs of life. If it does, you need to focus even harder on that channel. If it appears to have died down, it’s time to move on quickly, and avoid wasting time and energy on something that doesn’t provide your company gains.
All in all, entrepreneurs need to understand ‘hacking’ a business isn’t the way to initial success.
Companies must first use these fundamental principles to create a solid business foundation to prepare themselves for growth. And only once they’ve done this, it’s okay to ask growth hackers or online marketers to come in and work their magic.