What is Growth Hacking and What Can Good Marketers Learn from It?

Growth Hacking is Good Marketing

The latest buzz in startups is Growth Hacking. It sounds like some secret formula to grow companies to billions in valuation. But what is growth Hacking? What does it mean for marketers and for businesses? Is it Marketing 2.0 (or 3.0 or whatever version we are on +1)?

I have found the definitions by those who created the term to be inaccurate or of little value.  At first glance, it could appear that growth hacking is a marketing buzzword about marketing created by non-marketers.

After taking a closer look and reading all I could about it, I found that in trying to learn from it, a pure definition would not be as valuable as an observation of Gowth Hacking characteristics are:

  • Typically found in early stage startups – with no formal marketing teams or budget
  • Where marketing is performed by engineers or non-career marketers
  • That uses smart, cheap and unconventional methods to grow the business
  • With a strong focus on analytics, metrics, virality and scalability

Advocates of the term call out DropBox, Twitter and even Hotmail as success stories that prove the value of growth hacking. This view is somewhat misleading as there are a hundred startups following growth hacking techniques that won’t survive to their next round of financing. Which only proves there is no secret formula or buzzword that guarantees success.

The only guarantee of success is to have a great strategy, a great product, a great team, and great execution.  But let’s focus on what marketers can learn from growth hackers:

Growth Hacking is Good Marketing.

Let’s look at the core marketing ideas behind growth hacking, how they compare with good marketers and what we can learn (or be reminded of) from them:

1. It all starts with a good product.

The first step in growth hacking, the first stage, before they start thinking about how to grow the business or how to get more customers is to have a good product. This is what growth hackers call product-market fit.

The concept requires defining what the market you are serving is: what specific group of customers you will focus on – and which ones you will ignore. And how your product serves this customer base. In technology startups, product-market fit assumes an iterative process where the product continues to evolve based on customer feedback until a good enough product is found.

Good marketers start with understanding the market and defining customer segments. Good marketing requires defining target customers, understanding their needs and how products help them solve customer problems. Good marketers are hungry for customer feedback, which feeds product development to improve your product-market fit.

2. Growth hackers focus on growth

Marketing is anything that gets and keeps and grows customers. Which means, even if they don’t like the label, growth hackers are marketers. It’s a great reminder for any marketers that our primary goal should be profitable revenue growth. Leads, social shares and page views are nice, but they don’t show up on the scoreboard. If you are measuring your success by engagement then you need to re-think your strategy. A good marketer thinks about growing revenue all the time.

 

3. Retention and optimization are top of mind for growth hackers

Most marketers focus on the ‘getting customers’ and pay little attention to keeping and growing customers. A good marketer focuses on lifetime customer value, a term created decades ago. This means customer retention and revenue optimization are not being added to the job description for marketers – it always has been part of it. A good marketer understands the value of retaining a customer relative to your cost to acquire a new one and the opportunities to sell more to your customer base. If you don’t know your cost per customer acquisition and your share of wallet figures those are good starting points.

 

4. Traditional marketing does not work.

Growth hackers often believe most marketers focus on advertising and branding activities that are wasteful and inefficient. When they criticize these activities they are really criticizing the stereotype of the marketer that is not creative, not aligned with customers, and is not the growth engine for the business:

Why growth hackers dislike traditional marketing (for good reason)? Why marketing is broken:

  • Siloed – no integration of activities to drive results
  • Focused on bad metrics like engagement and impressions
  • Doing stuff just because that’s what they have done before
  • Too much reliance on buying customers via mass advertising or bribing customers with “loyalty’ programs
  • Risk averse and creativity limited

Advertising, branding and many other ‘traditional’ marketing activities are still valuable. Still, growth marketers have a good point: marketers need to look for more efficient and effective ways to drive growth. As GaryVaynerchuck says, you need to market in the year you are in.

Good marketers look for scalable, repeatable, sustainable and efficient ways to grow the business and look for creative ways to achieve this, often with little or no budget.

One way growth hackers achieve this is by building ‘virality’ into the product. (in quotes because it is another buzzword/formula for magic success). What it really means is build a product that encourages customers to market for you and share your product with their network.

 

5. A scientific approach at conversion.

Growth hacker have a metrics orientation. As most of them share an engineering background, it is not surprising they see customer acquisition as a process that can be analyzed scientifically. This is not new for marketers: conversion rates and efficiency improvement is core to our job.

It is a good refresher to keep in mind what we are trying to optimize is the entire process of acquiring customers: all the way to revenue, repurchase and advocacy. It’s all a machine that can be improved. And yet, most marketers don’t have a complete view of what those metrics look like end to end.

We need better tools, better attribution, better tagging and better integration between the tools we have: marketing automation to CRM to ERP, etc. But this is not a technology or integration challenge, this is a mindset problem. Good marketers think about the entire acquisition and growth process end to end in spite of not having all the data at hand and in spite of the limitations of their current systems. They start with educated hypothesis, they know their metrics and they take a disciplined approach at improving them.

 

Growth Hacking lessons for Marketers

A good marketer shares these traits:

  • An embedded responsibility and accountability for growing the business
  • An entrepreneurial drive, drive, passion. Getting things done.
  • A burning desire to connect customers with your products that stems from the belief your products are good for your customers
  • Creativity to figure out new ways to drive growth and to evolve what worked for other companies
  • A metrics orientation and a scientific approach to conversion optimization
  • A discipline of prioritizing ideas, testing them and analytical skills to connect activity to growth

Growth hacking should describe the unique marketing tactics required in early stage companies that need to fuel growth without traditional marketing talent and with limited budgets. For this to be true, we marketers need to get back to good marketing and improve the perception of what marketing stands for.

In summary, growth hacking is good marketing. For us marketers it serves as a reminder of what good marketing looks like and what we should be looking for.

The latest buzz in startups is Growth Hacking. It sounds like some secret formula to grow companies to billions in valuation. But what is growth Hacking? What does it mean for marketers and for businesses? Is it Marketing 2.0 (or 3.0 or whatever version we are on +1)?

I have found the definitions by those who created the term to be inaccurate or of little value.  At first glance, it could appear that growth hacking is a marketing buzzword about marketing created by non-marketers.

After taking a closer look and reading all I could about it, I found that in trying to learn from it, a pure definition would not be as valuable as an observation of Gowth Hacking characteristics are:

  • Typically found in early stage startups – with no formal marketing teams or budget
  • Where marketing is performed by engineers or non-career marketers
  • That uses smart, cheap and unconventional methods to grow the business
  • With a strong focus on analytics, metrics, virality and scalability

Advocates of the term call out DropBox, Twitter and even Hotmail as success stories that prove the value of growth hacking. This view is somewhat misleading as there are a hundred startups following growth hacking techniques that won’t survive to their next round of financing. Which only proves there is no secret formula or buzzword that guarantees success.

The only guarantee of success is to have a great strategy, a great product, a great team, and great execution.  But let’s focus on what marketers can learn from growth hackers:

Growth Hacking is Good Marketing.

Let’s look at the core marketing ideas behind growth hacking, how they compare with good marketers and what we can learn (or be reminded of) from them:

1. It all starts with a good product.

The first step in growth hacking, the first stage, before they start thinking about how to grow the business or how to get more customers is to have a good product. This is what growth hackers call product-market fit.

The concept requires defining what the market you are serving is: what specific group of customers you will focus on – and which ones you will ignore. And how your product serves this customer base. In technology startups, product-market fit assumes an iterative process where the product continues to evolve based on customer feedback until a good enough product is found.

Good marketers start with understanding the market and defining customer segments. Good marketing requires defining target customers, understanding their needs and how products help them solve customer problems. Good marketers are hungry for customer feedback, which feeds product development to improve your product-market fit.

2. Growth hackers focus on growth

Marketing is anything that gets and keeps and grows customers. Which means, even if they don’t like the label, growth hackers are marketers. It’s a great reminder for any marketers that our primary goal should be profitable revenue growth. Leads, social shares and page views are nice, but they don’t show up on the scoreboard. If you are measuring your success by engagement then you need to re-think your strategy. A good marketer thinks about growing revenue all the time.

 

3. Retention and optimization are top of mind for growth hackers

Most marketers focus on the ‘getting customers’ and pay little attention to keeping and growing customers. A good marketer focuses on lifetime customer value, a term created decades ago. This means customer retention and revenue optimization are not being added to the job description for marketers – it always has been part of it. A good marketer understands the value of retaining a customer relative to your cost to acquire a new one and the opportunities to sell more to your customer base. If you don’t know your cost per customer acquisition and your share of wallet figures those are good starting points.

 

4. Traditional marketing does not work.

Growth hackers often believe most marketers focus on advertising and branding activities that are wasteful and inefficient. When they criticize these activities they are really criticizing the stereotype of the marketer that is not creative, not aligned with customers, and is not the growth engine for the business:

Why growth hackers dislike traditional marketing (for good reason)? Why marketing is broken:

  • Siloed – no integration of activities to drive results
  • Focused on bad metrics like engagement and impressions
  • Doing stuff just because that’s what they have done before
  • Too much reliance on buying customers via mass advertising or bribing customers with “loyalty’ programs
  • Risk averse and creativity limited

Advertising, branding and many other ‘traditional’ marketing activities are still valuable. Still, growth marketers have a good point: marketers need to look for more efficient and effective ways to drive growth. As GaryVaynerchuck says, you need to market in the year you are in.

Good marketers look for scalable, repeatable, sustainable and efficient ways to grow the business and look for creative ways to achieve this, often with little or no budget.

One way growth hackers achieve this is by building ‘virality’ into the product. (in quotes because it is another buzzword/formula for magic success). What it really means is build a product that encourages customers to market for you and share your product with their network.

 

5. A scientific approach at conversion.

Growth hacker have a metrics orientation. As most of them share an engineering background, it is not surprising they see customer acquisition as a process that can be analyzed scientifically. This is not new for marketers: conversion rates and efficiency improvement is core to our job.

It is a good refresher to keep in mind what we are trying to optimize is the entire process of acquiring customers: all the way to revenue, repurchase and advocacy. It’s all a machine that can be improved. And yet, most marketers don’t have a complete view of what those metrics look like end to end.

We need better tools, better attribution, better tagging and better integration between the tools we have: marketing automation to CRM to ERP, etc. But this is not a technology or integration challenge, this is a mindset problem. Good marketers think about the entire acquisition and growth process end to end in spite of not having all the data at hand and in spite of the limitations of their current systems. They start with educated hypothesis, they know their metrics and they take a disciplined approach at improving them.

 

Growth Hacking lessons for Marketers

A good marketer shares these traits:

  • An embedded responsibility and accountability for growing the business
  • An entrepreneurial drive, drive, passion. Getting things done.
  • A burning desire to connect customers with your products that stems from the belief your products are good for your customers
  • Creativity to figure out new ways to drive growth and to evolve what worked for other companies
  • A metrics orientation and a scientific approach to conversion optimization
  • A discipline of prioritizing ideas, testing them and analytical skills to connect activity to growth

Growth hacking should describe the unique marketing tactics required in early stage companies that need to fuel growth without traditional marketing talent and with limited budgets. For this to be true, we marketers need to get back to good marketing and improve the perception of what marketing stands for.

In summary, growth hacking is good marketing. For us marketers it serves as a reminder of what good marketing looks like and what we should be looking for.

Related posts