Growth hacking is THE buzzword for entrepreneurs. Forget about “pivoting” and “iterating”. Everything now revolves around Growth hacking.
It generates almost an annoyance in those who have already heard about 1,000 times and confusion in those who do not know what it is.
Whether you like it or not, growth hacking is having its moment.
And that is the reason why we can see impressive growth rates for some new ventures every year.
… or, more recently, Uber.
Growth hacking emerged only a few years ago, but it is already very popular. All ventures are looking for growth hackers.
The reason is obvious: they also want to grow impressively fast and earn millions of users and dollars as income.
But what does this mean exactly?
It is time to answer that question once and for all. I’ll even show you how to do it.
Sean Ellis coined it in 2010 when he was trying to create a description for a new job. Sean is the OG (original growth hacker).
He helped many entrepreneurs achieve accelerated growth by working as a consultant.
However, when he left a venture to pursue new opportunities, it was very difficult to find someone to replace him. Someone who was in charge of the growth of the enterprise.
Sean analyzed hundreds of requests. All of them described a job similar to that of a marketing expert.
But this was not a job for a marketing expert.
Modern software products are completely different from traditional products, and their distribution is also different.
Marketing experts thought they should consider budgets, expenses, conversions, etc.
A growth hacker does not care about any of these things. Sean, in his own words, was looking for “a person whose true objective was growth”.
Because growth is the metric that can turn an enterprise into a big success or a resounding failure (that is, it grows fast enough or disappears), that is the only metric for which a growth hacker must worry.
An engineer can be a growth hacker, just like a marketer. What matters is your focus.
Due to the culture of the enterprises, they must often use analytical, creative, innovative and low-cost forms in order to make their customer base grow exponentially.
That’s the only thing a growth hacker does.
To really understand what can be achieved through growth hacking and what is the mentality you should have if you want to apply these principles to your business, I will show you some examples of well done growth hacking.
Growth hacking can, potentially, be done offline. For example, the appearance of a McDonald’s next to each exit on interstate highways in 1959 could be considered growth hacking.
McDonald’s realized that interstate highways were going to become important and therefore it was where it knew it would find customers in large numbers.
However, this relatively new concept is mostly applied to the environment of new ventures. They do not have big budgets for marketing, so they can not count on ads in the Super Bowl or posters in Times Square.
That is why they must find cheaper ways to advertise.
What they often do have is a very scalable product.
Think, for example, of Dropbox. What your cloud storage service offers, basically, is simply space on your servers that can be accessed through the internet.
They can rent more servers to provide more space for new users as soon as they subscribe.
Or Uber. This service that replaces the taxis is based on normal people who, with their own cars, pick up people in a place A to transport them safely to place B. The payment is made through the application.
With more than 250 million cars on the roads of the United States, this is also a very scalable product. They provide an application, which can be downloaded an indefinite number of times and used through the internet, users provide the rest.
A traditional product, such as soap, is not very scalable. Every time you run out of soap, you should buy a new one.
But every time a new user subscribes to Facebook, your experience improves.
In addition, its own operation allows the product to advertise itself. If you take an Uber to go to a friend’s house on a Friday night and he asks you how you got there, you answer: “I took an Uber”.
Naturally, the news extends. If you like the idea and have friends who could benefit from using this service (in addition to benefiting yourself if they participate in the platform), it is very likely that you suggest it.
This is how growth hacking uses word of mouth on a large scale, with the aim of achieving exponential growth rates like those we have seen.
Well, it was time to analyze some examples of growth hacking applied correctly.
But today I will not show you only excellent examples, but I will also show you a simple, four-step process that you can follow to try to apply growth hacking to your business.
Step 1: Make sure you create a product that people really want
You would think that this is obvious for any company, right?
Well, some years ago, on certain occasions, maybe you could get away with even offering a mediocre product simply if you advertised it enough.
For example, Coca Cola presented many different beverages in recent years, such as Sprite or Fanta, most of which do not taste as good.
But, through an extensive advertising campaign, these drinks became popular and currently abound in supermarket shelves as much as Coca Cola itself.
Achieving this again would be much more difficult, since the news about a new product spreads very quickly.
If your product is bad, the world will know it faster than you can imagine.
This phenomenon is also known as digital lynching. For example: In 2009, it was discovered that United Airlines workers carried their luggage by throwing it at each other. In doing so, they broke a client’s guitar.
They accepted their fault, but refused to compensate the passenger for his loss.
The result? Not one, but three songs, with videos, about the poor service that United Airlines provided.
A very bad image for United. If your product is bad, it can disappear in less time than it took you to create it.
What is the solution to this? Feedback.
You must make your product available to the public as quickly as possible to start gathering feedback and keep improving it continuously.
2 steps you should take to make sure your product hits the target
This is the correct way to do it:
1. Start by asking and answering questions, not developing the product.
Begin to investigate more deeply about the subject and think about creating a product that would solve that particular problem.
2. As soon as you have an idea, start gathering feedback.
Do not shut yourself up to develop a product for six months and then appear saying: “What do you think?”
Ask for feedback immediately.
Another example of a company that undoubtedly used feedback in the right way is Instagram.
Originally, the founders ventured with a social network application called Burbn, aimed at whiskey drinkers. They noticed that the most used function of the application was its mechanism to share photographs.
Only then did they begin to consider photographic applications, since they thought it was a market that was already saturated.
In conversations with the users, they eventually noticed that in all the available applications, sharing the photographs was either very complicated or it was not the main function of the application.
They simply took the best features of applications they already knew, such as Hipstamatics’ photographic filters and Burbn’s way of sharing, they eliminated the rest, and voilà, a great application awaited by all saw the light.
If you combine this with an excellent choice of timing for the launch (Instagram was released along with the iPhone 4), you will know how they got 25,000 downloads on their first day, reaching one million users in two months.
Validate your idea to make sure you do not carry it forward in vain
Another part of creating a great product: Validate your idea.
Do you want to find a sure way to know that people will be interested in what you are going to create?
Ask them for money.
If you want to create an application that shows the best places for tea drinkers in the city and you know that the cost to develop it is $ 1000, getting 50 friends to give you $ 20 will solve that problem.
You will be 100% sure that:
Your friends will want you to create the application (and that other people may be potentially interested).
You will not be wasting much of your own money if you do not succeed.
Asking for money before you have a product may seem counterintuitive to you.
But if you think about it better, you pay for things in advance all the time.
Tickets to the movies, flights, concerts, events, gym memberships …
You pay for all these things, whether you finally go or not.
Validate your product is something that works even better: in some cases, like writing a book or creating a digital product, you can return the money if you do not create your product eventually.
The writer Ryan Holiday sold more than 2,000 copies of his book “The obstacle is the way” in advance, which paid for his breakfasts while writing and ensured that his book was a success once it was released.
Do you want another example of successful validation? How about AirBnB?
The idea was born as a necessity. The founders, Joe and Brian, could not pay their rent. So they thought they could rent three inflatable mattresses on the floor of their apartment to make money.
When three people showed up, each willing to pay $ 80 for one night, they thought, “Mmm, it might be worth exploiting this.”
Once they launched it in South by Southwest, they continued to receive reservations, but only some of them and very separated from each other, with which they earned about $ 200 per week.
However, they knew there was an interest. All they had to do now was improve the product.
Offer free content if you do not have an idea.
If you do not have an idea, start with something free.
Create a blog or a Youtube channel and offer content related to the niche in which you want to build your business.
That is the simplest way to know what people like, what they want and need, and an excellent channel to get feedback for your ideas.
In addition, as we have already seen, if you gather email addresses, you can even build an audience of enthusiastic and loyal followers who will look forward to the moment you really launch a product.
You can achieve this if you give them a free e-book, develop a questionnaire or generate a series by email or a set of great videos.
It offers people the possibility of accessing a part of your best content in exchange for their email and you will have started building an audience instantly.
This is without a doubt the easiest and risk free way to start a business.
Well, let’s assume that you have an idea and that you have already validated it.
The time has come to avoid some of the mistakes that prevented, at the beginning of AirBnB, its growth.
Let’s keep going.
Step 2: Do not point to everyone
Guess who the customers AirBnB was targeting in the beginning?
Anyone who traveled.
He only observes his first three clients, those who rented the inflatable mattresses: a 30-year-old Indian man, a 35-year-old woman from Boston and a 45-year-old man, father of four children, originally from Utah.
What is the common point? What connects these people? What do they share?
You see, there is a life cycle by which all new and innovative products must pass. This is the so-called innovation dissemination law and is as follows:
In order to reach the largest number of people, your product must first pass successfully by innovators and first users.
These are small groups and communities that you should target specifically. Geoffrey Moore wrote an entire book, called “Crossing the Abyss,” about this phenomenon.
The products must first capture the first 15% of the market or die in the attempt.
If the client you are targeting is “everyone”, there will be no way to carry out a growth hacking through that first 15% because you will not even know who to convince to buy your product.
So, how do you manage to do it correctly?
Target a small minority of people who will get the most out of your product
You will have to create a customer profile. Consider all aspects of your product and then ask yourself:
Who will get the most out of our product?
Be specific. Describe a person as real as possible.
If Dropbox had to say which was their initial ideal client, they would surely say something like:
A 22-year-old white man who lives in San Francisco or the San Francisco Bay region, interested in technology, has few true friends, wears XYZ brand clothing and spends most of his time online .
You should be just as specific.
And at the beginning, you should really direct your product to the needs of those people.
Traditional products, such as books published through a traditional publicist, should create enthusiasm before launch to ensure that the release is successful.
With a modern software product, what happens before the launch is not really as important as what happens after the launch.
Dropbox did not host a great event that could only be attended if you received an invitation. He only released his product to the public at TechCrunch50 in 2008.
His clever strategy was to make the service accessible only by invitation after launch.
They launched their product in an event that their ideal customers attended each year and then created a feeling of exclusivity around the product.
Those who wanted to join the service needed an invitation from those who were already using it. Since everyone wanted to know what Dropbox was and how it worked, the waiting list grew immediately.
But the mystery always brings with it some skepticism. Therefore, to make known what Dropbox was about to potential users, they created a short demonstration video.
They made this video tailored to the users of Digg, a very popular social network at that time. Again, the users were their ideal clients: people interested in the internet, experts in technology and nerds.
Drew Houston, one of the founders, made about 12 internal jokes during the presentation. In 24 hours, the video had 10,000 diggs (= I like it), the news spread like wildfire and the waiting list grew from 5,000 to 75,000 users.
Compared to spending $ 300 per acquisition for a $ 99 product through Google Adwords, this seemed like the best strategy for them. Currently, Dropbox has 400 million users.
This type of growth jump is of extreme importance in the early stages for an enterprise to be able to surpass the 15% limit that is necessary for the product to really take off.
Here is another great example of how to spread the news in your community: Hotmail.
If you are a Gmail user, Hotmail seems to be years in the past and you may have forgotten about it some time ago. But since it was bought by Microsoft, Hotmail grew to exceed 400 million users. Gmail only exceeded it three years ago.
What did they do to be bought by Microsoft in the first place? Grow. Quickly.
When they analyzed advertising options, such as billboards, their investors had an idea. Why not put a banner at the end of each email sent through your service that said: “PS: I love you. Get your own free email in Hotmail “?
It was worth trying, and since then subscriptions have increased to 3,000 per day, doubling its user base from 500,000 to one million in six months.
After this, the growth was even greater: just five weeks later, they had two million users.
By keeping the request to share within their system, they made sure to get to the right group.
Since Hotmail users sent emails to their friends, it was very likely that they were similar to them and, therefore, also ideal customers.
Uber did the same. They waited a full year until the popular South by Southwest (SXSW) festival took place and there they offered free trips to hipsters and technology fans, to promote their service, instead of using advertisements.
Well, now you know who to target as initial clients, but once innovators and initial users know and come to love your product, what’s next?
Step 3: Become Viral
It was time to take out the heavy artillery. However, viralizing is different from targeting the whole world.
This step only means that you must intervene in larger systems, larger user bases and take advantage of the scope of similar products to really penetrate most of the market.
You will still be targeting your ideal clients, but you will be expanding to platforms in which everyone is present.
Let’s continue to analyze Dropbox for the moment to see how they did this. The same mechanism remains in force even today:
Free space! The product improves for you the more people you manage to invite.
This is an excellent mechanism to be used for any software product.
Now, not only invite your closest friends because you think that Dropbox is great, but you will invite everyone you know to get more space.
Groupon had the same idea and used a different way to implement it:
The incentives for each user to attract more people to a platform are a good way to start mobilizing your viral marketing campaign, but that your product announces itself is even better.
Apple used that model and put its ads to good use too. Do you know the popular iPod ads with black silhouettes and white headphones?
By drawing his headphones blank, Apple made sure everyone recognized them. Almost all headphones are generally black, so by changing this feature they converted all their customers into walking ads.
Do you want another example?
WordPress not only supports 25% of all online websites, but also does it for free. The free version, however, has a detail.
Your domain name will always look like wordpress.yourdomain.com.
All those who visit your free WordPress blog will know immediately that it is a WordPress website.
But let’s talk about an even more powerful growth hack.
The power of integrations and embeds
Everyone’s favorite, Facebook, used embeds as an early growth hacking strategy to make sure they reach their goal of acquiring 200 million new users in a year.
It gave its users the option to show their presence on Facebook in other places, such as their blogs, websites and forums, by creating different badges for them to create embeds.
The badges are still present today …
This created billions of impressions, hundreds of millions of clicks and, therefore, millions of subscriptions every month.
And this is not the only giant that uses this strategy. Have you ever tried to share a Youtube video on your blog?
They make embedding videos very easy, so many people do it.
This works not only because they create a complete code and they highlight it for you, so you only have to press Cmd + C (or Ctrl + C if you use Windows) and then copy in your editor, but also because the YouTube videos are very shareable .
Which company wants to reveal its traffic, number of clicks, profits and conversions?
But, guess who wants to share the last funny video of cats he found? All the world!
Tip: Give people a reason to explore more deeply your embeds. The YouTube player automatically goes to the next video or offers a selection of related videos at the end of each video, so it is very likely that you visit YouTube after watching an embedded video.
When you decide if you want your product to be embebible, or not, make sure your customers have a reason to embed it, make it easy to do and convince them to explore more your embeds.
However, there is something that is even more powerful than the embeds, especially if you do it correctly: integrations.
Did you know that if people can subscribe to a service using their existing Facebook, Twitter or Google accounts that can increase subscriptions up to 50%?
Integrate your service to work smoothly with another can give you easy access to millions of potential customers.
PayPal had difficulty getting started in most of the market. Few retailers gave them a chance in reality.
But once they closed a deal with Ebay and received the option to appear with Visa and Mastercard, the floodgates were opened.
(Image source: Payments News)
Over time, Ebay bought them for the sum of $ 1.5 billion in 2002.
A bargain if we consider that PayPal is currently worth approximately $ 10 billion more than Ebay. Having a powerful integration was enough.
But PayPal and Facebook are yesterday’s news. What if we talk about some more recent ventures?
Integrations work just as well today. Only now you must integrate with companies like Facebook and PayPal.
As Spotify did.
The integration with Facebook was a very specific movement. Facebook was already a platform to share interests, especially music (in the form of videos).
Spotify only improved the experience. By showing what your friends were listening to in the application and at the start of Facebook, people began to discover the application.
“Tom is listening to Jay-Z on Spotify.”
“Hm, I wonder what that is, I’m going to try it. Oh, free music, great! “
And suddenly, Spotify had a new user (by the way, exactly that way they got me).
As with the embeds, make sure that your integration makes sense for the users, so that both parties benefit.
AirBnB did not do it and that is why its growth hack stopped working. Fortunately for them, they no longer needed it at that time.
When they started creating their publications, what they really wanted was to take advantage of the great Craigslist network. But Craigslist did not publicize its API, so the founders of AirBnB had to create a technical solution that generated enough difficulties.
Over time, they made it work and people could post their AirBnB ads on Craiglist with a simple click:
(Image source: Growth Hackers)
At that time, nearly 50 million Unique users used Craigslist every month. The publications achieved a massive exposure, which led to the period of greatest growth in the number of AirBnB users.
(Image source: Quora)
But it was not a very, ahem, endorsed procedure and it was not approved by Craigslist. With time, they had to interrupt the integration.
(Image source: Quick Sprout)
Another concept similar to that of embeds and integrations is that of the “Developed by” badges.
However, these require a lot of testing and optimization, since it is impossible to know immediately what will work.
The integrations, embeds and badges are certainly your best bets to viralize and reach a market share large enough for your product to be a success.
However, these examples are rather ideas than “to copy” schemes.
You see, growth hacks usually stop working faster as more and more companies start using them.
Therefore, instead of copying these examples one by one, try to have the right mindset to see opportunities that you have not taken advantage of and new ways to use similar tactics to advertise your product.
Step 4: Improve your product continuously
Iterate, iterate, iterate.
Because even with a million users, it takes years for most enterprises to become profitable.
Either because their product is not very expensive or because they expect too much to start charging their customers.
Exceptions such as Birchbox, which soon reach $ 125 million in profits, with only an initial investment of $ 12 million in funds, are just that: exceptions.
It is surprising that only 20% of companies consider it important to maintain customers, when it has been proven that selling to existing customers is much easier.
It is 50% more likely that they make a new purchase before the new customers do.
Twitter had this problem very soon. I had millions of users but they did not really use the service.
This is because the perceived value of your product goes up and down during the incorporation process.
Imagine subscribing to a service, receiving a welcome email but not receiving instructions on how to use it or knowing about them again.
A pretty bad experience, right?
I would not go back to that place either.
When the new Twitter users subscribed, they did not receive instructions. Once Twitter changed this, the engagement rose impressively.
This is how it happened:
Even more important, immediately after subscribing, Twitter proposes you to follow 5 to 10 people on your own.
If you spend 10 minutes looking for friends or celebrities on Twitter and start following them, you have already invested time in the product, which makes it much more likely that you will return.
It is natural that if you “follow” someone, you really want to see them and find out what is new in their life.
Uber also constantly improves its service. These are some of the experiments he has done so far:
- Ice cream delivery on request Uber.
- Roses on Valentine’s day upon request.
- Roasts in Taxes upon request.
- Trips in a DeLorean in San Francisco.
- Trips to the Hamptons by UberCHOPPER helicopter.
- Association with the NFL to promote safe trips for NFL players.
Once you’ve grown, the user experience becomes a big part of the success of your product. That’s why companies like Apple and Facebook spend hours analyzing fonts, colors and button sizes.
Never stop improving.
Otherwise, the forces of nature, or the market in this case, will teach you that lesson the hard way.
There is an excellent quote about the idea of continuous improvement:
Never stop learning, because life never stops teaching.
So, do not adopt the “once and for all” approach to growth hacking. What follows growth is just as important if you want to create a sustainable business.
Facebook took eight years to reach a $ 50 billion valuation. That kind of growth was unprecedented. It was a historical fact.
Until Uber reached that same valuation in five years.
I can already hear your excuses.
“These growth hacks do not work anymore.”
“They do not apply to my industry.”
I do not want to hear it.
Growth hacking is not an established strategy.
It is a way of thinking.
I hope this guide helps you acquire that mentality. I want you to start thinking like I do. Like other growth hackers they do it.
Let this guide be the starting point.
These are, again, the four steps you can take:
- Make sure you create a product that people really want.
- Sharing free content about your niche.
- Asking and answering questions to get good ideas.
- Gathering feedbanck about your ideas immediately.
- Validating your ideas by obtaining customers before preparing them in their entirety.
- Point to a small niche in the market.
- Make it an exclusive experience for them.
- Help them spread the word within their community.
- Become Viral.
- Offering incentives to those who share your product (should improve with more users).
- Letting your product advertise itself.
- Taking advantage of the clients of other companies through integrations, embeds and badges.
- Continue improving your product.
- Iterating constantly and releasing updates.
- Evaluating all the details.
- Optimizing the incorporation process.