- What’s “Growth Hacking”? History and definition
- Examples of famous business growth hacks
- How you can use growth hacking for your business
- What does it mean to “test a hypothesis”?
- Why you need to test a lot of hypotheses
- How to start your own hypothesis pipeline
- FAQ on Growth Hacking
Look at the rising line in the graphic. That is the story of “Growth Hacking” popularity over time. Or the last 15 years, to be exact.
Sponsored by everyone who wants a company cheap and rapid growth, this graphic presents growth hacking as a real trend.
Does it a hoax or a perfect strategy for the 21st century? Facebook’s ridiculous growth rates up to 70 billion USD prove the second. But how? By crafting and testing the hypothesis.
What growth hacking is, who found it, how to find the hypothesis that turns your company into a market leader, and more you’ll read in this article.
What’s “Growth Hacking”? History and definition
“Growth Hacking” is often explained in the context of growing something (usually a business) at an exponential rate by manipulating its vital growth elements.
The problem is that a lot of people misunderstand this concept.
For instance, many companies try to hack their business’ growth by inflating their sales plans and advertising budgets. Pretty soon, they’ve blown a huge chunk of their budget (sometimes all of it), but the result they expected never materializes.
Andrew Chen — an authority on startups, growth, metrics, and network effects, whose writings have been featured and quoted in The New York Times, Fortune — believes that after a time, channels exhaust themselves and cease to be effective. Additionally, many of them do not scale at all.
This is why putting your advertising on steroids will not lead to explosive growth.
Andrew Chen practically popularized the term “Growth Hacking” in a blog post titled, “Growth Hacker is the new VP Marketing”, so he’s someone you might want to listen to.
But he was far not the first person who used it.
Who was the first growth hacking expert? The origin of the term
Sean Ellis coined it 10 years ago. This technique came from the name of the vacancy he placed looking for a successor for himself at PayPal. This person had to be more than just a marketer but someone who’s keen at marketing and tech, knows a product and data with a focus on sustainable growth.
Used among Silicon Valley startups, growth hack transformed into a workable approach for a business of any size. But still, for startups, it’s a shortcut to win the competitive race with big companies. When the last have rich budget and resources, small companies look for alternative ways to market their product.
Does it define growth hacking? Just an alternative way to market?
There’s also another term that is often associated with “Growth Hacking” in marketing-speak — “Hypothesis Testing Pipeline”.
Big name, but fairly self-explanatory.
If you ask 10 people about what growth hacking is, you’ll get 10 different answers.
We’ve analyzed its top 10 explanations from the web and came to the next definition:
Growth hacking is a data-driven methodology that uses traditional marketing techniques for testing new hypotheses of product growth.
Basically, it’s about the process of generating and testing hacks that will lead to business growth.
For instance, there was a time when the “hack” of having a referral program where you “Invite a Friend and Get a Bonus”, or content marketing, brought companies growth of up to $20 million in revenue.
Growth Hacking means “cracking” the growth of a company or a startup. It happens as a result of many initiatives, primarily marketing. The word “hack” is more of a colloquial term in this case.
Is the growth hacker a pro version of a marketer?
Growth hacking won’t replace traditional marketing, they are just different. When the last has a certain list of tasks to build company awareness, bring leads, etc., the only religion growth hackers profess is company growth. Growing this north star metric, they can ignore everything to achieve and hack it.
But still, the growth hacker funnel version is way bigger than marketer’s one:
The list of funnel elements on how to hack the business growth vs. elements of the marketing funnel
- Growth hacker covers 5 phases with the only goal to grow revenue.
- Marketer efforts are aimed at brand recognition, gaining traffic, and converting it to leads.
In fact, growth hackers looking for an IS — smart way to leverage growth hacking. And in this article, we’ll be telling you how to growth-hack your business at a sensible pace, so that you get maximum growth without burning out.
Let’s start with a dose of inspiration.
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Examples of famous business growth hacks
Think of a company that EVERYBODY knows. Can you think of a couple more?
While everyone knows these businesses, they were once small startups with zero users and no revenue. But now, they now have multimillion-dollar revenues and a massive customer base. And they’ve achieved that by hacking their growth like crazy.
Airbnb’s customer base growth hack
This is the first company Andrew Chen mentioned in terms of rapid growth because of the excellent growth hacking. Airbnb had neither users nor a reputation for being a reliable service for finding and renting housing. They needed to build a customer base quickly and establish themselves in the market.
To do this, they provided users with an opportunity — besides publishing on Airbnb, they could quickly and easily post their listings on Craigslist, an electronic classifieds site that was very popular at the time. So they got access to a huge database of their target audience.
So what did they do:
- Asked their users for cross-posting on Craigslist with a link back to the Airbnb profile.
- Encouraged Craigslist’s hosts to Airbnb sign up.
Airbnb’s growth hack: Find your target audience on the web and leverage to get their attention. And don’t forget about the value of your business offer.
Dropbox’s referral program gamification
Dropbox proposed a hypothesis to gamify referral programs: if a user invited a friend to the service, they would each get 500 MB.
This is the kind of strategy that — when implemented properly — can drastically boost the number of new users.
Additionally, sharing the link is as easy as making two clicks, which makes the potential for business growth even bigger.
This little strategy hack boosted Dropbox’s registrations by 60%. The hypothesis was confirmed, and now we all know about Dropbox.
Dropbox’s growth hack: The key to user engagement is gamification. But the classical referral program doesn’t work, double-sided one is the best. Offering something to the users don’t forget to welcome those who they invite.
Facebook business grow hack
Facebook’s growth hacking example tells how it got over 2 billion users. They achieved such numbers with the help of their own hack machine.
One of the hypotheses they tested was an email newsletter with a notification that the user had been mentioned in a post or tagged in a photo. This has helped increase the number of returns to accounts.
But this strategy has turned into a double-edged sword. Now, it’s come to a point where you’re flooded with notifications just because a friend of yours posted on someone else’s wall. And that’s not what makes a social network attractive. Instead, users are increasingly seeing it as a trick they don’t want to fall for.
Facebook’s growth hack: think over the channels to engage your target audience via the existing one.
Here are examples of the growth hack tactics business apps used:
So now you’re probably wondering, “How can I use all of this to growth-hack my business?”
Let’s find out.
How you can use growth hacking for your business
In our article, “Are you making any of these 7 funnel-killing mistakes?” we talked about the mistake of trying to reinvent the wheel. When it comes to business, mistakes can have very serious consequences, which is why learning from the successes and failures of others is crucial.
Here are some tools to start testing ideas on how to growth hack your business:
- Grow your email list by subscription form or pop-up on the website.
- A blog to test marketing efforts because everyone loves content.
- Build your own brand to build others.
- Create high-quality content on high-quality sites for reputation first and only then for linkbacks.
- Analyze and understand the data (content results, customer data, experience, etc.) you have.
Keeping this in mind, let’s see what we can learn from the achievements (and mistakes) of the companies we mentioned above.
Sit tight, because we’re about to share with you some top-notch advice from Yuri Drogan, the Growth Hacking expert who guided the Dashly team in its quest for growth hacking.
As explained earlier, Growth Hacking enables businesses to achieve exponential growth through the constant testing of hypotheses. “Exponential growth” refers to a kind of growth that is two, three, five, ten times what a business would normally expect to see.
How fast your business grows, depends directly on the number of hypotheses you test and experiments you run.
The more you test, the more likely you are to achieve exponential growth.
What does it mean to “test a hypothesis”?
Einstein was a pretty smart guy. And yet, when he was building his Theory of Relativity, he went about it in a very basic, methodical, and structured way.
- First, he formulated a hypothesis.
- Next, he ran a ton of experiments over an extended period of time.
- Finally, through lots of experimentation, he arrived at a number of conclusions that contradicted the generally-accepted theory at the time.
- So he used his findings to build a new theory, based on the data he had gathered and the conclusions he had reached. And even after all these years, repeated experiments continue to prove his theories.
So, a growth hacking hypothesis is an assumption that requires proof.
In the case of business growth hacking, this assumption is within the context of rapid growth. And the experiment is conducted in order to prove or refute the hypothesis.
Hypothesis = Assumption requiring proof
Experiment = Process of proving or refuting the hypothesis
Here’s a practical example:
Let’s say we start with the hypothesis that we can increase sales by X by installing online chat on our site to communicate with our customers.
Next, we conduct the growth hacking experiments by actually installing online chat and monitoring calls and sales. We notice that after we installed a chat, our sales actually increased, so our hypothesis is confirmed.
The whole point of the growth hacking process is to come up with a lot of hypotheses, and use experiments to test them rapidly.
The coolest hypotheses are always about the value of the product for users.
Why you need to test a lot of hypotheses
Here’s a growth hack scenario for you to consider.
You want to grow business fast, so you start testing hypotheses. You can probably test one hypothesis per week. There are 52 weeks in a year. If you take away holidays, and maybe a couple of weeks for sick leave, meetings, conferences, and so on, you’re left with around 42 working weeks a year. So that’s 42 hypotheses tested in one year, assuming we stick to the schedule of testing one per week.
That doesn’t sound too bad. But if you actually look at the numbers, you’ll find that only about one in ten hypotheses turn out to be true. So out of your 42 hypotheses in a year, you’re left with only 4 that you can work with.
Additionally, imagine that each of these hypotheses brings you a 3% growth. That’s works out to roughly 12% per year.
Not really what you’d consider “explosive growth”.
But try testing 300 hypotheses. That works out to around 30 successful hypotheses, contributing an expected average growth of 3% each, for a compound annual growth of over 142%.
Pretty impressive, don’t you think?
The number of experiments per week is directly proportional to the growth rate of the company.
Of course, it’s not as simple as it sounds. To test five, ten, or one hundred hypotheses per week, you need a well-established testing process — a hypothesis generation engine, continuous experimentation, and analytics. So, your business needs a growth hacking plan.
How to start your own hypothesis pipeline
We’ve already agreed that the more testing you do, the higher your chances of getting explosive growth. To do that effectively, you’ll need a growth hacking team that will devote all of its time to generating, prioritizing, testing, and analyzing hypotheses.
But what does a growth hacker look like?
Andrew Chen believes that growth hackers are typically marketer/programmer hybrid. When you ask them the question, “How do I bring users to my product?” they will reply, “By A/B testing landing pages, virality hacks, and mailshots.”
Growth hackers rely on data and quantitative measurements. They draw conclusions exclusively on that basis. And these are the kind of growth-oriented people that you will need in your growth team.
The selection of the team itself should begin with the grower of the master – the person who will be responsible for team processes, plan sprints, and also manage the testing process.
It is difficult to clearly define positions in the growth team. Full-stack specialists are highly valued because they can navigate the many tasks involved while hiring individual specialists for every aspect of the process is too expensive. You need people who can fulfill these roles:
- a marketer who knows everything about channels and traffic;
- layout designer;
- designer, preferably a UX developer.
The primary goal of the business growth team is — you guessed it — growth, and its primary task is to quickly test quantitative hypotheses.
Now that you have a growth team, all that’s left is to build the process itself of generating ideas for practical growth hacking, testing hypotheses, and analyzing them further.
And we’ll tell you how to do this in part two of this article.
FAQ on Growth Hacking
It’s generating and testing hypotheses based on data and marketing channels to lead a company to new solutions and rapid growth.
Using it, you can outsmart your competitors and gaining millions of clients and dollars in revenue ridiculously fast and cheap.
It’s better to look for a growth hacker when your product achieved market fit, has the potential to grow revenue with minimal cost, plain company processes. At this point, you should know the fundamentals of growth hacking and how to scale your team and fund growth.
The step-by-step guidance on how to hack the business growth you’ll find in our next expert article “How to Ensure Continuous Growth Hacking”.
Marketing growth hackers do 2 major buckets: planning and tests. Starting with a model for how a site grows, they try out hypotheses and deploy them as A/B tests. If it works, they test new ones, if not ― rethink the model of the 1st step because it might be broken.
First, you need skills at SMM, community management, database & SQL, analytics, direct and content marketing, conversion optimization, web development. Your next steps is described in the article from Dashly experts “How to Ensure Continuous Growth Hacking”.
Andrew Chen, follow on Twitter.
Rebecca Rosenfelt, Airbnb’s growth strategy expert.
Brian Balfour, the startup sector expert. Follow on Twitter.
Nir Eyal, Consultant, Public Speaker, Best-Selling Author. Follow on Twitter and LinkedIn.
Alex Schultz, Facebook growth hack expert. Follow on Twitter.
|This’s the update of the article that was published 15 January, 2020.|