No matter the business, building a loyal customer base is a top priority. This is particularly crucial for start-ups, but most lack the resources to splash out on massive marketing campaigns. For many, the answer to this problem lies in growth hacking.
The business “buzzword” refers to innovative and low-cost marketing strategies which drive enormous growth in a short period of time. These techniques use customer data to test new methods of promotion in order to maximise their audience whilst minimising expenditure.
How It Works
Growth hacking comes in a variety of shapes and sizes. Although it tends to incorporate SEO (search engine optimisation) and social media, it can take on whatever form necessary to optimise customer conversion rates.
These techniques are applied through what is affectionately known as the Pirate Metrics, or (as a real pirate would say) the ‘AARRR’ model. This is a funnel framework which follows each step potential users take to becoming loyal, paying customers.
The acronym stands for Acquisition, Activation, Retention, Referral and Revenue. Each section has its own metrics to evaluate the effectiveness of the growth tactics it uses. This data allows companies to adapt their strategies and quickly gain users. In other words, to hack growing their business.
Acquisition
The first stage of the framework is about deciding on the right target audience, examining who they are and what they want. Growth hackers use this information to create the best product and find the most effective way to introduce users to the brand.
In the 50s, for example, McDonald’s recognised that the drivers on newly built motorways would be hungry. Their restaurants popped up at road exits, the now-famous golden ‘M’ beaming through every passing windshield. By analysing customer needs, McDonald’s became one of the biggest growth hacking success stories.
Activation
This phase is where a potential user becomes an active customer. Growth hacking activation involves making this transition as seamless as possible by improving customer experience. Triggering a sale can be as simple as changing a website layout to make it easier to navigate.
YouTube, for example, made video uploading and embedding possible for the masses. Rather than spending hours uploading content to different sites, users could simply paste a video embed code onto any platform. This took the watcher straight to YouTube and grew their brand enormously.
Retention
Now that a user is subscribed, how do you keep them coming back? Low-cost solutions range from emailing customers with exclusive offers to simply posting shareable content on social media. Growth hackers use analytics based on these tactics to assess how best to keep customers on board with their brand. This data-driven flexibility is what generates such rapid expansion.
Referral
One of the most reliable and inexpensive growth hacks is word of mouth. Getting an established customer to act as a brand ambassador lends credibility and markets to the right people.
This strategy was famously adopted by storage service Dropbox. When they offered 500MB of free storage space to users who referred a friend, their engagement doubled overnight.
Revenue
By this point, the company should be making money. This phase is simply the assessment of how efficiently it is doing so. Growth hackers study the data collected from the other sections of the funnel and adapt their strategies to maximise revenue.
Should We All Be Using It?
The short answer is, no. While the fast and affordable results are appealing, rapid expansion isn’t for everyone. There are some aspects which should be considered before you commit to hacking a business to the top.
Resources
Not every business has the resources to provide for a surge in customers. The scalability of the business is a huge factor in deciding whether this strategy is feasible. Making promises you can’t keep or selling products you can’t produce will wreck a reputation faster than hacking can save it.
Goals
‘Growth’ is a vague term. When considering hacking, a company needs to be certain of what kind of growth they want to achieve.
For example, a growth hacker working for an app may focus on increasing downloads. If these downloaders are then deleting or simply not using the app, this type of growth is pointless.
Trial And Error
Experimenting is central to growth hacking, be it with new techniques or different versions of a product. Unfortunately, these experiments aren’t always successful. Is your company financially or strategically prepared to cope with the losses if Plan A goes awry?
Bottom Line
The realities of growth hacking may not be for everyone, but it is the buzzword du jour for a reason. For businesses ready to move to the next level, the benefits can be exponential. Working through the growth hacking funnel above can transform the right brand into a booming success.