What Is Growth Hacking?

Growth is essential for any business, but finding cost-effective ways to attract and keep customers can be challenging. Growth hacking offers an approach built around experimentation: Rather than committing significant resources to a single marketing strategy, businesses can test different ideas, measure the results, and quickly double down on what works.

Growth hacking aims to identify practical ways to increase customer acquisition, engagement, retention, and revenue while making the most of limited resources.

Here’s a closer look at what growth hacking is and some strategies that can get you started.

How Growth Hacking Works

There are many different ways for businesses to grow. But how do you figure out which strategies will work best for you, especially when you have a limited budget? Growth hacking could be the answer.

Growth hacking is a data-driven method businesses can use to acquire a deep understanding of how customers learn about and adopt their products and services. Armed with this knowledge, they can run inexpensive experiments to pinpoint strategies that can attract and retain more customers and increase sales. The strategies that work can be scaled, while strategies that don’t can be quickly discarded in favor of further experimentation.

Growth Hacking vs Traditional Marketing

Traditional marketing methods typically rely on carefully planned campaigns and brand position. They often depend on relatively expensive investments in online, print, radio, and/or television ads. Any type of advertising is usually focused ultimately on growth, but traditional methods also track metrics like impressions, reach, and positive changes in consumer awareness.

Growth hacking, in contrast, is focused entirely on growth metrics. It’s looking to push positive changes in conversion rates, customer acquisition costs, and lifetime value. While traditional methods can be relatively slow, growth hacking methods focus on agility, essentially using the scientific method to quickly test ideas and drop those that aren’t working.

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The Growth Hacking Funnel

A useful way to organize growth-hacking efforts is the AARRR funnel framework. It breaks the customer journey into five key stages. Here’s how they might work for a digitally-based company.

•   Acquisition: Track how people discover your business and sign up for an account or subscription through channels such as search engines, social media, paid advertising, and influencer partnerships.

•   Activation: Measure whether new users successfully complete onboarding and begin using the product’s most important features.

•   Retention: Focus on strategies that give customers a reason to return, including personalized email campaigns, push notifications, and ongoing improvements to the user experience.

•   Revenue: Test ways to increase revenue, such as improving trial-to-paid conversion rates, experimenting with pricing, and offering upgrades or additional products.

•   Referral: Build systems that make it easy for existing customers to spread the word, using tools such as referral incentives, team invitations, or built-in sharing mechanisms.

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Growth Hacking Techniques That Drive Results

If you’re considering adopting this approach, the following growth hacking techniques may help you begin your experimentation.

Referral Programs

Referral programs incentivize your existing customers to share your product or service with others. Rather than relying on traditional advertising for customer acquisition, you can have your customers act as an acquisition engine for you. Typically both the referrer and the referred individual are given some sort of reward — such as a discount, credits, or free products or services — in exchange for their participation.

Viral Loops and Product-Led Growth

Viral loops are engineered in such a way that a product is exposed to new users naturally through customers’ ordinary usage. For example, say a person uses an online scheduling app to set up meetings. They send an invitation through that app to other people, who are then exposed to the product and may go on to adopt it themselves.

Since no direct marketing is involved, this is an example of product-led growth, and it can be a sustainable model for attracting new customers.

A/B Testing and Conversion Optimization

A/B testing is a way to compare two versions of a product, service, or idea through a controlled experiment to see which works better according to a set of predetermined metrics.

For instance, you might send two versions of a marketing email to a set of small control groups. You could then track metrics, such as how many people opened the email, how many people clicked through, and how many readers became converted customers. The email that performed better can then be sent to a broader customer list.

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Growth Hacking Strategies for Small Businesses

There are many ways your small business can experiment with growth hacking. In addition to the ideas above, you might consider the following growth hacking strategies.

•   Offering a free version of your product that allows users to try it out, send it to friends and colleagues, and consider converting to a paid version.

•   Using content marketing, such as social media posts, blogs, and podcasts. When used consistently, these can be relatively inexpensive ways to reach a broad audience.

•   Targeting a specific community that uses your products or services. Doing this can give your business a stronger base from which to grow.

•   Creating viral marketing campaigns. This can be easier said than done, but it’s worth thinking of low-cost creative ways to demonstrate your product and service in a way that grabs attention, often by using humor.

•   Leveraging strategic partners. For instance, you might pair up with other small businesses to offer exclusive discounts. This mutually beneficial setup provides the participating companies with access to each other’s audiences.

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How to Measure Growth Hacking Success

Growth hacking focuses on growth above all else. So it makes sense to track metrics such as conversion rate, retention rate, and customer lifetime value across all levels of the AARRR funnel.

Avoid focusing on vanity metrics, such as social media likes. These can look and feel good, but they’re often poor measures of actual growth.

The Takeaway

Growth hacking is about creating a repeatable process for finding strategies that work to grow your business. By focusing on the customer journey, testing ideas systematically, and measuring meaningful metrics such as conversion, retention, and customer lifetime value, you can identify opportunities for sustainable growth without relying solely on a large marketing budget.

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FAQ

Who coined the term “growth hacking”?

The phrase was coined by Sean Ellis in 2010. He defined a growth hacker as “a person whose true north is growth. Everything they do is scrutinized by its potential impact on scalable growth.”

Is growth hacking only for startups?

Growth hacking can be used for businesses of all sizes. It can be a particularly useful mindset for startups who may not have big budgets for more traditional forms of marketing.

What’s the difference between growth hacking and growth marketing?

While growth hacking methods focus on rapid experimentation and perhaps unconventional tactics to acquire customers, growth marketing focuses on building sustainable, long-term strategies to acquire and retain customers and grow customer relationships.

What are some real-world growth hacking examples?

There are many examples of real-world growth hacking that are well known in the business world. For instance, Dropbox famously offered extra storage to users for referrals. Hotmail attracted new users by including the line “P.S. I love you. Get your free e-mail at Hotmail” at the end of every email that was sent through their service. And dating app Tindr started out by focusing on a select client community, namely college campuses. Its user base grew from there.

What are the risks of growth hacking?

Growth hacking does have some pitfalls to consider. These can include an excessive focus on short-term thinking, a reliance on techniques that don’t work in all business arenas, concentrating on acquisition over retention, and strategies that appear so pushy or manipulative that they lose consumer trust.

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