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On the web, just like in stores, stuff still needs to be sold. In the technology and software sector, for example, products and services are purchased through an online sign-up process. They often use a freemium model (offer the core product for free, with additional features available at extra cost) combined with a subscription model (regular payments instead of a single one-off payment).
The goal is more sales -– and that only happens through more sign-ups and conversions. But how do you increase user sign-ups? And whose responsibility is it?
Is it the marketing department? The sales team? The web and UX team? The CEO?
That was the question faced by marketing consultant and entrepreneur Sean Ellis in the mid-2000s. He was working for a small startup that offered what was then a new type of cloud storage. Its name was Dropbox.
Ellis and his team realized the power of rapid experimentation. They tested, tweaked and trialed new ideas. Most didn't work. But some did. The breakthrough came when they offered all users extra cloud storage if they referred a friend. This created a virtuous circle, driving new users from existing users. This seemingly simple incentive was one of many ideas that helped Dropbox grow its user base and ultimately become the multi-billion-dollar tech giant it is today.
So is this a marketing or a sales initiative? Sean Ellis soon realized there was no limitation on where these growth-driving ideas could come from. In 2010, with no existing phrase to describe what they were doing, Ellis coined the term ‘growth hacking’.
Sean Ellis defines it as: “a process of rapid experimentation across the full customer journey to accelerate customer and revenue growth.”
But even Ellis admits that the term has been mis-used, hijacked to make people and companies sound cool. Today, ‘growth hacking’ has been adopted by countless consultants, startup advisors – in fact anyone who wants to appeal to a certain type of young Silicon Valley tech entrepreneur (and make a quick buck in the process).
David Taylor, a marketing expert who helps startups via his consultancy, GROW: in London, knows the problems that 'growth hackers' can cause. "To say 'all growth hackers are bad' is wrong. But there are still too many bedroom gangsters out there selling a vision of utopia, promising clients the holy grail. They say 'Oh, those growth hacks didn’t work? It did for all my other clients.' In the meantime, they’re out the door leaving a significant dent in your budget."
The answer is to foster a growth hacking culture across your entire organization, because growth hacks can come from anywhere. And that’s why the name ‘growth hacking’ works: it can cover a range of business functions and disciplines.
If you're looking for inspiration, growth hacking case studies are everywhere. Amazon’s e-commerce checkout process is a great example: aiming to drive sign-ups to its paid Amazon Prime service. Every purchase includes a page pop-up offering the user free next-day delivery if they sign up for Amazon Prime.
Spotify, the music streaming service, used similar growth hacking concepts to encourage new users. One of its first key features, beyond just music streaming, was a social sharing functionality that made it easy for users to post their ‘now playing’ track on Facebook, Twitter and other social networks. And it worked: its user base rocketed from 500,000 in 2011 to 70 million in January 2018.
It’s not just online brands with a conventional product model that are benefitting from growth hacking. News site BuzzFeed also uses growth hacking techniques to improve their click-through rates. BuzzFeed uses a headline optimization tool to test different headline and thumbnail combinations almost instantly. It’s contributed to Buzzfeed’s meteoric success. Back in 2012, Buzzfeed’s global audience stood at only 10 million. Today, it tops 650 million.
What started in the tech sector has today leaked into the wider world of online retail, from groceries to 24-carat gold rings. If growth hacking can teach us anything, it’s that all businesses must be continually on the lookout for effective ways to boost growth. Speaking to Ryan Holliday on Observer.com, Sean Ellis said:
“Growth hacking isn’t really about an individual silver bullet hack. It’s more about a process of uncovering effective ways to grow your unique business. It involves focused, rapid experimentation around the best growth opportunities for your business at any given time. Growth hackers don't guess. They test."
So what does the future of growth hacking look like? The single most important phrase in what Sean Ellis says above is ‘ways to grow your unique business’. There’s no single magic formula for finding a growth hack that works for your business – it’s down to you to see what others have done and find inspiration that leads to the answer. You might want to explore these wider barriers to growth and how to overcome them for inspiration.
There's no way of predicting the growth hacking techniques of the future. They're for you to discover. One company's growth-hacking gold dust is another's garbage. So here are four tips to help you unlock your organization's growth hacking potential and find the tactics that work for you.
Growth hacking isn’t about product development. But, of course, growth hacking ideas can come from the product development team.
From the examples of Buzzfeed, Spotify and Dropbox above to the many more available on the internet, go seek inspiration.
No department has the monopoly on finding the next big growth idea.
Test and learn. Fail fast and move on. And if that doesn’t provide the answer, ask your audience. Always follow the data.