Growth marketing is something of a buzzword in the startup world. It has become a catchall term used to describe everything from paid advertising to content marketing and SEO. But what exactly is growth marketing, and why should you care?
Let's start with the what.
Growth hacking: the buzzword that grew up
Growth hacking as a term became somewhat of a buzzword in the startup world over the past decade or so. First coined in 2010 by Sean Ellis while he was working on growing the userbase at Dropbox, growth hacking essentially refers to strategies used by founders and marketers that help them grow their company quickly without spending money on traditional marketing channels like paid ads or PR campaigns. The goal of growth hacking is simple: get your startup where you want it to be as fast as possible so that you can focus on making product decisions instead of worrying about revenue numbers or user acquisition costs.
This emphasis on rapid growth without traditional marketing spend has led to some extremely innovative tactics that seem incredibly simple but were highly effective when deployed. This is where the magic and mystique of growth hacking comes from, and it's well deserved. Here are some famous examples of growth hacks:
- Dropbox, where the term originated, implemented a referral program which gave users free storage space for every person they referred to the platform. This led to viral growth as their users did all of their marketing for them, and Dropbox jumped from 100,000 users to 2.2 million in just one year thanks to this tactic.
- Hotmail, one of the pioneers of the early internet, grew from 20,000 to 1 million users in 6 months in 1997 thanks to their innovative tactic of appending a link labelled "Get your free email at Hotmail" to the bottom of every email sent from their platform, effectively turning their users' emails into free ads.
- AirBnB added a feature which allowed their users to cross-post listings to Craigslist, a simple hack that let them tap into Craigslist's large userbase of people looking for accommodation. They also sent automated emails to Craigslist users inviting them to post on AirBnB as well.
- Dollar Shave Club exploded onto the scene with a single marketing video that employed humour to sell its razor subscription service. The founder himself appeared in the video and the overall budget was a mere $4,500, but the video quickly went viral and led to a massive influx of new customers which skyrocketed the company's growth.
As time has gone on the term "growth hacking" has gained somewhat of a controversial reputation. Because its need for creativity and constant innovation is such a core part of it, inevitably there have been some growth hacks that have trodden the line between clever and unethical. For example, Reddit started out by creating dozens of fake user accounts to post on its fledgling platform in order to encourage real users to join in to what appeared to be a buzzing site. It worked, but it was arguably quite deceptive. Question marks were also raised over the ethical implications of AirBnB's spamming of Craigslist users without the website's, or the users', consent. Because of this, growth hacking sometimes gets unfairly entangled with the concept of "black hat marketing", which is essentially a form of spamming, or using unethical tactics to attract customers. However, growth hacking is not meant to be about spamming or deceiving people. It's about using marketing techniques in a smart way that will actually help your business grow rapidly.
Partly because of this, and largely due to the maturation of the concept over time into a core mindset and methodology embraced by many modern marketing teams, the concept of growth hacking has gradually been usurped by growth marketing.
Growth hacking vs growth marketing
Growth hacking and growth marketing are two terms that are often used interchangeably. However, they actually refer to subtly different things:
- Growth hacking is the use of specific techniques to drive rapid growth for a company. It focuses almost exclusively on acquisition and is generally targeting short term rapid growth. As we have seen from the examples above, it aims to implement high-reward, unconventional tactics that are generally unsustainable in the long term.
- Growth marketing, on the other hand, is a more holistic and strategic marketing approach that concerns itself with creating and optimizing marketing strategies across the entire customer lifecycle, from acquisition to retention and brand advocacy. Growth marketers use data to make strategic decisions about how best to engage with customers at each stage of their journey with your brand to help you grow rapidly while also improving customer lifetime value (CLV)
In short, growth hacking looks at short-term, low-cost user acquisition while growth marketing looks at strategically growing the entire funnel over both the short and long term. While the overall mindsets are different, the two approaches do share some important commonalities, including:
- Data-driven approach: both growth hacking and growth marketing put data at the centre of everything they do, and measure every single tactic in as much depth as possible.
- Experimentation: both approaches use experimentation and testing to determine what will work best for their specific marketing goals.
- Cross-functional expertise: both growth hacking and growth marketing often involve collaboration between various teams within an organization, such as marketing, product development, sales, and customer success. Growth hackers are not
- Agile approach: both growth hacking and growth marketing use an agile approach, which emphasizes speed and iteration over perfection. This is especially true when it comes to measuring results, where early feedback is crucial for making improvements in subsequent experiments.
That said, it is not safe to assume that somebody who claims to be a growth marketer isn't just a growth hacker, and vice versa. There is overlap, but the two approaches are distinctly different.
Why startups need growth marketing
Now that we're clear on what growth marketing is, let's discuss why it's so important for startups. And this really can be summed up in one word: traction.
For a startup, traction is everything. It's the difference between being able to raise your next round of funding and not being able to. It's the difference between hiring and keeping top talent, and losing them because you can't pay them enough. It's the difference between selling your startup for millions , or going bust in year three. Without traction - or sales, to give it its more common name - you don't have a business.
Beyond sales, growth marketing also helps to validate the direction your product or service should take. One of the more well-known growth marketing stories is BitTorrent's paid subscription hack. BitTorrent - a peer-to-peer filesharing application - was struggling to get its free users to upgrade to the paid plan. Their head of growth decided to send a survey to all of the free users asking why they weren't upgrading, and the overwhelming majority of responses came back saying they had no idea there was a paid plan! This led to the development team focusing on making the upgrade button more prominent, which resulted in an instant 92 percent increase in revenue.
This is an excellent example of how growth marketers break down barriers within organisations and get to the bottom of a problem. They engage with every part of an organisation, ask questions, dig for answers and then come up with solutions. In a larger organisation such barrier-breaking is tougher to achieve, but in a startup it's an essential weapon in the battle to be nimble and creative.
And why does creativity and nimbleness matter? Competition. Startups are in a constant battle for market share, and being creative and nimble is the key to staying ahead of your competitors. If you're not innovating at least as fast as they are, you'll be left behind. Growth marketers play an essential role here: by getting everyone involved in solving problems, they help the company innovate faster than its competitors.
The final reason is money. Startups, particularly in the early stages, typically have very little budget for marketing. They certainly won't be able to compete on ad spend with the larger incumbents in their space so they need to be more creative in their approach and squeeze every ounce of opportunity out of their entire organisational function. A growth marketer can help the team find ways to generate more leads at a lower cost, thereby increasing profit margins and helping their company stay in business long enough to grow into something much bigger.
The bottom line is that every startup needs a growth marketer. Whether that role is occupied by the founder, a small internal team or an external agency like Growthmode, they are the key to getting your company off the ground and growing it into something much bigger.
Implementing growth marketing in your startup
Implementing a growth marketing approach is not a trivial task. It will require a significant shift in mindset and a change to your company’s culture and structure. But if you are committed to making your startup successful, it is worth the effort. This article won't go into depth on how to set up a growth marketing approach but to get you started in the right direction, here are the first steps:
- Assign a specific individual to be in charge of growth marketing. This will be your Growth Lead. This person will need to be a bit of a polymath with a reasonable level of expertise in analytics, product, engineering and of course, marketing. They should also be an excellent communicator and creative thinker.
- Gain visibility of all your data. Invest time in tools and processes that will gather all of the data around your product, users and market into frontends that you can analyse and reason on. As a minimum, invest time in getting your Google Analytics - or similar tool - firing on all cylinders, recording as much useful data about your current and prospective users' behaviours.
- Get buy-in from the whole organisation. As a startup it's likely your company is still small so this part will be easier, but it's still important to make sure everybody is on board with the growth marketing initiative and is willing to cooperate and contribute. The more brains from different disciplines, the better.
- Establish a regular agile cadence and just get started. Growth marketing works best on a rapid turnaround, iterative cycle basis. So implement an agile delivery process that focuses on running experiments weekly (or fortnightly, if easier) and commit to it. You'll soon get into a rhythm and the ideas will start to flow.
And while you're at it, avoid these common mistakes:
- Don't focus too much on one channel. It's tempting to put all your time into the channels that have worked for you in the past, but you'll end up missing out on opportunities if you're not willing to experiment with new channels.
- Don't get too focused on a particular metric. As any good growth marketer knows, vanity metrics such as pageviews or downloads aren't particularly useful unless they lead directly to revenue or engagement (and even then, they only tell part of the story). Instead of focusing solely on these vanity metrics and losing sight of what really matters--increasing conversion rates and lifetime value--it's important to track how well individual campaigns are performing against those goals while also keeping an eye out for opportunities elsewhere in your funnel where there may be additional ways to optimize performance and increase ROI.
- Avoid spending too much time on any one campaign before moving onto something else; this will help prevent burnout while also ensuring that none of your efforts go unnoticed by potential customers who might visit at just the wrong time without seeing anything worth clicking through.
- Don't try doing everything yourself! In order for any business model (including yours) to succeed over time without going broke first or burning out its employees/founders/etc., everyone involved needs help from outside sources such as freelancers specializing in certain areas such as copywriting etcetera; otherwise things will fall apart pretty quickly once growth starts slowing down due lack resources available within company itself versus outside services available elsewhere online.
Growth hacking and growth marketing are well established concepts now and should be considered seriously by any startup that doesn't want to fail. Not only will the approach help you to build your product more effectively and drive vital sales that will keep the cash coming in, it's also the future of marketing in general. Long gone are the days of the big budget campaign and the mass media approach. Now, it’s all about being smarter than your competitors and getting ahead of them by using the latest technology to reach your prospects. Growth hacking is about creating something unique that people want to buy and then selling it fast before someone else does. In the survival game of startups, it's your best weapon.
For more advice on how to implement growth marketing in your organization, get in touch.