What is Growth Marketing?
Between 2011 and 2017, Snapchat amassed over 160 million users. Five-year-old Tinder sees over a billion user actions per day. In just a year, 500 thousand team members flocked to communication platform, Slack.
What’s their secret to colossal and rapid growth? Teenagers, help tickets, sororities, and a new spin on an old method of earning and keeping customers, known today as “growth marketing.”
What is growth marketing?
According to Autopilot’s Growth Marketing Evangelist, Josh Fechter, growth marketing is “the process of testing acquisition and retention strategies aligned with frameworks that evaluate and measure the potential outcome of an experiment based on cost, time, and expected result.”
More so than traditional marketing, growth marketing focuses on maximizing the lifetime value of a customer at all stages of the funnel, while minimizing the cost and time it takes to do it.
What growth marketing (aka “growth hacking”) is not
Growth marketing is often referred to as “growth hacking.” The tendency to use those terms interchangeably leads startups to make the most dangerous mistake regarding the technique. Here’s why…
To many, a “hack” represents a quick win or a shortcut. In this context “hacking” implies that you can apply a simple formula and expect exponential and sustained growth. For example: Change a button color, generate more leads.
“People believe that a single tactic they read about on Forbes will skyrocket their site’s success overnight,” says Shanelle Mullin about growth hacking. According to Josh, that belief couldn’t be more misguided:
“The most common mistake I see in business with regards to growth marketing is looking for quick wins. They think of growth marketing as a secret sauce to their acquisition and retention problems rather than a systematic framework. The best growth marketers understand excellent processes underlie all growth whether discovering quick wins or scalable traction strategies.”
Yet, marketers from startups of all sizes continue to look for that secret sauce. And who could blame them when so many bite-sized case studies on the internet lead them to believe it exists?
Here’s one called “The $300 Million Button.” By its title we’re led to believe that a simple button change generated 9-figures’ worth of revenue. Really, though, the bottom-line boost came from an optimization of the entire checkout process. And that came from usability test results conducted on e-commerce customers.
But “How We Generated $300 Million With A Usability Testing Framework” doesn’t sound nearly as sexy. It’s also not what people want to hear.
Instead, many growth marketers prefer to believe that a change of one word on one button can deliver a payoff in the hundreds of millions. Uncoincidentally, those marketers also believe in miracles, unicorns, and pots of gold at the end of rainbows.
By doing so, they’re setting themselves up for disappointment, and along with it, failure.
That’s not to say growth marketers don’t fail. They do, often. But when they do, they fail smart, and they fail fast. Here’s what else they do…
What makes growth marketers different
Knowing that growth marketing is, as Mullin says, “about money,” you’d think every business was using the technique. But, that’s not the case.
More established companies aren’t constrained by the expectation of quick growth and a lower budget with which to meet it. Startups, on the other hand, are. And that’s why they hire growth marketers, says Gagan Biyani:
Startups intend to grow at 20 percent month over month (or more), while corporations are satisfied with 5 percent year over year. As such, corporate marketers deal with the challenge of: I’ve got a mature business that already has significant market penetration. How do I eke out another few percent and keep the business growing? Startup marketers, by contrast, need to figure out how to 1000x their numbers but from a much smaller base.
Growth marketing at a startup, he goes on to say, is like fixing up a car:
“While startups are trying to both build a car and get the engine started, corporations are trying to make their cars run faster.”
The people responsible for building that car and revving that engine need to have a very particular skill set. According to Sean Ellis, growth marketers come in many forms, but they all share these common traits:
- Driven: A growth marketer must have a “burning desire to connect your target market with your must-have solution,” says Ellis. Passion is key to succeeding in the startup trenches, where growth is a priority.
- Creative: Growth marketers need to be risk-takers. They need to combine their entrepreneurial drive with out-of-the-box thinking to find new, faster, affordable ways of driving growth.
- Disciplined: Repeatable processes, not one-off tactics, grow startups. That’s why Ellis says growth marketers must have “process of prioritizing ideas (their own and others in the company), testing the ideas,” and turning them into replicable frameworks for boosting KPIs.
- Analytical: Anyone responsible for driving growth must have a data-driven mindset. If an idea cannot be proven successful with test results, it shouldn’t be followed through with. Period. Relying recklessly on unproven methods will only burn a startup’s valuable time and budget.
- Resilient: Thomas Edison famously said “I haven’t failed, I’ve just found 10,000 ways that won’t work.” In large part, his success was dependent on resilience. Josh is familiar with this characteristic, as are Airbnb’s founders, who tried getting their idea off the ground by selling $30,000 worth of cereal boxes. They, and other growth marketers fail often, but they do it the right way: by abandoning disproven methods quickly and learning from their mistakes.
With the help of these traits, a growth marketer could develop a framework that skyrockets a startup’s bottom line. So what does that look like?
What a growth marketing framework looks like
Exponential growth doesn’t come from launching on a Tuesday or commenting on SlideShare presentations. There’s no such thing as a $300 million button. When we talked to Morgan Brown, COO of Inman, he shared three secrets to a high-growth company:
1. A must-have product
“Startups do not need growth hackers — at first,” says Andrew Chen. The reason failure is so prevalent in Silicon Valley, he adds, is that new businesses focus on growth without a great product. Do you have one? Here’s what you should be measuring to find out, according to Brown:
- Qualitative feedback: Early on, surveys can reveal whether your product is must-have. Would your audience be upset if it no longer existed? “If 40% of the people you survey say that they’d be extremely disappointed if this product disappeared,” says Brown, “you have some user passion.” Slack, one of the fastest-growing SaaS companies of all-time, was built on user feedback. Its team responds to around 8,000 Zendesk help tickets and 10,000 tweets per month.
- Net Promoter Score: This is a measure of how likely your customers are to recommend your business. If they’ll advocate for you, it’s a good indication that your product is headed in the right direction.
- Retention: With more customers comes more data. And when you have more data, you can learn a lot from quantitative metrics like retention. Brown says: “If you have nice, high, stable retention rates of your audience over time, then you have a product that people can’t live without.”
- Revenue: Obviously, if people are spending on your product or service, it’s valuable to them. According to Mullin: “The best validation is always money in your bank.”
Just as important as a great product is market fit. To find that fit, startups with few users need “more lead bullets,” says Chen, “not one silver bullet.” PR campaigns, strategic partnerships, and community management can get you quantitative data you need to focus your positioning.
It took Tinder a country-wide tour to cultivate its market in sororities, where college-aged women grew the app by attracting men. Snapchat didn’t gain traction until the app fell into the hands of the creator’s high-schooler cousin, who spread it throughout the student body.
Remember: “Growth comes as a result of having achieved fit, and a growth team is built to optimize the curve.” — Andrew Chen
With that foundation built, a growth team is free to focus on profitable distribution and acquisition strategies. Here’s how…
2. Distribution and acquisition strategies
Remember: Rapid growth is about creative exploration and responsibility. Before you can start testing channels and techniques, it’s important to know which KPIs are central to your startup’s growth. If you don’t know what drives it, you can’t reproduce it — plain and simple.
Once you understand the metrics that fuel your company’s growth, don’t aim for benchmarks with random tactics. Start with proven methods of distribution and acquisition, like SEO, paid ads, social media, and email marketing.
Dropbox found success with a referral program, Heap leveraged social proof in the form of badges to drive growth, and Evernote created exclusivity to generate demand for the service. Often, startups don’t need to stray far from proven methods to boost their bottom line. They simply need to put their own spin on them.
At the same time, search for growth drivers unique to your business that naturally draw more customers. The team at Airbnb, for example, realized early on that they could grow quickly by turning to another website where people commonly search for accommodations. By working a piece of technology into their product, they boosted traffic by enabling their users to cross-post to Craigslist in a click:
They also invited people using Craigslist to join Airbnb, where they could access a greater pool of potential renters:
With two channels (email and Craigslist), two creative strategies, and some integrated technology relevant to their value proposition, Airbnb was able to drive growth exponentially. And they did it with the help of test data.
3. A rapid experimentation process
One of the biggest misconceptions surrounding growth hacking, which Josh touched briefly on above, is that it’s about tactics over processes. Brown adds:
“The first is the myth that there is a silver bullet shortcut that produces a ton of results by gaming a system. This has never been the case and is not the case now. Unsustainable growth always fizzles out, no matter what you call it and what the gimmick is.”
If you’re going to “hack” your way to sustainable growth, it needs to be with the idea that “hacking” means developing a hyper-efficient testing framework. Instead of quick wins, growth hacking should be about quick results and iterations. David Arnoux from Growth Tribe explains why:
It’s all about speed and finding the quickest way to test your ideas because 80% of your ideas will probably fail. The faster you can run through experiments the faster you can find out what works and what doesn’t. This is how companies can find their ‘growth hacks’. I believe this is one of the biggest pitfalls of growth hacking. The lack of a process for rapid experimentation.
What does that process look like? Josh outlines the keys:
1. Start with an understanding of consumer psychology
To test successfully you need to understand two things: First, valuable tests are based on data. Second, there are people behind that data. If you don’t understand “why people do what they do from a cognitive, physical, and primate aspect,” says Josh, there’s little chance your test results will be worth anything.
2. Ask better questions
With the help of data and an understanding of your audience, educated assumptions called “hypotheses” form the reason for testing. Without one, you shouldn’t be experimenting.
“Your tests are only as fruitful as the quality of your hypotheses,” shares Josh. “If you make poor hypotheses, then you can expect poor results.” So what makes a good hypothesis?
- It starts with a reason. Why are you testing? Remember back to the so-called “$300 Million Button.” Optimizers didn’t change the checkout process for the hell of it. They did so after realizing customers were frustrated about having to register.
- It isolates a particular process or element that needs improvement. What are you trying to optimize with your experiment?
- It’s measurable. Every test should not only begin with data, but it should end with it too. If you can’t reject or accept your hypothesis with data, it’s not a good hypothesis. How will you know whether you’ve succeeded?
When you have all those, write them out to form a clear hypothesis. Here’s an example:
After collecting usability test data, we noticed that customers were frustrated that they had to register during the checkout process (our reason for testing). Because of that, we believe that altering the checkout process (what we’re testing) to allow guests to check out without registering, and explaining that on a call-to-action button will increase the number of successful checkouts (measurable goal).
3. Understand how to outsource, including technical projects
Startups rise and fall in a matter of weeks and months — which means every minute of your time needs to be spent on the most productive activity you can handle. Strategists shouldn’t be working on menial tasks. Similarly, complicated tasks shouldn’t be assigned to inexperienced team members.
“If you can’t take advantage of outsourcing, then you’re losing out on half the experiments you can run as a growth marketer,” according to Josh. “You can hire people from all over the world to work on your projects to save you time.”
When a task is either too complex or time-consuming for your team to handle, consider looking elsewhere to outsource it. A freelancer marketplace like Upwork is a good place to start.
4. Iterate fast
If you know which KPIs are key to your startup’s growth, you’ll recognize quickly when a new method isn’t working. Most marketers, Josh says, do not.
“When marketers fail, they often slow down their testing speed. In turn, they don’t find their breakthrough win until it’s too late. Their startup fails. They get fired.”
Successful growth marketers understand sound experimental design, including when it’s safe to make business decisions based on test results. They also know that, regardless of the outcome, there’s always another test to be run. How will you learn from your wins and losses?
How do you use growth marketing?
Remember: Growth marketing isn’t about one-off tactics or silver bullets. It’s about going beyond traditional marketing to focus on the entire customer journey, and finding scalable, replicable ways to increase customer lifetime value without burning through budgets.
How have you grown your business’s bottom line with nontraditional methods? What growth marketing processes have you put in place?
Let us know in the comments, then begin growing your startup with automated email campaigns based on your users’ behavior.