Growth hacking for start-ups: learning from the big players
Your product does not perform? The numbers are catastrophic? There are no guarantees to avoid this scenario. But a lot of possibilities.
Your new product has been launched. It boasts good quality and an attractive design. Yeah. You can finally celebrate. Now all you have to do is sit back, bathe in the glory and watch the cash pile up. If it weren’t for one thine: your product isn’t performing. The figures are dismal. There are no guarantees to avoiding this scenario. But there are a lot of possibilities that could help.
This is where US entrepreneur Sean Ellis comes in. He has served as marketing manager for several Silicon Valley start-ups, including LogMeIn and Uproar, and has also put Dropbox on the road to success. Conventional marketing was too expensive for him and too little focused on growth. His key question: How can you quickly generate growth with limited resources? And his answer: With a combination of creative marketing, intensive web analysis and process automation. He understood every single touchpoint with potential customers as a communication channel to be used. He put user feedback at the top of his list of priorities. It was important for Ellis to learn from the first users right away, to analyze feedback and to base further action on this. In 2010 he coined the term “growth hacking” and founded the platform GrowthHackers.com.
Many disciplines, small steps, continuous analysis
The current slogan on the company’s website is: “Growth is a Team Sport”. The message behind this is that growth hacking can only work with a team that combines different competencies such as sales, marketing, product development and coding. Ellis planned everything in quick, small steps and experimented again and again. Until he experienced his initial successes.
Growth hacking is continuous learning and adaptation, agile experimentation in many different places and with many different methods of how best to achieve growth. Successes are achieved long-term. Paradoxically, it’s a long path to winning customers quickly. A path that, contrary to popular belief, also costs time and money. Even Airbnb, Dropbox or Facebook, which are among the most successful examples of growth hacking and seem to achieve unchecked global growth, experimented for a long time in advance. The founders did not become millionaires overnight, but in some cases also made radical changes of direction (so-called pivots) to meet their customers’ needs.
The ongoing search for growth drivers
Growth hackers are constantly looking for ideas that can bring growth. New online marketing campaigns on Facebook, LinkedIn, Instagram or Pinterest? Website optimization? A different customer approach? Which tools can be used? Where are the weaknesses? As soon as a measure is initiated, the central question is: How do the users respond? Is the idea accepted? If the idea isn’t accepted, just carry on. Often only one in ten ideas leads to success.
An important question: Can you simply copy the methods of Sean Ellis or other known growth hackers? An exact copy probably won’t work. It is possible, however, to learn from their approach in order to derive one’s own individual path from it. Successful growth hacks are ultimately based on the possibilities available at the time, which often won’t work right before and shortly afterwards. Especially those who use platforms like Google, Facebook, YouTube or Instagram depend on the codes and algorithms on the respective platforms remaining unchanged.
How the big players have made it
DROPBOX: More storage space through referrals. Initially, Dropbox experimented with paid ads. Then it turned out that users were running out of storage space. The result was a great idea that led to millions of new users. Those who sent referral emails to friends got more storage space. If friends registered, both the inviter and the invitee benefited. Anyone who linked Dropbox to Twitter and Facebook and shared information about Dropbox there got additional storage space. File sharing and collaboration in folders was also made possible—all with the goal of attracting new users. And new users were acquiring more and more new users. The appealing user experience did the rest. Dropbox is an example of how rapid scalability of a business model can be achieved with simple and cost-effective means.
AIRBNB: Craigslist cross-posting. Airbnb mediates private accommodations in almost 200 countries. People can use Airbnb to search for cheap stays almost anywhere in the world. The founders naturally benefited from the success of the sharing economy as a whole. But in the beginning they also struggled and were often not taken seriously due to their lack of experience. Craigslist was a turning point. Airbnb realized that people seeking alternative accommodations were often looking on Craigslist—a platform which, unlike Airbnb, already had a huge user base. Airbnb offered its users the opportunity to post a copy of their offer on Craigslist. They could simply copy the offer with just one click, after which they only had to verify and post it. As a result, Airbnb quickly gained access to a large market with the intended users. This became a key growth driver for the accommodations marketplace.
BOOKING.COM: Perfect mastery of the customer desire map. Many readers may roll their eyes when they think of Booking.com’s methods—especially the aggressive email marketing—but start-ups can also learn from such growth hacks. Booking.com is a bit out of the ordinary here, because its success is not based on a single mega hack, but many individual measures. The company visibly works constantly and quickly on improving the customer desire map. Booking.com plays in exemplary fashion on the hopes and dreams, pains and fears of its customers. These include things like its clear indication of free cancellation or that an offer is almost sold out, how many users are looking at the offer, or that the ratings are indicated with both stars and thumbs up. A look at the website is worthwhile to analyze the methods it employs. Although copy & paste rarely leads to success, Start-ups can certainly glean a few tricks from this site.
FACEBOOK: Invite contacts, send e-mails. Facebook was originally launched as a student portal that could only be accessed using a student e-mail address. It initially even relied on precisely this exclusivity for its success. Subsequent successful growth hacks included asking users to invite their contacts and emailing all users who were mentioned or tagged. To date, this principle has resulted in two billion registered users.
INSTAGRAM: Adopt the competition’s unique selling proposition. Instagram, which was bought by Facebook in 2012 when it had no revenue model and just twelve employees, now has 800 million users. An important growth hack: Images on Instagram can be automatically shared on Facebook and other social networks. The platform has been continuously optimized and adapted to the needs of its users. Focus has consistently been placed on the user experience. This includes the fact that the platform is extremely easy to use. A particularly important milestone consisted of Instagram Stories, which were introduced in April 2017. They were previously only offered in a similar form by the competitor Snapchat, where they were enjoying immense popularity. With introduction of this feature, Snapchat lost its unique selling point, while Instagram significantly expanded its user base and intensity.
HOTMAIL: Love for the e-mail signature. The forerunner of all growth hacks is Hotmail. Hotmail created a signature at the end of every email as early as the 1990s, so every sent email invited recipients to join Hotmail: “PS: I love you. Get your free e-mail at Hotmail.” That was long before Sean Ellis created the term growth hacking. In the record time of 18 months, twelve million users (or about 20 percent of the e-mail market at that time) were attracted to the platform. What can start-ups still learn from this today? Simple: Never underestimate the power of good email signatures.
The list of particularly successful growth hacks goes on and on. For example, Twitter came up with the idea of showing tweets at events and programs and introducing hashtags, Spotify enabled millions of free music tracks to be legally shared with friends, and YouTube, which was initially intended to be a dating portal, produced a technical growth hack with its embed code.
Conclusion: Start-ups can gain attention even without a conventional advertising campaign and a multi-million dollar budget. Growth hacking is the smarter, albeit not necessarily more convenient alternative. It is based on continuous analysis of user preferences and the ability to question one’s own strategy to offer more attractive products. More than one digital company in the US has expanded exponentially in this way.