Beginners Guide: What is Growth Hacking?

The term “Growth Hacking” was coined by Sean Ellis, founder and CEO of GrowthHackers, in 2010. Growth hacking strategies focus solely on growth, driving growth to a business or growing the growth. To be more specific, the ultimate goal is to acquire as many users or customers as possible while spending as little as possible. Due to its goal and characteristics, this method is commonly used in early-stage startups who need rapid and massive growth in a short time with small budgets.

Definition

Growth hacking is the specialized term for processes of mixing marketing, engineering, data analysis, and craziness. Its goal is to find out a repeatable, predictable, and scalable process for a business by using rapid experimentation across various channels.

“A growth hacker is a person whose true north is growth.”

– Sean Ellis, Founder and CEO of GrowthHackers.

Growth Hacking vs Marketing

  • What is the difference between growth hacking and marketing?
  • Can growth hacking replace marketing?
  • Why do we need growth hacking while having marketing or vice versa?

If you ever ask any kind of question above, here is the answer.

Although growth hacking and marketing have some overlap, they are far from the same thing. Each of them focuses on different goals and suits for different business stages. As a result, depending on the size and structure of each company, you can choose to adopt growth hacking or marketing or even both. 

“Depending on the size and structure of your company, you can choose to adopt growth hacking or marketing or even both.”

Both growth hacking and marketing will benefit your business by its own way. There are many differences between growth hacking and marketing, below we will summarize 3 main points.

Firstly, Approach

Growth Hackers: “Make a product people want”

The first priority of a growth hacker is achieving the product market fit. Growth hackers normally stay within the organization since the beginning day and they learn and acquire knowledge about their businesses and products. Then, they plan and execute campaigns to test product validation, whether people really need this product or whether this product satisfies a strong market demand. After having results, they will consider whether this product needs improvements or whether this product is not worth to continue.

Marketers: “Make people want the product”

Marketers focus on increasing acquisition and activation throughout the whole product lifecycle. In addition, they do not usually participate in the product development because their priority is building brand awareness and acquisition and attracting leads to their businesses. Each product has its own audience, the mission of marketers is to find that group and market to them.

Secondly, Focus

Growth hackers focus entirely on the sales funnel, from awareness to revenue.

The role of a growth hacker is driving growth to the business wherever it is. Hence, growth hackers try to understand and follow the entire customer journey from start to finish. With their deep knowledge about their business model and the product, they work to turn people into visitors, visitors into users, users into customers, and customers into advocates. 

Marketers consider awareness, acquisition, and activation throughout the whole product lifecycle.

The role of a marketer is placing a product or service in front of the target audience and raising brand awareness and recognition. As a result, they mainly focus on increasing acquisition and activation throughout the whole product lifecycle using content and graphic designs etc, mainly associated with paid ads to have the product available via internet as much as possible.

Thirdly, Channel

Growth Hackers: Free or low cost channels.

Growth hackers prefer free or low cost channels to acquire customers and promote their products. Hence, they try to turn product itself into a distribution channel. Dropbox is a perfect example for this idea. They create a strategy which is for each friend who installs and activates Dropbox due to your invitation, both of you then receive extra storage.

Marketers: Paid channels

Running advertising campaigns on social media, television, or newspaper is the most common choice of marketers. They burn money by paid ads in exchange for quickly raising brand awareness and acquire customers. Marketing duties require both offline and online efforts across a various channels and platforms to achieve expected outcomes.

Depends on the long-term and short-term goals a business want to achieve, the role of a growth hacker and a marketer can overstep over each other. A growth hacker, or a marketer, can both have various advantages and bring out positive business outcomes.

Pirate Funnel in Growth Hacking

Pirate funnel or AAARRR framework is a framework that breaks a business into 6 stages for you to see where to focus your attention. 

If you don’t know where to get started, the pirate metrics are the perfect starting point. From there, it will show you where you’re at, how you’re doing at that point, and what is the weakest point of your business. 

Pirate Funnel
  • Awareness – Build brand awareness and recognition by making your presence known on multiple channels. How are people able to recall or recognize your brand?
  • Acquisition – Acquire new customers visiting your platforms. How many people visit your website?
  • Activation – Get visitors taking the first significant actions such as signing up, posting first status,… How many people take the first significant action on your platform? (Ex: signup, post their first status,…)
  • Retention – Convince customers to come back repeatedly. How many users come back repeatedly?
  • Revenue – Achieve business outcomes varying by business models. How many users start paying? How much do they pay?
  • Referral – Convert customers into brand ambassadors, publicly supporting your brand. How many users refer or invite friends to your business? 

After all, the pirate funnel is very flexible.

Different businesses have their own way to understand and define each stage in the pirate funnel and draw their own pirate funnel. Therefore, depending on your business model, you can swap each stage together to develop your own funnel.

Growth Hacking Process

A growth hacking process is the path which leads your business to the rapid and sustainable growth. Once your product passes the product market fit stage, you and your whole company should focus on driving growth and scaling it up. It’s not just paying for advertising to attract more customers, increasing brand awareness, or doing promotions. Growth hacking is a method that is data-driven full funnel marketing based on rapid experimentation to find out the best way to grow a business. Growth hacking is a better way to increasing ROI, a better way to save time and money, and a better way to save your resources.

Stage 1: Find North Star Metric (NSM)

By deeply understanding the value the most loyal customers receive from your product, you can draw your own pirate funnel and find a key metric called a north star metric (NSM), which reflects the core value your product delivers to customers. Growing this metric leads to sustainable growth across your customer base and your product lifecycle.

Stage 2: Find One Metric That Matters (OMTM)

The task here is to find only one metric that matters the most (OMTM) at the moment. As Sean Ellis states that your growth metric should be easy to understand, relevant to your goal, timely, and instantly useful. Examples of OMTM are bounce rate, intention rate, or churn rate. OMTM drives growth instantly to your business and the results from different OMTM at different time will grow NSM upward.

Stage 3: Idea Generation

Once you figure out and understand your OMTM, you need to generate ideas that can take advantage of those variables and thus growing the metric. One way to generate ideas is observing competitors, questioning your way of doing things, or networking with other people. Then, you can make simple, unambiguous, and testable assumptions, also known as hypotheses. And you must decide metrics needed to be measured in order to have a line between success and failure.

Stage 4: Idea Ranking

You might have a long list of ideas which are ready to run but remember you do not have unlimited time and a large budget. Hence, you need to rank those ideas in order of level of the effectiveness.

Stage 5: Idea Experimentation

You know what you want to achieve, how you want to achieve it, and how to consider it as a success, it’s time to validate your hypotheses to see whether it’s right or wrong. Turn your hypotheses into a minimal viable product, a campaign, or a landing page and test it.

Stage 6: Growth Analysis

After running tests, you will receive results. Analyzing it will give you insights into your hypotheses and know which is right or wrong or how you should improve or optimize it.

Stage 7: Idea Optimization

If your experiment fails, document the process, try to figure out the reason leading to this result, and repeat the process. If your experiment succeeds, you and your team can discuss whether there is anything needed to be improved. After all, you will know which campaigns should be optimized before officially launching it.

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