Growth Hacking is a term coined by Sean Ellis-the first marketer at Dropbox. It has rapidly attracted the attention of start-ups and marketers across the globe. According to Wikipedia, a formal definition of growth hacking is
Growth hacking is a process of rapid experimentation across marketing channels and product development to identify the most effective, efficient ways to grow a business.
In simpler terms, growth hacking is the right blend of marketing and product development activities to find what works for your business.
In this post, we’ll talk about how the growth hacking funnel works and how some of the top start-ups have used it in a brilliant way.
Image Source: Forbes.com
The Growth Hacking Funnel
The growth hacking funnel defines a clear pathway as to how start-ups and growing businesses can implement this form of data-driven marketing.
Broadly classifying, the funnel is based on AARRR model which can be further substantiated as
- Acquisition: This part talks about awareness of your business. It focuses on how to gain maximum awareness in a cost-effective way and a short period of time.
- Activation: Once people know about your business, why should they sign up with you? This part talks about how to on-board users in a smooth way.
- Retention: When users have started using your product/service, what will make them come back again and again? Retention is all about keeping your customers for life.
- Referral: One of the best marketing channels is word of mouth. People trust their friends and network more than anything else. This part aims at solving the problem of maximizing referrals.
- Revenue: When all the above points are put into a scalable process, managing cash flow and revenue is the next step.
Let’s now talk about some interesting cases of growth hacking and what we can learn from them.
#1 Case: Airbnb’s Growth Story
About the company: Airbnb helps you find homes and rental spaces when you are travelling. The experience they offer is different from your standard hotel experience. As of Oct 2016, the company has over 12 million rental locations available online and 100 million users.
So how did Airbnb become so big?
After raising the initial round of funding, the founders focused their plans to grow the company in an exponential fashion.
In the world of internet marketing, it is all about getting traffic from some other platform to your own. The founders understood that Craigslist was one of the platforms where their target audience hangs out.
With a very smooth messaging, Airbnb encouraged people to share their listing on Craigslist as well. Here is what the message read:
This resulted in exponential growth for Airbnb as their listings were much better (than the regular Craigslist one) in terms of images, structure and appeal.
Key Takeaways From Airbnb
Understanding where your target audience hangs out and building the right form of awareness at that platform works really well.
#2 Case: Hubspot’s Growth Engine
About the company: Hubspot is one of the biggest inbound marketing software used by companies across the globe. It is used by marketers, entrepreneurs and business development professions.
How did Hubspot hack growth?
Hubspot practices what it preaches. Both the co-founders were focused on building content and tools that would generate inbound leads which could be further converted into paying customers.
Image Source: Ph-Creative
Hubspot invested extensively in:
- Building valuable content in the form of blog posts, eBooks etc. for marketers and sales professionals.
- They launched free tools like website grader and Twitter grader which help you understand your site’s and Twitter performance. Till date, Hubspot has received millions of requests for using these tools.
- Hubspot also invested in webinars to teach people about marketing and sales.
The conversion rates on inbound leads that came through these efforts were phenomenal.
Hubspot began with just 3 customers in 2006 and last year (2015), they did $186 million in revenue.
Key Takeaways From Hubspot
Investing in content, educating and helping your target audience can build a lot of credibility for your business. This credibility will then turn into paying customers at a much better rate than outbound marketing.
#3 Case: Paypal’s Viral Growth
About the company: PayPal needs to no introduction. It is used by millions of individuals and businesses to send and receive money online.
What made PayPal what it is today?
Paypal’s growth engine was so strong that they went from 1 million users in March 2000 to 5 million users in summer 2000.
They understood the concept of activating users with an incentive. With every sign up, PayPal started giving $20 initially. Once things started looking good, PayPal reduced it to $10, then $5 and eventually nothing.
Image Source: Quora.com
Note: PayPal had already tried different forms of advertising and found out that this method got them the lowest cost per acquisition.
Key Takeaways from PayPal
Understanding how to activate users with an incentive can be a crucial part of your business success.
#4 Case: Dropbox’s Referral Growth Engine
About the company: Dropbox is a cloud storage company headquartered in San Francisco, California.
What Led To Dropbox’s Growth?
As any other online marketer would do, Dropbox was initially invested in digital ads.
“They were incurring a cost of acquisition of over $250 for a product which was priced at $99”
However, they quickly figured out that it was not going to work out. They shifted their model to referral marketing that took them from 100,000 to 4,000,000 users in 15 months.
Dropbox launched a simple referral program where you could invite your friends and win free cloud storage space. The program looked like this
Image Source: ReferralCandy.com
Other than that, they also made the process of inviting a friend super-easy
Image Source: ReferrralCandy.com
Key Takeaways from Dropbox
Word of mouth marketing works better than anything else. If you already have customers who love your product/service, you should consider encouraging them for inviting their friends/network to use your product/service.
#5 Case: Buzzfeed’s Viral Story
About the company: Buzzfeed is a media company that publishes interesting content including social news and entertainment.
What Made BuzzFeed Viral?
Buzzfeed started as a side project when one of its co-founders was working at Huffington post. The team started getting a hang of why people share content, how stories spread and what makes someone engage with content.
One of the first memes that got viral was a girl standing outside a burning house. The look on the girl’s face indicated that she set the house on fire.
Image Source: Buzzfeed
Over the years, Buzzfeed has evolved its content as the Internet changed. However, at the core, the team knows what makes people click and what influences social sharing.
The most recent post in 2015 was this one which asked people to guess the true colour of the picture (#whiteandgold or #blackandblue)
Image Source: Buzzfeed
Key Takeaways from Buzzfeed
Understanding what engages people is something the internet revolves around. If you can create content which resonates with your audiences and qualifies as “worth-sharing”, you are on the right path.
In A Nutshell
The above case studies talk about how growing businesses can implement marketing in a way which is data driven, resonates with your target audience and is scalable. If you can understand how your customers discover your business, why they sign up with you and what makes them become a paid customer, there’s no limit to where you can go.
Which growth hacks have worked for your business?