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Growth Hacking Made Easy: A Step-by-Step Guide
Growth hacking is THE catchphrase for start-ups. Forget about pivoting and iterating. It's all about growth hacking.
Everything revolves around that.
For those of you who have heard of this 1,000 times, it is probably already annoying and those who don't know what it is confused.
Like it or not, growth hacking is happening.
And that's exactly why we see some new startups every year with absolutely ridiculous growth rates.
Like Facebook ...
(Image source: statista)
... or, more recently, Uber.
(Image source: Venture Beat)
Growth hacking has only been around for a few years, but it's spreading like wildfire. Every start-up looks for growth hackers.
The reason is obvious: They too want to grow fast, with millions of users and dollars.
But what exactly is growth hacking?
It is time to sort this out once and for all and I'll show you how to do it.
I think I explained this pretty well a while back in my guide to growth hacking. However, here is a brief summary.
That printout is just five years old.
Sean Ellis shaped him in 2010 when he tried to create a new job description. Sean is the original OG (original Growth Hacker).
As a consultant, he has helped many startups grow rapidly (like Dropbox, for example).
But every time he left a start-up to work with new companies, he struggled to find a successor.
Someone who could oversee the further growth of the start-up. He read hundreds of résumés from applicants, all of whom were applying to be marketers.
However, a pure marketer cannot do this work.
Modern software products differ from traditional products and the same applies to their marketing.
Marketers put a lot of emphasis on budgets, costs, conversions, etc.
A growth hacker shouldn't worry about that sort of thing. Sean searched for "a person whose main goal is growth.“
Since growth means all or nothing to a start-up (either you grow fast or you fail), this should be the only metric that a growth hacker should consider.
An engineer can also be a growth hacker. Just like a marketer. The inner attitude alone counts.
Because of the start-up culture, growth hackers often have to Leverage analytical, inexpensive, creative, and innovative opportunities to expand your company's customer base exponentially.
That's the only thing a growth hacker does.
In order to really understand how successful growth hacking can be and how you have to adjust your mindset if you want to apply the same principles in your company, I will now show you some successful examples of growth hacking.
Growth hacking can potentially also take place offline. For example, the appearance of McDonald’s at every motorway exit in the 1950s can be described as growth hacking.
McDonalds found that freeways were used a lot and therefore showed up where they suspected many customers.
However, this relatively new concept is more used in the start-up world. They don't have big marketing budgets, so they can't rely on advertisements during the Super Bowl or on billboards in Times Square.
As a result, they need to find cheaper ways to advertise.
But often they have one expandable product.
Take Dropbox, for example. What they offer with their cloud storage service is actually just a storage space on a server that can be accessed via the Internet.
You can buy or rent additional servers at any time to provide additional storage space for your users.
Or Uber. The service, which replaces taxis, trusts normal people to pick up passengers from location A with their own cars and bring them safely to location B - while the payment is handled via the app.
With over 250 million cars on the streets of the United States, that too is very scalable. They provide the app, which can be downloaded infinitely and used over the Internet. The users do the rest.
A traditional product, such as soap, cannot be expanded. Every time you run out of soap, you have to buy a new one.
But, every time a new user logs on to Facebook, your user experience improves.
In addition, the way the product works helps to market itself. When you use Uber to get to your friends house on Friday night and they ask you how you got there, you say, "With Uber."
In this way, awareness grows naturally. If you like this idea, then you will most likely recommend it to others, if they can also benefit from using this service (and you too will benefit from having your friends use this platform).
And so Growth hacking makes extensive use of word of mouthto achieve exponential growth just like we've seen.
Now is the time to look at companies that have used growth hacking properly.
But today I'll not only show you good examples, I'll also give you a simple, four-part guide that you can follow to try out and apply growth hacking in your own company.
Step 1: Make sure you create a product that people really want
You might think that's obvious to any business, right?
You may be with one before mediocre product got away with it when you've marketed it well enough.
Coca Cola has brought other soft drinks, such as Sprite and Fanta, onto the market for many years. Most of them don't taste as good as coke.
(Does anyone remember the new Coke?)
But with intense (and expensive) advertising, they have made these drinks popular too, and now, along with Coke, they are filling supermarket shelves.
It would be much more difficult these days as the news of a new product spreads very quickly.
If your product is bad, the world knows faster than you can imagine.
This phenomenon is often referred to as a sh * tstorm. Example: United Airlines specialists were seen in 2009 throwing luggage at each other and breaking a customer's guitar in the process.
They admitted it but refused to compensate the customer for his loss.
The result? Not one, but three songs and a video about the shitty United Airlines service.
The first of these has been viewed over 15 million times (!):
Pretty bad advertisement for United. If your product is bad, it can go away faster than it took to get to market.
What is the solution to the riddle? Feedback.
You need to get your product to market as soon as possible to collect feedback and then improve it regularly.
I had to learn this the hard way. When we launched KISSmetrics, we were spending all of our money developing the product.
It took us a whole year and when we put it on the market - we learned that our customers were already satisfied with the metrics that social networks provide.
2 things you have to consider in order for your product to reach the target group
Here's how to do it right:
1. Ask and answer questions first before developing your product.
We did it that way with Crazy Egg. The people had questions regarding customer behavior. They said: "We spend so much money on advertising, and we don't even know what the customers are doing, where they click and how they behave."
Only then did we start to look more closely at the topic and think about a product that would eliminate this problem. We didn't just develop a product that "sounded like a good idea."
2. Get feedback as soon as you have an idea.
Don't hide in the basement for six months to develop something, then come out again, wave it in the air and shout: "What do you all think of it?"
Ask for feedback immediately.
Imagine a friend telling you about problems with his company over dinner and together you sketch a solution on a napkin.
Once you have this sketch you can show it to other people.
We released the first version of Crazy Egg after just a month to collect feedback. After that we brought every month an extended version out.
Thanks to our quick publication and constant feedback, we had a good product in just six months that our customers are happy to pay for.
And that wasn't all. The hype surrounding the release of the public updates had already put us on a waiting list of 10,000 when we finally released Crazy Egg.
Instagram is another example of a company that takes feedback very seriously.
(Instagram’s growth is insane)
Originally, the founders tried their hand at a social network for whiskey drinkers, Burbn. They found that the most used feature of the app was the photo sharing feature.
Then they started looking at photo apps even though they thought this market was already saturated.
After long conversations with users, they finally realized that all available apps are photo sharing either made it too difficult or it wasn't the main function of the app.
They then simply used the best of all popular apps, such as Hipstamatic's Photo Filter and Burbn's Photo Part function, removed everything else and, lo and behold, a great app that everyone already wanted was born.
(Instagram version 1.0.2)
Combine this brilliant timing (Instagram hit the market at the same time as the iPhone 4) and you know why they had 25,000 installs on the first day and millions of users within two months.
Review your idea to make sure it doesn't completely fail
Another aspect to create a great product: Check your product idea.
Do you want to be absolutely sure that people want the product you are creating?
Then ask them to pay for it.
If you want to create an app that shows people the best tea shops in the area and you know it will cost $ 1,000 to develop, $ 20 out of 50 friends (or $ 50 out of 20 friends) will help you with the cost issue.
And then you can be 100% sure that:
- Your friends want you to create the app (that's why other potential customers are interested in it too)
- You don't lose a lot of your own money if it doesn't work
It seems counterintuitive to ask for money before you have a product.
But if you think about it, you will find that you are constantly prepaying for a lot of things.
Movie tickets, flights, concerts, events, memberships in the gym, and, and, and ...
You pay for these things whether you end up going or not.
The review of your product is - in some cases - even better because you can simply return the money if you don't develop the product after all.
Author Ryan Holiday has pre-sold over 2,000 copies of his book "The Obstacle is The Way" to pay for his oatmeal while he was writing the book and to make sure it was a success once it was published.
Want another example of a successful review? How about AirBnB?
(Here's a great infographic of AirBnB's history)
The idea arose out of necessity. Founders Joe and Brian couldn't pay their rent. So they rented three air mattresses on the floor of their apartment to make money.
When three people showed up, each paying $ 80 for a night, they thought, "Hmm, let's look into that."
When they published on South by Southwest (SXSW) they got a few more bookings, albeit a few, making about $ 200 a week.
Still, they knew there was interest. They just had to improve the product.
Post free content if you have no idea
If you can't think of anything, do it for free.
Create a blog or YouTube channel and deliver content for the industry in which you want to build your company.
This is the easiest way to learn what people like, what they don't, what they want and need. And it's a great way to get feedback on your ideas.
As you've seen before, if you collect email addresses, you can even create an audience with willing and loyal followers who can't wait for your product to hit the market.
You can do this by giving away an e-book, creating a quiz, or creating a series of emails or a series of cool videos.
Give people the opportunity to get your best content in exchange for their email address and you can build a readership right away.
This is by far the easiest and absolutely risk-free way to start a business.
So, let's assume that you already have an idea and that you were able to check it out.
Next, let's look at how you can avoid some of the mistakes AirBnB made that delayed its initial growth.
Step 2: Don't target everyone
Guess what audience AirBnB had in the beginning?
Anyone who has been traveling.
All you have to do is look at the first three customers to rent the air mattresses: a thirty-year-old man from India, a thirty-five-year-old woman from Boston, and a forty-five-year-old father of four from Utah.
Where do they all overlap? What do they have in common? What do they have in common?
As you can see, every new and innovative product has to endure a life cycle. This is called the law of diffusion theory and looks like this:
(Image source: Wikipedia)
In order to reach the majority of people, your product has to be first successfully address the trendsetters and early adopters.
These are small groups and communities that need to be carefully targeted. Geoffrey Moore has written an entire book on this phenomenon, also known as "Crossing the Chasm".
Products either fascinate the first 15% of the market or they die.
If you want to include "everyone" in your target group, it is impossible to achieve the first 15% with growth hacking, because you don't even know who you want to convince to buy.
And how do you do it right?
Focus on the small minority that will benefit most from your product
You should create a customer profile. Consider all aspects of your product. Then ask yourself:
Who will get the most benefit from my product?
Be specific. Describe the real person as best you can.
If Dropbox told you about their ideal original customer, it would be like this:
A twenty-two year old white man with computer experience, lives in San Francisco or the Bay Area, is slim, has few good friends, wears XYZ branded clothes, and spends most of his time online.
This is how detailed you should be.
In the beginning you should solely care for the needs of these people.
Traditional products, such as books that are published with a publisher, need to get the word outbefore they are brought to market in order to be successful in launch.
For a modern software product, what happens before it is launched is not nearly as important as what after that happens.
Dropbox didn't host a large private party for its launch. It was only released during TechCrunch50 2008.
They were smart and only offered their service to invited guests after the market launch.
They brought it to market during an event that draws its ideal customers every year, and so did one exclusive atmosphere.
The people who wanted to join the service first needed an invitation from a current user. Since everyone wanted to know what Dropbox was and how it worked, it didn't take long for the queue to explode.
But, secrets rarely come without a doubt. So they create a short demo video for potential customers to explain Dropbox.
They customized this video to meet the needs of the users of Digg, a very popular social network at the time. Again, these users were the ideal target group: computer / technology freaks and other nerds.
Drew Houstin, one of the founders, made about twelve inside jokes during the presentation. Within 24 hours the video had 10,000 diggs (= likes), the news spread like wildfire and the queue jumped from 5,000 to 75,000 users.
The original Dropbox demo:
Instead of spending $ 300 on every $ 99 product purchase on Google Adwords, that was a better strategy and now you have 400 million users.
In the first days of founding, such leaps in growth are crucial so that the 15% market share that is needed to make the product successful can be broken.
Here is another good example of word of mouth: Hotmail.
If you use Gmail, you may find Hotmail old and probably long forgotten, but since Microsoft bought it, it has grown to over 400 million users. Gmail only overtook them three years ago.
What did you do to be taken over by Microsoft in the first place? You have grown. Fast.
When marketing opportunities such as billboards were discussed, the investors came up with a different idea. Why don't we put a note at the end of an email and write: “P.S. I love you. Get your free email from Hotmail ”?
It was worth a try and it increased registrations to 3,000 per day, and in doing so, they doubled their user base within six months - from 500,000 to a million.
After that, it grew even faster - just five weeks later, it had two million users.
(Twelve million users are not bad - especially when that's one in five people on the internet)
With the Keeping the "Please share", they made sure they were reaching the right audience.
Hotmail email users sent messages to their friends who were presumably very similar to them and therefore ideal customers.
Uber did the same. They waited a full year for the popular South by Southwest (SXSW) festival to offer hipsters and tech freaks free rides and to promote their service instead of relying on advertisements.
So now you know who to target, but what follows once all the trendsetters and early adopters know and love your product?
I am glad you asked.
Step 3: Get “Viral”
It is time to bring out the heavy artillery. But spreading something “viral” doesn't mean targeting everyone.
This step actually only describes that one should select larger systems and larger user groups, as well as exploit the range of similar products to penetrate the majority of the market.
You are still focused on your ideal customers, but you are expanding on the platforms that everyone is on.
Let's stay with Dropbox for a moment and see how they did it. The same mechanism is still used today:
Free storage space! The product gets even better if you manage to invite more people.
This is an excellent strategy for any software.
Now you will not only invite your best friends because you are convinced of Dropbox, but also everyone you know so that you can get more storage space.
Groupon - same idea, different implementation:
Refer a friend, get $ 10 credit.
Giving bonuses to reach more people is a great way to kickstart your marketing campaign. But it's even better if your product advertises itself.
Apple did that and took good advantage of it in the advertisements too. Do you remember the popular advertisements for iPhones, with the black outlines and the white headphones?
(These ads were everywhere in 2004-2008)
Thanks to the white headphones Apple made sure that everyone recognized them. Since all of the other headphones were black, with this new feature they turned all of their customers into running advertisements.
Would you like another example?
WordPress not only creates 25% of all websites, but also offers this service for free. The free version has a catch, however.
Your domain always appears as wordpress.yourdomain.com.
Anyone who visits your free WordPress blog will immediately recognize that it is a WordPress site.
But now let's talk about even more powerful growth hacking.
The power of inclusions and embeddings
Everyone's favorite, Facebook, used embeds as early growth hacking to ensure they met their goal of getting 200 million new users in one year.
By creating various banners to embed, they gave their users the option too to show in other places that they can be found on Facebook, such as on blogs, websites and in forums.
This Facebook banner (Facebook badges) still exist today ...
This generated billions of impressions, a hundred million clicks and millions of registrations.
And Facebook isn't the only giant using this strategy. Have you ever tried to put a YouTube video on your blog?
They make embedding videos very easy, which is why a lot of people are using it.
This works so well not only because they generate and highlight the code so you just have to hit Cmd + C (or Ctrl + C if you're using Windows) and just copy the video into your editor, but also because videos from YouTube can be shared well.
We also wanted to give people the ability to embed their data from Crazy Egg - not a good idea.
Which company would like to show traffic, clicks, sales and conversions?
But guess who wants to share the latest Funny Cat video? Everyone!
Pro tip: Give people a reason to take a closer look at your embedded content. At the end of each video, YouTube automatically suggests the next video or shows you a selection of similar videos, which increases the likelihood that you will switch to YouTube if you have seen an embedded video.
When you have to decide whether to make your product available for embedding, make sure that your customers also have a reason to embed it so that it's easy to perform and that you tempt them to take a closer look at your embedded content.
But there is one thing that is far more effective than the embeds, especially if you do it right: theInclusions.
Did you know that you can increase sign-ins by up to 50% if people have the option to sign into one of their existing Facebook, Twitter or Google accounts?
If you can seamlessly integrate your service with someone else, you get quick access to millions of potential customers.
PayPal struggled to break into much of the market. Only a few dealers offered them as an option.
But as soon as they had signed a contract with Ebay and were offered as an option in addition to Visa and Mastercard, the floodgates opened.
(Image source: Payments News)
Eventually, Ebay bought them for $ 1.5 billion in 2002.
That was actually a steal when you consider that Paypal is now worth $ 10 billion more than Ebay. The effective incorporation was enough.
But PayPal and Facebook are already old. Are there any new startups?
Inclusions still work very well today. But now Facebook and Paypal are the ones you want to join.
Spotify did that.
(This is how it looks)
The inclusion on Facebook was a targeted step. Facebook was already a platform to share interests, especially music (for example as a video).
Spotify improved this user experience. Since you could show your friends what you were listening to on the app and on Facebook, people started exploring the app.
"Tom is listening to Jay-Z on Spotify right now."
“Hmm, what is that? I have to take a look at that. Oh, free streaming, how cool! "
And “Wumm”, Spotify had a new user (by the way, that's how they attracted me too).
Just as with the embedding, make sure that the integration offers your customers an advantage so that both sides benefit from it.
AirBnB didn't do that, and that's why growth hacking stopped working. But they were lucky and by then they no longer needed it.
When they first started making their lists, they were eager to tap into Craigslist's vast network. But Craigslist doesn't make their API public and so the guys at AirBnB had to come up with a very difficult technical solution.
But eventually they made it and people were able to double publish their AirBnB ads with a simple click.
(Image source: Growth Hackers)
At that time, around 50 million (!) Users are using Craigslist every month. The ads received an incredible amount of publicity and this led to AirBnB's biggest growing season.
(Image source: Quora)
But it wasn't, um, a welcome practice, and it hadn't even been approved by Craigslist. Eventually they had to stop their incorporation.
(Image source: Quick Sprout)
Another concept that is similar to embeddings and integrations is the "Powered by Badges".
(I talked about it last year in Vienna)
However, this procedure requires good review and optimization because it is impossible to know immediately what is working.
For example, we found that "Analytics by ..." worked much better for KISSmetrics than "Powered by ...".
Inclusions, embeddings and quality seals certainly offer you the best chance to have a huge success and to dust off a chunk of the market that is big enough for your product to become a hit.
However, these examples only offer ideas and do not represent a template.
As you can see, growth hacking quickly stops working the more companies exploit it.
Try to develop the right mindset rather than mimicking these examples so that you can find untapped opportunities and new ways to come up with similar tactics to market your product.
4th step: Constantly improve your product
Repeat, repeat, repeat.
Because even with millions of users, start-ups need years to become profitable.
This is either because their product is not very expensive or because they wait too long to ask for money.
Anomalies like Birchbox, which has nearly $ 125 million in annual sales with just $ 12 million in funding, are just that - anomalies.
It is shocking that only 20% of businesses focus on customer loyalty, especially as it has been proven that it is much easier to sell to existing customers.
The chance that existing, instead of new customers, will buy something from you again is 50%.
Twitter had problem early on. You got millions of users very quickly, but they didn't actually use the service at all.
Because the perceived added value of your product rises and falls with it the onboarding process.
Imagine signing up for a service, receiving a welcome message but no instructions, and after that you never hear anything again.
A pretty bad experience correct?
I wouldn't go back either.
As soon as a new user logged on to Twitter, they were left out in the rain. When Twitter changed that, retention increased immediately.
Here's how they did it:
At registration Twitter suggests five to ten people to follow.
If you spend ten minutes making and following friends or celebrities on Twitter, you've already invested time and the chances of coming back are increased.
“Following” someone is a natural act when you want to see what's new.
Uber is also constantly improving its service. Here are some of the experiments they have already tried:
- Ice cream from Uber Ice Cream on request
- Valentine's Day roses on request
- A Texas BBQ party upon request
- Rides in a DeLorean in San Francisco
- UberCHOPPER helicopter tours in the Hamptons
- Partnered with the NFL to promote safe rides for NFL players
Once you've grown, the user experience plays a huge role in the success of your product. That's why companies like Apple and Facebook spend hours discussing fonts, colors, and button sizes.
Never stop improving yourself.
Otherwise, nature, or in this case the market, will teach you a hard lesson.
There's a good quote about constant improvement:
Never stop learning because life never stops teaching you anything.
So don't approach growth hacking with a "once and never again" mindset. What comes after growth is just as important if you want to build a sustainable business.
It took Facebook eight years to reach a value of $ 50 billion. This growth has never been seen before. It was historical ...
Until Uber hit the same level in just five years.
I can already hear your excuses.
"Growth hacking no longer works."
"That doesn't apply to my industry."
I don't want to hear that.
Growth hacking is not a fixed strategy.
It's a mindset.
I hope this guide made that understandable. I want you to start thinking like me, like other growth hackers.
Use this guide as a starting point.
Here are four more steps you can take:
- Make sure you create a product that people really want by:
- Offer free content in your industry
- Asking and answering questions to collect ideas
- Gather instant feedback on your ideas
- Check your ideas with your customers before you build the complete solution
- Offer free content in your industry
- Focus on a small target group and:
- Create an exclusive user experience
- Help them pass it on in their community
- Get “Viral” by:
- Motivate sharing your product (it should keep improving with more users)
- Letting your product market itself
- Tapping into existing customers of other companies with inclusions, embeddings and seals of approval
- Continually improve your product by:
- Constantly improving and posting updates
- Test every detail
- Optimize the onboarding process
What part of the growth hacking process are you in right now? Tell me where you are and what steps you have planned next.
Share your answers in the comments.
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