Who knew that “growth hacking,” a term coined in 2010 by Sean Ellis, the first marketer at Dropbox, would become so commonplace in 2022? Considering the fact that growth marketing wasn’t even a formal function at startups 12 years ago, I think it’s okay to say that we couldn’t have predicted how growth hacking would evolve.
But let’s discuss what growth hacking is and isn’t. Firstly, growth hacking isn’t a way to code or hack your way to 100x growth with one clever tactic. It’s also not a magical solution that only a few people in this world possess.
Growth hacking actually means growth testing. Exhaustive growth testing.
Growth hacking involves using creative strategies with minimal resources to help startups acquire and retain customers. At the heart of growth hacking are growth marketers who use stringent experimentation frameworks to run countless A/B tests to achieve rapid growth.
Let me give you an example.
During my tenure as a growth lead at Postmates, we ran into massive roadblocks because of constrained budgets and lofty fleet (driver) acquisition targets. This was before the company raised the $300 million Series E from Tiger Global Management, so we had to get crafty and find new ways to acquire fleet.
If each test can result in a 1% improvement, you’re well on your way to 100% improvement after running 100 tests.
For example, we signed up with platforms such as Handshake, a college student job board, to recruit students to drive for us for extra cash in their spare time. While this was a manual operation, it allowed us to hypertarget a specific profile (e.g., college students) for free. We tried many other tactics to “hack” growth, but there never was one super solution that eventually resulted in us getting acquired by Uber.
In other words, it takes countless tests and lots of analysis to determine the winners from the losers.
Every big company has done growth hacking at some point. Let’s dive into some examples of growth hacking and explore how you can start thinking about the next steps.
How to proactively think about growth hacking
When attempting to hack growth, you should start by thinking about increasing test throughput while being as methodical as possible. By implementing a fairly simple framework, every startup can be successful with growth hacking:
- Hypothesis ideation.
- Stack ranking.
- Testing.
- Analysis.
To start, hypothesis ideation can be fueled by key answers to questions at each step of the funnel (more on that later). It’s important to have a healthy number of hypotheses as that will help ensure there’s an adequate runway for the tests being launched.
Once you have a healthy test list, it’s important to stack rank your hypotheses using methodologies such as RICE (reach, impact, confidence and effort), and use those buckets to prioritize your tests.
Example of a RICE scoring spreadsheet. Image Credits: Jonathan Martinez
In the example above, Project 3 has the highest RICE score. This is calculated by multiplying reach, impact and confidence, and then dividing by effort. This means that Project 3 should be the first test to conduct given its high impact and the low effort required.
When testing and analyzing, it’s crucial to have a repository sheet to track all tests and results. This will later serve as an information bank for everyone across the company.
Acquisition growth hacking
When you’re growth hacking the acquisition step of the funnel, here are some key questions to ask yourself:
- What is my ideal user persona?
- Where does my user persona hang out?
- How can I leverage where my user persona hangs out?
Airbnb gained a lot of attention with its low-cost experiments to scale both sides of its marketplace. The company realized that its ideal users and hosts were browsing and listing properties on Craigslist. So, once a user posted their property on Airbnb, an Airbnb designed-bot would also post a listing on Craigslist to drive additional traffic to the original listing.
In addition to the bot, Airbnb also poached nice properties listed on Craigslist by asking owners to post on Airbnb for increased visibility.
While this was one of the craftiest ways Airbnb could leverage traffic to another platform, the company likely ran hundreds of other tests on traditional paid acquisition channels to reduce acquisition cost.
Activation growth hacking
Users first need to be activated if you want to move them through the funnel with the ultimate goal of making them power users.
Here are some key questions to help guide that process:
- Why are people stuck in my funnel?
- What alternatives are people using?
Duolingo is notorious for its heavy testing via push notifications and product enhancements to get users to start their first and subsequent lessons.
The company took careful gambles such as delaying sign-up to allow users to try the app before committing or adding badges to reward lesson completions (via First Round Review). The growth team at Duolingo is said to be running five to eight experiments at any point in time. This is the epitome of growth hacking.
Retention growth hacking
What good are the first steps of the growth funnel if none of the users are being retained? This is a crucial moment and you must ask yourself the following questions:
- What is my product’s trigger (cue) moment?
- What is my product’s routine moment?
- What is my product’s reward moment?
Charles Duhigg created the Habit Loop, which describes the neurological loop needed to create a habit.
Charles Duhigg’s Habit Loop. Image Credits: Jonathan Martinez
In the Habit Loop, Charles claims how a cue, routine and reward are essential to getting people to form habits. Take the example of being hungry below:
- Cue: Wanting better physical fitness.
- Routine: Working out.
- Reward: Healthier body.
This simple yet effective method should be applied to every product to create sticky users who come back for more.
Facebook found that it needed to get users to have 10 friends within the first week to retain them. This ultimately became its polestar metric on the journey to 1 billion users. Once a user reached 10 friends, they would enter the Habit Loop of coming back to Facebook to connect with friends and family.
Not a perfect science
I’ve consulted and worked for smaller startups who have sought to find the magic lynchpin to hacking growth. But it’s important to remember there’s no such thing as hacking growth. Instead, you should be thinking about how you can run 100 tests to move the needle forward.
If each test can result in a 1% improvement, you’re well on your way to 100% improvement after running 100 tests. It’s that simple.