Who knew that the 2010 term coined by Sean Ellis, the first marketer at Dropbox, would ultimately become commonplace in 2022? Considering growth marketing wasn’t even a formal function at startups twelve years ago, I think it’s okay to say that we couldn’t have predicted growth hacking’s evolution.
But let’s discuss what growth hacking is and isn’t. Growth hacking isn’t a way to code or hack your way to 100x of 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.
The practice of growth hacking involves using creative strategies built with minimal resources, to help startups acquire and retain customers. At the heart of growth hacking, are the 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 heavy roadblocks, because of constrained budgets and lofty fleet (driver) acquisition targets. This was before we had our massive $300M series-E from Tiger Global Management, so we had to get crafty and find new ways to acquire fleet.
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 very manual operation, it allowed us to hyper-target a specific profile (e.g., college students) for free. We tried many other tactics to “hack” growth at the company, but there wasn’t one solution which eventually took us to an acquisition from Uber. In other words: it takes countless tests and heavy analyses to determine the winners from the losers.
Every ubiquitous company has performed growth hacking. So,let’s dive into some growth hacking examples and how your startup can start thinking about next steps.
When attempting to growth hack at your startup, you should start by thinking about how to increase test throughput, while being as methodical as possible. By implementing a fairly simple framework, every startup can be successful with their growth hacking.
To start, hypothesis ideation can be fueled with key answers to questions at each step of the funnel. But more on that later. What’s important here, is for there to be a healthy number of hypotheses, which helps ensure there’s an adequate runway for the tests being launched.
Once a healthy test list is created, it’s important to stack rank the hypotheses with methodologies such as RICE (Reach, Impact, Confidence and Effort), and collectively those buckets to create a score for ranking how tests should be prioritized.
In the example above, Project 3 has the highest RICE score. This is computed by multiplying Reach, Impact and Confidence, and then dividing by Effort. This means that Project 3 should be prioritized as the first test to conduct, given the high impact and low effort for launch.
When testing and analyzing, it’s crucial to have a repository sheet which tracks all tests and results, so it can later serve as an information bank for everyone across the company.
When you’re growth hacking the acquisition step of the growth funnel, here are some key questions to ask yourself:
Airbnb famously gained mass attention for the low-cost experiments they ran, to scale both sides of their marketplace. Airbnb realized that their 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 for Airbnb to leverage traffic to another platform, there are likely hundreds of other tests that they also ran on traditional paid acquisition channels, to reduce acquisition cost.
In order to move users through the funnel with the ultimate goal of making them power users, they need to be activated first. Here are some key questions to answer, as you help guide that process:
Duolingo, a language education platform, is notorious for their heavy testing via push notifications and product enhancements to get users to start their first and subsequent lessons.
Some of the calculated gambles they made, included delaying sign-up to allow users to try their app, before committing. They also added badges to reward lesson completions (via First Round Review). At any point in time, the growth team at Duolingo is said to be running 5-8 experiments. This is the epitome of growth hacking.
Let’s talk retention.
What good are the first steps of the growth funnel, if none of the users are retaining? This is a crucial moment, when you must ask yourself the following questions:
Charles Duhigg created the Habit Loop, which describes the neurological loop needed to create a habit.
In the Habit Loop, Charles claims how a cue, routine and reward, are essential in getting people to form habits. Take the example of being hungry below:
This simple, yet effective methodology, should be applied to every product to create sticky users who come back for more.
Facebook found that they needed to get users to 10 friends on their friends list within the first week, to maintain user retention. This ultimately became their North Star 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.
I’ve consulted and worked for smaller startups, who have sought to find the magical lynchpin to hacking their growth by 100x. 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.
How does a founder implement a growth framework to scale to their first million dollars in revenue?