It has been around a long time and even has its own Wikipedia entry. And if you have never heard about the concept, it may be time to learn. After you’ve read this post, you may want to improve your understanding further by reading this Definitive Guide to Growth Hacking.
Of course, the reality is if you have not come across the term 'growth hacking' before, chances are you have spent your career in the office of a large corporation, and you may even be slightly repulsed and horrified by the idea of 'hacking' anything. Even if you are familiar with the term, there remains a great deal of confusion about what is involved in growth hacking and how it can help a business to grow. Agencies and clients alike can be unsure of how it can be deployed in big business, and how brand reputation can be affected by a growth hacking strategy. While it is a technique that is traditionally associated with the start-up community, growth hacking is emerging as a serious marketing science and a cost effective means of adapting to changing consumer behaviours.
What is growth hacking?
Growth hacking is a term that was coined in 2010 by Sean Ellis to distinguish between traditional marketing people, who are focused on brand equity and customer service, and the kind of agent who is focused entirely on growth, new audiences and new markets. The difference is subtle, but important. Growth hackers are in a numbers game, where the largest possible increase in customer size is generated at the lowest possible cost. While close to a traditional sales role, it is arguably more strategic, because it is driven by data, and because growth hackers are not focused on short term gains, but long term, sustainable growth.
The notion of growth hacking grew out of start-up cultures, where audience size is not just a marker of success and investment, but often survival. Without the marketing budget and agency resources of major companies, start-ups resort to growth hacking as a means to validate the need for their product to investors, and to capitalise on the network effects of product adoption among their audiences. Using social media, word of mouth and guerrilla marketing tactics, analytics and influencers, growth hackers target niche audiences and emphasise the opportunities of sharing experiences. The objective of a growth hacker is to satisfy immediate needs of new customers, and to incentivise network growth among existing customers.
Importantly, for growth hackers, brand awareness and brand reputation are lower order considerations. For growth hackers, brand reputation is not managed, so much as produced by product adaptation and customer growth.
How might agencies help large firms with growth hacking?
The big difference between growth hacking for start-ups vs established firms, is the scale of business intelligence required to migrate into new customer markets. Because so much of growth hacking is dependent on data and insights, established firms will not often have the in-house resources to analyse activities and audiences with the granularity required to facilitate effective growth. While it is sufficient for a start-up to be able to tap into inexpensive data sources, and to identify a few key influencers to achieve greater than double digital growth, for an established business, growth hacking requires a more sophisticated approach to both insights, and to creative engagement with new customers.
If the value of growth hacking is its cost efficiency, then it does not make sense for established firms to be doing it themselves. The expense of data analytics software, as well as the employment of dedicated data analysts and creative product innovators would collectively cancel or significantly reduce the benefits gained from market growth.
But agencies that have such resources in-house, all constantly studying the customer zeitgeist, can provide for clients the cost effectiveness necessary for a growth hacking strategy. Agencies have economies of scale. Larger firms do not.
As an innovation specialist, I like to study lean business processes, to learn how they can inspire creativity and generate significant results. And among the lessons of lean business, growth hacking is possibly the most effective method for businesses to adapt to changing markets. That is, when a firm begins to see a shift in expected consumer behaviour, growth hacking is a useful mechanism to track changes, and guide marketing strategy.
It is tempting for firms to assume that they can control brand perception through clever advertising, and that the negative impact of a poor customer experience can be washed away with sales and discounts. However, a more effective strategy to maintain and grow market interest is to innovate around changing customer habits. While marketers are in the trade of changing behaviours, it is short sighted to believe that all unplanned changes to consumer behaviour should be resisted. As technologies and communication protocols shift the way consumers engage with businesses, marketing professionals need to adapt to that shift with empathy and with insight. And a growth hacking mindset gives firms the best process to adapt.