It takes money to make money … unless you’re using growth hacking.
“It takes money to make money” — that’s what I’ve always heard is the traditional way to grow a business. But today’s most successful businesses are anything but traditional, and they’re achieving exponential growth in nontraditional ways.
These companies achieve scale by growth hacking — a strategy that allows them to create lightning-fast customer growth by prioritizing speed over efficiency, even in an environment of uncertainty.
Growth hacking has advantages and disadvantages depending on your business model. But whether these tactics are a good fit for your business or not, it’s an important strategy to understand for scaling in today’s business environment.
A different approach to growth
Careful what you wish for, you just might get it. For companies that manufacture a traditional physical product, more customers means more costs to create a more physical product. That means purchasing more raw material, hiring more employees, and generally increasing costs. You can’t make more unless you spend more.
This obstacle is lessened for a service business, which can grow without as much overhead. However, growth hacking is truly tailor-made for SaaS businesses because their products are digital — eminently scalable and not necessarily tied to capital investment.
SaaS companies seek unicorn status, often measured by customer count. Scaling up for these businesses is not about employee headcount or computing capacity. it’s about the ability to accommodate growth, especially when you are unsure about its dimensions. That’s where growth hacking comes to play: It prioritizes speed over efficiency.
Growth hacking experts explain it as a combination of tactics that help you acquire as many users or customers as possible while spending as little as possible. The term was coined in 2010 by Sean Ellis, author of the book Hacking Growth. Ellis has used the principles to ignite breakout growth for unicorn companies, including DropBox.
At the core of growth, hacking is a relentless focus on increasing user adoption and the agreement to avoid spending time or money on things that are not core competencies. In many cases, outsourcing HR, accounting, and even IT functions are the best strategy for scaling up quickly.
How to hack growth for your SaaS business and others
To achieve substantial growth as quickly as possible, with a minimal increase in budget or tools, use these three strategies.
Don’t perfect your product: It’s estimated that 42 percent of startups die because they invested too much time building products and features their target market did not recognize as fulfilling a need. The product did not fit the market. Growth hackers account for this by launching the “minimum viable product” — an early version that does just enough to fulfill its role and prove its value — with the understanding that users will identify deficiencies and needs to address in future updates. In growth hacking, product fit with the target market is more important than releasing what your internal team thinks is a perfect product. Get it out there, get some feedback, and cultivate a culture of obsession with finding out how your users want to enhance the product.
Pick the right goals to measure: The objective is user adoption of your product. Which KPI or metric best demonstrates this? Beware of what HubSpot calls vanity metrics, “flashy analytics that is satisfying on paper, but doesn’t move the needle for your business goals. They offer positive reporting, but no context for future marketing decisions — something actionable metrics can do.” Care here helps you with the temptation to broaden your minimum viable product, too. Identify the metric that most correlates to your growth and optimize your strategies and product to raise that metric.
CYA — Challenge Your Assumptions: Growth hackers prize employees with unbridled curiosity and the urge to test everything. Analytics chart progress — or lack of it — and can give reveal that it’s time to make strategic adjustments. The metrics that specifically indicate this will vary by business model, but that’s not the most important part. Building a team that can analyze the data to find your specific inflection points is the real key.
Traditional marketing is a holistic approach that looks at prospects who become customers, and then advocates. Growth hacking marketers are more focused on prospecting and customer acquisition, relying on product-market fit to build advocates for them. Growth hacks also tend to go much deeper into analytics. The KPIs speak for themselves. Is this marketing the cause of quantifiable growth?
Kissmetrics and Crazy Egg founder Neil Patel is a highly respected marketing growth hacker. He goes as far as to suggest that, unless you are extremely well funded, traditional growth marketing in today’s business environment may not even be possible. Patel agrees that organizations who pursue growth hacking must also make sure that their marketing efforts are aligned and focused on this singular area.
The right stuff
If ever there was a perfect industry for growth hacking, it’s SaaS. A digital technology product distributed via the Internet. But many of the principles can be applied to many other business models when they’re ready to scale-up. Supported by a strong operations strategy, product-market fit, optimizing for the right analytics, and focusing on dramatically expanding the customer base is a recipe for increasing ROI and business value as quickly as possible
If your business is trying to expand, but you’re not seeing the exponential growth you want, it could mean that you need to adjust your strategy. Take our free Scaling Up Assessment to see if your business is ready to scale without drama