June 22nd, 2015
When you think of growth, the last thing that would come to mind would be hacking. Albeit the term is very catchy, it can mislead some into believing it to be what it is not. Most start-ups are in search of the most optimizing form of advertisement in order to increase revenue; the quickest way to do so is to implement growth hacking. Paying for advertising of course is a great way to acquire new users and consumers, but the goal is to have growth with minimal cost. Paid advertisement is the easiest way but it is not free, most start-ups do not use paid advertising which may increase their potentiality, and the majority of investors would like to see the maximum exposure for possible investment ventures.
There are several methodologies for growth hacking; the most efficient one would be Distribution Hacking Framework, which is a methodology for measuring, experimenting, and optimizing the user acquisition. Attempting to be as scientific as possible will surely give the upper edge on increasing your cost per acquisition and lifetime consumer value. The ultimate goal for implementing growth hacking methods is to ensure that your cost per acquisition is less then the lifetime consumer value. When you attempt to acquire a few users cost effectively it will grow your company, although successfully reaping multiple users cost effectively will ensure your company to grow successfully.
There are six proven steps to put into practice while using this growth hacking process. The first step would be to implement analytics and testing tools. This will enable you to measure and test everything. Create for yourself a desirable conversion goal, tracking every step through the funnel using a 'Sign-up, add to cart, and check out' method assists in your split testing results. Keeping in mind that there may be a possibility that having a blue check out button as opposed to a red check out button may very well effect the outcome of the conversion rate. There are several avenues you can implement through out this stage in growth hacking, such as Mix Panel, Kissmetrics, and Google for analytics as well as Optimizely and Unbounce for split testing.
The second step for a scientific method on growth hacking is to define your target consumer. Every start-up falls into one of two categories of a start-up. One being pre-product market fit and the second being a post-product market fit. When you fall into a pre-product market fit, you already have a product or service for purchase and the company is left searching for a consumer. The advantage of having a product that has no set consumers is the marketing and advertising can be wide spread reaching a multitude of demographics, which may work in benefit to increasing revenue. When you are a post-market product fit there is already a set demographic, a niche in the market. In order to fully define your consumer finding the facts of the consumer will increase your ability to expose the service or product in which you choose to sell or market.
Factors such as the age of the consumer, the gender, where the consumer is located, what the household income is, if the consumer is married or single, what is the level of education they have received, the choice of occupation, as well as the interests the consumer holds. A critical question to ask when it comes to deciding the avenue of growth hacking is what is your consumer's persona when they are using your product. In order to properly expose your product to the right audience you will need to understand that a consumer's persona differs in each area of their life. A work environment is different than a home environment as well as an environment with a sports team or a personal hobby. A product a consumer may purchase for work while at work will not be the same as a product a consumer will purchase while in a home environment. Leading in to the belief that a consumer is more likely to purchase a business directed product while in a work environment as opposed to while in a home environment.
The third step to this process would be to define your conversion goal and funnel. Setting up a goal that you intend to reach, or even surpass is key. A conversion goal is a single event such that when a user completes the process they are then considered a customer. If there is no goal or aim, then the results may be scattered and there will be no order to the results. Being able to measure the success rate in a product, a goal for conversion is necessary. Examples include but definitely are not limited to a signup, a lead, an opt in newsletter, a specific sale of an item or even a subscription to the product. What you choose to use really is dependent upon what is most valuable to your business. The conversion funnel is the path in which your consumers will take to complete the conversion goal. A three step process to conversion is the most common and the goal is a check out or a purchase of a product.
Following up with the fourth step is to hypothesize an acquisition channel. Taking into consideration of the demographic factors and the persona of the choice consumers relating it to potentially where they choose to 'hang out' on the web. Exposure can differ from each potential hang out choice, including Facebook, Google, LinkedIn, Twitter, Instagram, and Youtube. Advertising a business product on Facebook may not fair as well as a business product being advertised on LinkedIn.
The fifth step to this methodology would be to set up your ads and to execute the experiment of growth hacking. Every avenue has its pros and cons and each will need to be weighed and attempted to see which one you want to use continuously. Attempting different avenues, testing which one best suits the needs of your business. In order to determine what type of advertising you want to invest time in you will need to consider the budget and the amount of data you would like collect. Your budget should be large enough to allow you to accumulate statistically significant data. Some tips on creating ads include using simple image graphics, as to not confuse the consumer and to get the idea across clearly, utilizing clear value propositions, and a single call to action. When the user is looking at your ads they need to be able to clearly distinguish what they are looking at, and provide the consumer with distinct direction on how to purchase the product, making the process clear creating a pre-qualification system.
The sixth and final step in this methodology is to optimize, rearranging and recollecting data to improve the efficiency or the retrieval process. After running the experiments and reviewing all data, contemplate if there is a potential for success then proceed. Optimizing is your next step. What is there to optimize? You can advertise using a click to rate method. You may also optimize your call to action and copy an image on a basic Facebook ad. To increase advertisement optimization internally you can optimize the design of the call to action graphic. If there is no success in the experiment you have conducted then you will need to go back to step four and readjust your hypothesis for another acquisition channel.
To conclude the methodology here is a summary of the scientifically approached steps in growth hacking:
- 1. Implement analytics and testing tools.
- 2. Define your target customer.
- 3. Define conversion goal and funnel.
- 4. Hypothesize acquisition channel.
- 5. Set up ads and execute experiment.
- 6. Optimize or return to step 4.
In this methodology you should attempt to be as scientific as possible. Collecting and accumulating results that will enable your business to reach consumers and increase the life time value of the consumer at little to no cost. While having paid advertisements is an addition the goal is to decrease the cost to increase profit and revenue.