Understanding Growth Hacking

Growth Hacking first started for startups in order to gain competitive advantage over big guys. Big tech companies have deep pockets for ad expenditures but startups are more agile and respond to changes much quicker. In reality Growth Hacking is not a revolution, it is just a systematic approach to a growth problem. It covers and combines wide area of disciplines such as digital marketing, IT, UX, analyzing data and customer psychology technics.
In basic terms it is about finding correlation and understanding the user actions with specific analytical tools. Based on the data acquired, you and your team generate ideas and test them in prioritized order. That’s an infinite circle because you want to maximize your conversion 100%(which is almost impossible), also find new customers and retain existing ones…
Although Growth Hacking started for startups, it turns out these days almost all the unicorns and the big tech guys use this approach in marketing.
For effective communication between departments first step is to build a cross functional team with weekly meeting sprints. Usually team members include marketing specialists, software engineers, data analysts, product managers, product designers and the growth lead. Lets expand the roles a bit:
Growth Lead:
Growth Lead is a part manager, part product owner, part marketer, part engineer. Needs to know all those disciplines. A key responsibility for the growth lead is choosing the core focus area for the team to work on and for what period of time. At every period of time that’s only ONE true KPI to succeed, which should be aligned to the company short-term strategy and needs to be actionable.
Other responsibilities of the Growth Lead includes organizing team members, keep track of the progress, analyzing outcomes and sharing results.
Product Manager:
PM’s in general oversee how the product and its various features are brought to life. They’re the CEO of their product. Because they’re close to customers, they usually make vital contribution to idea generation and experimentation process. For startups this role mainly is filled by the founder, CEO.
Software Engineers:
These guys are usually alienated from decision making process. They just take orders. In fact, they’re highly skilled, smart and can bring creative ideas and new technologies to the process. If you add the motivation by including the decision making process, that will clearly be an advantage.
Marketing Specialist:
Bringing their marketing expertise is important. For big firms, there can be several marketers depending on their professions such as emails, social media, seo , ppc, content…
Data Analyst:
Because data is in the center of Growth Hacking practice. Much as an airplane can’t fly without instruments providing information about altitude, air pressure, and wind speed constantly being monitored, without right data at your fingertips, your growth team will be flying blind. Thus data analysts are essential part of it.
The team sometimes needs complicated graphics or statistical analysis that may need to extract from many data sources like sales, customer service… For small companies engineers can do this job in a limited way. But a standout data analyst can make the difference between a growth team squandering its time and mine data gold.
Product Designer:
Responsible for user experience design such as developing mockups and user stories. Having product designer in a team can speed up experiments and growth cycle.
Finding the AHA Moment
This is the moment that the utility of the product really clicks for the users, when users really get the core value-what the product is for, why they need it and what benefit they derive from it. For example, movie and tv directory IMDB’s “Aha!” moment is the movie and tv shows ratings that are received from users. So they have encouraged users to add their reviews.
For Twitter’s case, after extensive data analysis, they found that users who quickly follow at least 30 other users were much more engaged and likely to continue using the service. Digging into why following 30 people seemed to be the tipping point, the Twitter growth team found that getting stream of news and updates from people they were interested in was the “Aha!” moment for people. So they’ve developed the suggested users feature while signing up to Twitter. The reason is to encourage you to follow at least 30 users.
Finding the “Aha!” moment is not easy. It’s easy in your point of view but customers’ view and perceived utility is essential to progress forward. Usually you go with both quantitative data and also qualitative data like surveys to find out that moment.
Now, lets examine Hacking in acquisition, activation, retention and monetization.
Acquisition
Gaining new customers is crucial for growth but if acquiring new customers is costing you more than you stand to make from them, well, I’d say you have a bit of a problem. Yet far too many companies fall into this trap. And it turns out it’s just getting worse. Global ad spending since 2010 is doubled, on the other hand, the growth of the web audience is slowing, which essentially means companies spending more money to chase fewer potential customers.
First years of Dropbox, they spend 400$ to acquire for their 99$ premium subscription plan. Since it’s not sustainable, they find a way to smartly change it by implementing a referral program.
One of the trap is to spend large amount of money to ads before the product/market fit. Our advice is to find your product/market fit first. Then spend a small part of your marketing budget on as many channels as you can. By looking at what works, what doesn’t you then allocate more resources to what works.
There is also one more element to that equation. Language/market fit. Language should be consistent across all the marketing channels and reflect your company culture.
Research have shown that average attention span(the amount of time we focus on a new piece of information online) of humans is now eight seconds, which is down from twelve seconds in 2000. With so little time to impress people, it is imperative that they understand almost immediately how your product can benefit to them. Thus, crafting a compelling message should tell more by writing less. One of the best example is Steve Jobs’s new Ipod release campaign message. “1.000 Songs in your Pocket”. He did not mention about better features etc… That’s enough for telling the whole story in one short sentence.
You can also optimize your message by running A/B tests.
Activation
After attracting your potential customers, how do you engage them in actually using your product? This is something many companies get wrong. 98% of traffic to websites does not lead to activation, and most mobile apps lose up to 80% of their users with in three days.
At its core, improving activation is about increasing the rate at which you get new users to your “Aha!” moment.
To get to the “Aha!” moment there can be lots of frictions; the app might be slow, searching might be cumbersome, creating an account could be over complicated, content of the app does not tell the core utility and so on. One way to analyze those obstacles is to create user funnel reports.

If you come up with a formula: Desire-Friction=Conversion Rate. Finding and eliminating frictions are vital for increasing engagement.
Email, push notification, app popups, sms triggers are necessary for activation. But they’re double-edged swords. If you use them too often, it will end up badly. Marketing automation tools are great for that kind of purposes.
Retention:
The cheapest way of marketing expense is retaining your own customers in stead of loosing them. Especially in this competitive ad spending space.
Amazon is one of the best examples of customer retention. By subscribing Amazon Prime, customers get two-day free shipping, benefit from video and music streaming services… But real benefit lies for Amazon rather than its customers. They increase the frequency of visits, in other words retention and as a conclusion increase in Customer Lifetime Value.
Another example is Facebook’s metric which is making 10 friends in seven days after a user signed up. They choose this north star metric because of retention purposes.
Today, our apps and websites are producing lots of raw data in every second. You can use it for personalization purposes to increase retention rates. If you also have enough resources to apply machine learning technics, you can optimize the outcomes progressively through time.
While building products, it is important to keep in mind that the product should give recurring value to the customers. If it is a one time need then your business may end up as a hobby.
Forming a habit to your product is essential in this phase of the funnel. For more information, you can read my previous blog post for this subject.
One of the best ways to measure retention is by conducting cohort analysis.

Monetization:
Funnel analysis are needed in this stage too. This time frictions could be caused mainly due to price or trust issues.
Pricing a product is one of the hardest puzzle of this equation. There are lots of inputs as a parameter. Yet most companies often mislead this part. They mainly look at the competition price and set their price accordingly. Companies should test and react market conditions supply-demand in real time. Also price elasticity for your product, seasonal effects, days of the week and other parameters can play roles. There are some tools to track and optimize your pricing.
For startups trust is a bigger problem. Building trust is a long-term process. The center of it lies first in your company culture, then in your stakeholders such as investors, customers, partners…
Final part of the monetization subject is to effect customer’s buying behavior such as creating scarcity effect of your product, social proof, reward and so on.
As a conclusion, implementing Growth Hacking to your business will surely help to boost your sales, decrease your customer acquisition cost, increase activation, retention and monetization which will result in building a competitive advantage for your company.
Alpin Consultancy will be glad to assist you in terms of achieving your high growth targets. Please do not hesitate to consult us akapani{at}alpinconsulting.net .
Best,
Alparslan Kapani