BEYOND THE BUILD
Hacking Growth Essentials — Part 5: Supercharging Customer Acquisition
To unlock explosive customer acquisition, this comprehensive guide will take you through a three-pronged approach: 1) Finding Message/Market Fit: Discover how to craft captivating copy and messaging that deeply resonates with your target customers. Learn techniques to uncover their pain points, develop a compelling value proposition, and connect with them on an emotional level; 2) The Channel/Product Fit Formula: Dive into the process of identifying and optimizing the ideal marketing channels for your product. Explore strategies to analyze customer behavior, test different channels, and find the most cost-effective avenues to reach your audience; 3) Viral/Product Fit: Examine the science behind creating effective viral loops that drive exponential growth. Leverage network effects, design incentive structures that encourage referrals, and optimize the viral mechanics of your product or service. By mastering these three critical elements, you’ll be equipped with a holistic playbook of growth hacking strategies to supercharge your customer acquisition efforts and take your business to new heights.
Table of Contents
Hacking Acquisition: Driving Growth Through Cost-Effective Customer Acquisition
1 — Finding Message/Market Fit — Crafting Captivating Copy and Connecting with Customers
2 — The Channel/Product Fit Formula: How to Find and Optimize Your Ideal Marketing Channels
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Hacking Acquisition: Driving Growth Through Cost-Effective Customer Acquisition
The key to sustainable, compounding growth lies in our ability to acquire new customers cost-effectively.
After all, what good is a brilliant product if the cost of acquiring each new user eats away at your bottom line?
Unfortunately, far too many companies fall into the trap of spending way too much to lure potential customers.
They get caught up in the race for scale;
Pouring millions into flashy marketing campaigns and aggressive acquisition tactics, only to watch their profits evaporate.
The Importance of Cost-Effective Acquisition
Gaining new customers is crucial for any business, but the cost of acquisition must be sustainable.
Many companies fall into the trap of spending too much to acquire customers, without considering the long-term implications.
This approach can lead to financial struggles and even failure.
Exceptions to the Rule
However, there are exceptions to the rule. Certain business models may justify high upfront acquisition costs, such as:
- B2B software companies investing in a large sales force: A B2B software company, for instance, may need to invest heavily upfront in building out a robust sales team to land those enterprise customers.
- “Winner-take-all” businesses with network effects: In “winner-take-all” markets dominated by network effects, an aggressive land-grab strategy could be a brilliant move.
- Businesses in a tight race with strong competitors: In a highly competitive market where multiple strong players are vying for dominance, an aggressive customer acquisition strategy may be necessary. For example, in the case of car service providers Uber and Lyft, there may be no choice but to spend heavily on acquisition efforts. However, this high upfront spending is only justified “assuming, of course, that the company has the cash on hand to sustain that up-front spending and a solid plan to recoup it down the line.”
But for the vast majority of businesses, the goal should be to make acquisition as cost-effective as possible. And that’s where the power of the growth hacking process shines.
Determining Optimal Acquisition Spending
There is no one-size-fits-all formula for determining optimal acquisition spending. It depends on:
- The company’s business model
- The competitive situation
- Stage of growth
Mature businesses can afford more expensive tactics, while startups must use scrappier, low-cost methods.
The goal should always be to make acquisition efforts as cost-effective as possible.
The Growth Hacking Process for Acquisition
Once you’ve established your growth team and identified your key levers, the focus shifts to hacking the acquisition stage of the funnel.
This involves achieving three critical types of “fit”:
- Message/Market Fit: How well does the way you describe the benefits of your product resonate with your target audience? Are you speaking their language?
- Channel/Product Fit: How effective are the marketing channels you’ve selected in reaching your intended customers? Are you leveraging the right platforms and tactics?
- Viral/Product Fit: Have you baked in any clever viral mechanisms, like referral programs, that can help your product acquire new users organically?
The beauty of the growth hacking approach is that it allows you to rapidly test and optimize these different acquisition strategies.
Rather than relying on guesswork or gut instinct, you can systematically identify the most effective and cost-efficient methods through a disciplined process of experimentation.
Rapid Testing for Acquisition Optimization
Growth hacking uses rapid-fire testing to identify the most effective and cost-efficient acquisition methods.
This includes optimizing marketing language, selecting core marketing channels, and developing viral growth hacks.
- You could start by tweaking your marketing copy to better highlight the unique value you offer.
- Or perhaps you discover that a certain social media platform is driving far more high-quality leads than your other channels.
- Heck, you might even uncover a brilliant viral loop that turns your existing customers into powerful brand ambassadors.
The key is to keep an open mind, embrace a test-and-learn mentality, and never stop iterating.
In today’s hyper-competitive landscape, the companies that win are the ones that can consistently find those small, incremental improvements that compound over time into major growth breakthroughs.
1 — Finding Message/Market Fit — Crafting Captivating Copy and Connecting with Customers
Crafting a compelling message is not just about marketing; it’s about resonating with your target audience and communicating your product’s value in a way that motivates them to try it.
Message/Market Fit: The Foundation of Compelling Messaging
Message/market fit refers to how well the language used to describe and market a product resonates with potential users.
This includes messaging across all marketing channels and within the product itself.
Effective language must quickly communicate the product’s core value and answer the customer’s key question:
“How will this improve my life?”
The Power of Concise, Persuasive Language
Think about it — the average human attention span has dwindled down to a mere 8 seconds.
That’s less than a goldfish, for crying out loud!
If we can’t hook our customers in those precious few moments, we’ve lost them for good.
That’s why the language we use has to be laser-focused, directly addressing the question on every prospect’s mind:
“How is this going to improve my life?”
Steve Jobs’ introduction of the iPod as “1,000 Songs in Your Pocket” is a brilliant example of reframed messaging that resonated with customers.
Iconic slogans like “It’s the Real Thing” and “Just Do It” are powerful despite their simplicity.
They’ve become synonymous with their brands and have stood the test of time.
These examples demonstrate that effective language can be simple yet persuasive.
The Challenge of Crafting Appealing Messaging — the Power of A/B Testing and Optimization
Writing compelling marketing copy is not an exact science.
The human response to language is highly emotional and largely subconscious, making it difficult to craft appealing language.
However, growth hacking brings rigor and experimentation to this creative process, allowing anyone to craft compelling language, not just marketing savants.
A/B testing is a breeze with tools like Optimizely and Visual Website Optimizer, allowing for easy testing of different versions of a copy.
This data-driven approach helps you identify the most effective language for your product.
Sources for Powerful Messaging
Start by tapping into the language your customers are already using to describe your product on social media and in online reviews.
What words and phrases are they gravitating towards? What pain points or desires are they highlighting?
Adopt that authentic, customer-centric voice, and you’re already halfway there.
You can also draw inspiration from direct customer conversations, whether through surveys, support calls, or one-on-one interviews.
Ask them point-blank how they would describe your offering to a friend, and listen closely for the gems that might just become your next viral tagline.
The key is to approach this process with an open mind and a relentless commitment to learning.
Because at the end of the day, crafting a compelling message isn’t an exact science — it’s an art form that requires constant refinement and experimentation.
The Power of Small: How Tiny Tweaks in Language Can Unlock Massive Growth
The smallest changes in your messaging can have the biggest impact on customer acquisition and growth.
One of the most effective ways to drive growth is through language optimization — and I’m not just talking about tweaking a few words here and there.
I’m talking about reframing the very essence of your product’s value proposition to resonate with your target audience.
For example, by reframing a dating app’s tagline from “find a date” to “help people find a date,” you can experiment with user signups and how much growth you can experience.
The example above illustrates the power of subtle language shifts in reframing user perceptions and behaviors. By changing just a few words, you can reposition a product and tap into a deeper need in their target audience.
This is not just about marketing speak —
It’s about understanding what drives your customers and speaking to those needs in a way that resonates.
The beauty of the growth hacking approach is that it allows us to rapidly test and optimize these messaging experiments, without getting bogged down in endless debates and revisions.
The Role of Message Fit in Product Development and Branding
Sometimes, changes in wording can lead to additional changes in branding and product development.
Growth hacking teams should consist of product developers, engineers, and marketers, sharing data freely among them.
By collaborating and experimenting with language, you can identify what works and what doesn’t, and refine your messaging and positioning until you hit the sweet spot that drives growth.
The point is that message/market fit isn’t just about the surface-level messaging —
It can have profound implications for your entire product and business strategy.
That’s why it’s so important to have a cross-functional growth team, with product developers, engineers, and marketers all collaborating and sharing data freely.
Small language changes can have a significant impact on customer acquisition and growth.
By understanding what resonates with your target audience and experimenting with language, you can reposition your product and drive growth.
I’d love to hear your thoughts!
Share your insights and feedback in the comments below and let’s continue this discussion.
2 — The Channel/Product Fit Formula: How to Find and Optimize Your Ideal Marketing Channels
Finding the right marketing channels is crucial for growth, but it’s a daunting task.
With so many channels to choose from, and new ones emerging all the time, it’s hard to know where to start.
But the key to success lies in a two-phase approach: discovery and optimization.
The Mistake of Channel Diversification
Far too many product growth leaders and marketers make the mistake of trying to spread their efforts across a wide array of channels, thinking that diversification is the path to growth.
But the reality is, this just results in spreading your resources too thin, without truly optimizing any one channel to its full potential.
Google’s Larry Page: “it’s better to put more wood behind fewer arrows.”
PayPal co-founder Peter Thiel: “it is very likely that one channel is optimal. Most businesses actually get zero distribution channels to work.”
The Two-Phase Approach to Channel Selection
Identifying the optimal marketing channels for a business can be a daunting task. With the sheer number of options out there, from social media to search engine optimization to influencer marketing, it can feel like a daunting, never-ending task.
But that’s where the power of the growth hacking process shines. By approaching channel selection with a disciplined, two-phase framework, we can systematically identify one or two optimal avenues for reaching our target customers.
Discovery Phase [Divergence]: The first phase is all about discovery. We start by researching and categorizing the full range of potential channels — from the table above.
This allows us to quickly eliminate any options that are misaligned with our product and target audience and focus on a few high-potential channels in each category to test and optimize.
For example, we might start with Facebook ads, content marketing, and a referral program. The key is to resist the urge to spread ourselves too thin — we want to dig deep and optimize each of these select channels before moving on.
Optimization Phase [Convergence]: Once we’ve identified the one or two that are truly moving the needle, we shift into the optimization phase. Here, it’s all about maximizing the cost-effectiveness and reach of those core channels, using the growth hacking process to rapidly test and refine our approach.
For example, maybe we discover that a certain type of Facebook ad creative is driving way more high-quality leads than the others. Or perhaps we realize that our content marketing efforts are resonating best on LinkedIn, rather than our company blog. Whatever the case may be, the goal is to double down on what’s working and ruthlessly cut what’s not.
Prioritizing Channels for Experimentation
To prioritize channels for experimentation, consider the following:
- Align channels with business goals and target audience: Start by clearly defining your business objectives and target customer profile. Then evaluate each potential marketing channel through the lens of how well it aligns with those goals and audience. For example, if you’re selling enterprise software, advertising on consumer entertainment sites may not be the best use of your resources.
- Research and understand the strengths and weaknesses of each channel: Dive deep into the unique characteristics, capabilities, and best practices of each channel you’re considering. Understand the pros and cons, costs, and typical performance metrics for each option. This will help you make informed decisions about which channels will most likely be effective for your business.
- Start with a small, focused experiment to test channel effectiveness: Once you’ve narrowed down your list of priority channels, start by testing just one or two in a small, controlled experiment. This allows you to quickly gather data on their relative effectiveness before scaling up your efforts. It’s better to deeply optimize a couple of channels than to spread yourself thin across many.
- Iterate and Expand Based on Results: Closely analyze the results of your initial experiments to determine which channels are truly moving the needle. Double down on the high-performing options, continuing to optimize and scale them. Selectively add new channels to test, but maintain a focused, disciplined approach.
The key is to resist the urge to diversify across too many options.
Instead, leverage the growth hacking process to systematically identify the one or two marketing channels that are best suited to your business goals and target audience.
This laser-focused approach is the surest path to driving sustainable, compounding growth.
Channel Selection: Leveraging Business Model and User Insights
Finding the perfect marketing mix requires a thoughtful and data-driven approach. By considering your business model, user behavior, and marketing channels, you can create a winning strategy that drives growth and success.
Remember always to prioritize experimentation and optimization to ensure you’re getting the most out of your marketing efforts.
Understanding Your Business Model: The first step in finding the perfect marketing mix is to consider the demands of your specific business model. Different models require different marketing channels. For instance:
- B2B businesses need sales teams, trade shows, and content marketing to connect with other businesses.
- E-commerce stores rely on search ads and SEO to drive traffic and sales.
- Marketplace businesses must target both suppliers and customers with their marketing efforts.
Understanding Your Users: Next, you need to understand the behaviors and needs of your users. Identify what they’re already engaged in and what solutions they’re searching for.
- If they’re actively searching for solutions online, search-based channels like SEO and SEM are good bets.
- If they’re not yet searching for your offering, building awareness through other means is necessary.
Ask yourself:
- Are people using search to find a solution? Explore SEO and SEM.
- Do existing users share your product via word-of-mouth? Leverage virality and referrals.
- Does having more users improve the experience? Focus on virality.
- Are your target users already using another platform? Pursue integrations and partnerships.
- Do users have a high lifetime value? Invest in paid acquisition.
Prioritizing Experiments: After selecting a few initial channels, propose specific tactics to experiment with for each. Prioritize the experiments to test based on the insights gathered in the previous steps. This will help you maximize your marketing budget and resources.
Experimenting to Get Channel/Product Fit
To find the perfect marketing mix, we need a structured approach to evaluate and rank potential channels.
The key to efficiency is prioritizing which channels to test using a methodical approach. We adopt a prioritization method inspired by Brian Balfour’s framework, which evaluates channels across six critical factors:
- Cost: The financial investment required to test each channel.
- Targeting: The precision with which you can reach your intended audience.
- Control: The degree of control you have over the variables in your experiment.
- Input Time: The time it takes from concept to execution.
- Output Time: How quickly you can expect to see results.
- Scale: The potential reach of the channel.
Using a structured grid, we score and rank each channel. This grid helps visualize which channels might offer the best return on investment at a glance.
- For instance, a channel like SEM might score high on targeting and control but might be costly and limited in scale. This methodical scoring system ensures that we focus our efforts on channels that align best with our strategic goals.
The cornerstone of effective channel experimentation is robust user data analysis. Understanding user behavior, preferences, and engagement patterns is crucial for tailoring our channel strategies to meet their needs effectively.
Based on user data, we hypothesize which channels are likely to perform best.
- For instance, if data shows that our users are highly active on social media, it makes sense to test targeted advertising on platforms like Facebook or Instagram.
Beyond internal data, external market research and direct user feedback are invaluable.
- Surveys and feedback mechanisms can reveal why certain channels might be underperforming or what users truly desire from our product, guiding our experimentation efforts.
Finally, each channel idea is rigorously scored using our prioritization framework. This scoring is not just a theoretical exercise but a practical tool that drives real-world decisions and strategies.
- Each potential channel can be scored on a scale from 1 to 10 based on the mentioned factors, with 10 being the most favorable, and averaging the scores to identify their competitiveness.
This scoring is not just about identifying the most potent channels but also about understanding the trade-offs and balancing acts required in channel management.
Channel experimentation is not just about trying everything to see what sticks; it’s about making educated, strategic decisions that align with our business goals and user needs.
By adopting a structured approach to channel prioritization and experimentation, we can significantly enhance our product’s channel fit and success.
Optimizing Experiments, Embracing Innovation, and Scaling Success
The key to driving long-term, compounding growth for your business lies in your ability to continuously optimize your growth marketing efforts and expand your acquisition channels.
This kind of rigorous analysis and willingness to course-correct is crucial. It allows you to double down on what’s working while quickly pivoting away from what’s not.
It’s a never-ending journey, but one that is essential if you want to stay ahead of the competition and keep your customer pipeline flowing.
The key is to maintain an iterative, data-driven mindset.
Continuously analyze your results, identify your bright spots, and relentlessly optimize those efforts.
But don’t be afraid to cut bait on underperforming initiatives, either.
The growth hacking process is all about efficiently testing and learning, not stubbornly clinging to your initial ideas.
New channels and tactics emerge constantly, offering fresh opportunities for growth.
You need to stay vigilant and explore innovative ways to reach customers, such as free online tools and community building. This requires an experimental approach that allows you to efficiently navigate the vast landscape of possibilities and focus your efforts.
And as your business scales, adding new acquisition channels becomes increasingly crucial. As you reach natural ceilings with certain channels, layer on additional ones to sustain growth.
This ongoing process involves shifting focus between different stages of the customer funnel.
You can unlock new avenues for growth and success by continuously optimizing, experimenting, and innovating.
3 — Viral/Product Fit: The Science of Viral Loops
The pursuit of viral growth can be a tantalizing dream, but it’s essential to dispel the myth that a “set it and forget it” viral loop is the key to effortless success.
In reality, achieving exponential growth requires ongoing experimentation, optimization, and a deep understanding of user behavior.
While some products may appear to have achieved overnight success through viral loops, the truth is that even these seemingly effortless achievements often result from extensive effort and refinement.
- Hotmail’s email signature and Dropbox’s referral program are prime examples of viral loops that require careful design and optimization.
The reality of viral growth is far more complex and nuanced.
It’s not a simple matter of engineering a viral mechanism and waiting for users to pour in.
Instead, it demands a continuous cycle of experimentation, optimization, and user-centric design.
By acknowledging the complexity of viral growth and dedicating ourselves to understanding user behavior, we can create products that truly resonate and drive sustainable growth.
The dream of viral growth may be elusive, but with the right approach, it’s within reach.
The Importance of a Must-Have Product
Before we dive into the world of viral loops, it’s essential to remember that a viral loop strategy will not work if the product itself is not delivering value to users.
A must-have product is essential for achieving viral growth.
Types of Virality
When it comes to viral growth, it’s important to distinguish between two distinct types:
- Traditional word-of-mouth virality
- Instrumented virality — the kind that’s built directly into the product experience
Even products that seem to grow through instrumented virality often rely on word-of-mouth.
Understanding the difference between these two types is crucial for designing effective viral loops.
Designing Effective Viral Loops
So if viral growth isn’t as simple as just “setting and forgetting” a clever loop, what does it take to design one that works?
Well, the key is to make the viral experience as seamless, user-friendly, and delightful as possible.
Just look at Hotmail’s email signature — one click, and you were signed up for free email. Or Dropbox’s referral program, which was designed to be genuinely fun and easy to use.
Misunderstandings About Viral Coefficients
Another common misconception is the idea of the “viral coefficient” or “K-factor” — the notion that to be truly viral, your product needs to achieve a coefficient greater than 1, meaning each new user brings in more than one additional user.
But the reality is, that this level of virality is incredibly rare and often short-lived.
The viral coefficient formula simply doesn’t account for all the nuanced factors that determine viral growth.
Therefore it’s best to consider that:
Virality = Payload x Conversion Rate x Frequency
This framework encourages us to focus on optimizing the three key drivers of viral growth:
- Payload: The number of people each user is likely to invite at a time. This is about the reach of your viral loop — how many people can each existing user potentially expose to your product’s viral mechanism with a single action. For example, if users share a link on social media, the payload would be the average number of followers or friends they have. If they are sending emails, it would be the average number of recipients per email. The higher the payload, the more potential new users can be reached.
- Conversion Rate: The percentage of people who accept the invite and become new users. Even if each user has a large potential reach (high payload), if very few of those people convert into new users, the overall virality will be low. Optimizing the conversion rate involves making the viral action as easy and compelling as possible. Removing friction, offering incentives, and ensuring the viral experience is valuable and delightful can all boost conversion.
- Frequency: How often users will be exposed to the viral mechanism and take the viral action. Even if each instance of the viral loop has a high payload and conversion rate, if it only happens rarely, the overall viral growth will be limited. Increasing frequency means finding ways to naturally integrate the viral action into the core user experience, so it happens repeatedly and consistently. Sending emails, sharing on social media, and inviting friends should be a common occurrence, not a one-time event.
Crafting Effective Viral Loops: Key Considerations and Best Practices
When designing viral loops, keep the following essential considerations in mind:
- Invite delivery: Choose between passive integration or incentivization
- Incentives: Create double-sided incentives to drive participation from both senders and recipients
- User experience: Avoid “dark patterns” that annoy users and damage long-term growth
To maximize the impact of your viral loops, follow these best practices:
- Prioritize user experience and make invite delivery and participation seamless
- Set realistic expectations for viral growth and focus on experimentation and optimization
- Use Payload x Conversion Rate x Frequency to assess viral potential and identify areas for improvement
- Continually experiment and optimize viral loops to achieve the best results
Designing Effective Viral Loops
The truth is that effective viral loops require extensive experimentation, optimization, and a deep understanding of user behavior.
And even when you do manage to create a viral mechanism, maintaining and optimizing that growth will be an ongoing battle.
- Tapping into Network Effects: One of the key factors that can give your viral loops a significant boost is leveraging network effects. The best viral loops are those where users are motivated to invite others because it directly improves their own experience of the product. Social networks, messaging apps, and online marketplaces are prime examples of products that thrive on network effects. The more people using these platforms, the more valuable they become to each user. This inherent incentive to grow the user base is a powerful driver of viral growth. But even products that don’t seem to have obvious network effects can often find creative ways to tap into them. Take Dropbox, for instance — the more files I store and the more people I collaborate with, the more valuable the service becomes to me. By designing viral loops that capitalize on these network dynamics, you can unlock exponential growth.
- Creating Effective Incentives: Not every product has the same built-in network effect advantages. In those cases, you may need to create external incentives to motivate users to invite their friends and colleagues. The key is to ensure that these incentives are tightly aligned with your product’s core value proposition. Dropbox’s referral program offering free storage space was a perfect example — it directly addressed the user’s primary need and desire. Contrast that with a grocery store app offering a free flower vase for referrals, which would likely feel disconnected and less compelling. While cash incentives can certainly work, I’ve found that non-cash rewards often feel more valuable and compelling to users. Airbnb’s approach of offering travel credits is more effective, as it feels more intrinsically valuable to the user. It’s important to be careful not to make your viral incentives feel too transactional. Incentives that are too easy to calculate the monetary value of can sometimes feel like a cheap gimmick, rather than a genuine value-add.
- Seamless Integration of Viral Prompts: Another critical factor in designing effective viral loops is how you integrate the invite mechanism into the user experience. The best prompts feel like a natural, seamless part of the product, not an obtrusive add-on. LinkedIn does this brilliantly by prompting new users to build their network as soon as they sign up. Uber takes a similar approach, prominently featuring the referral program right on the ride status screen. These integrations ensure that the viral action is visible, accessible, and aligned with the user’s current context. In contrast, burying the invite prompt in a hard-to-find corner of your website or app is a surefire way to ensure it gets overlooked.
Your goal should be to make the viral experience as frictionless and delightful as possible for both the inviter and the invitee.
- Optimizing the Invitee Experience: Far too many products neglect this, hitting potential new users with an abrupt request to create an account before they even understand what the product is or why they should bother. Airbnb, on the other hand, nails this. Their referral invites include the referrer’s name and photo, a personalized message, and a clear, prominent call to action. This makes the experience feel personal, valuable, and worth engaging with.
Designing effective viral loops is a complex, nuanced challenge. But by embracing the realities of how virality works, leveraging network effects, crafting aligned incentives, and seamlessly integrating viral prompts, you can stack the odds in your favor.
Continuous Experimentation
The best viral growth hacks are often unexpected discoveries that come through rigorous experimentation.
- Dropbox, for instance, was surprised to find that emphasizing the product’s file-sharing and collaboration features was far more effective in driving viral growth than simply offering free storage space.
- Similarly, LinkedIn discovered through testing that the optimal number of invites to recommend to users was not the obvious “as many as possible,” but rather a more curated set of connections.
The key takeaway here is that successful viral loops don’t just materialize out of thin air. They require a strategic, efficient, and low-cost approach to experimentation and optimization.
You need to be constantly testing different incentives, messaging, and viral loop designs to find what works best for your specific product and user base.
