What is Growth Hacking and What Do Growth Hackers Do?

You started a new business. And things are going great. Your plan is well-built, and your team is organized and ready to make your products rock on the market. But with a startup budget, you will need to get familiar with growth hacking.

Thus, what is growth hacking, what does a growth hacker do, and what are some of the best techniques and practices that can help businesses grow?

What Is Growth Hacking?

Basically, growth hacking implies focusing on the rapid growth of a company by using various techniques that can work quickly and do not require significant investments.

However, if you are looking for a more straightforward definition, Parul Agrawal, Rohan Chaubey, and over 35 marketing experts discussed it in “The Growth Hacking Book”. According to them, growth hacking means conducting marketing experiments to uncover strategies to acquire and retain users or customers using data.

The main goal of growth hacking is to get massive and rapid growth for a specific business. To do that, marketers do not focus on budgets or expenses. Instead, they test various tactics that can lead to their company’s growth.

What Is a Growth Hacker?

A growth hacker is an expert that uses creativity and low-cost strategies to help businesses acquire and retain new customers. And even if it may seem too strong of a metaphor at first, Robert Peters defined growth hackers in one of the simplest ways. According to him, growth hackers are charged with taking “nothing” and turning it into “something” as fast as possible.

All growth hackers have to focus on is growth, and to do that, they shape multiple strategies and test them to get the most favorable outcome possible.

How Does Growth Hacking Work?

Usually, growth hacking combines several concepts, such as marketing and optimization, to create a strategy that can contribute to a company’s growth in no time. And while the channels and techniques you decide to use can highly depend on the company you are working for or its products, you can follow some basic steps to help you build a growth hacking strategy.

In his book, “Hacking Growth”, Sean Ellis discusses a framework called the Pirate Funnel. Also called AARRR, the Pirate Funnel was developed by Dave McClure (former Marketing Director at PayPal and founder of 500 Global) and includes between 4 and 6 steps that can help a growth hacker achieve success for their company. Here are the main steps:

Acquisition – make yourself popular among consumers;
Activation – offer users a positive first experience;
Retention – keep users coming back for more;
Revenue – monetize users.

According to Sean Ellis, growth hackers should focus on one step at a time to get consumers through the whole funnel smoothly and safely, leading to incentivized customers, if not even advocates.

And basically, by getting through all the steps of the Pirate Funnel and filling the gaps your business has, all you do is improve your North Star Metric.

If you are wondering what the North Star Metric is, the first answer is that it depends on what you sell. But at its core, the North Star Metric is defined by the value customers get from using your product.

For instance, if you have a company that designs a specific product, the number of products sold may be your North Star Metric. To understand the concept even better, keep in mind that Facebook’s North Star Metric is the number of daily active users.

Growth Hacking vs Traditional Marketing

Many think growth hacking and traditional marketing are the same. And while they are related, there are some key differences between the two concepts. According to Sean Ellis, who coined the term in 2010, “growth hacking is about running smart experiments to drive growth within a business.

Marketing is about experimentation to move growth as well. The problem is that marketing is also about many other things”.

Growth hacking is a subfield of marketing, but the main difference between the two is that the former implies getting rapid growth with little resources, while the latter can benefit from larger budgets and base its activity on advertising, extensive mail campaigns, and other paid media that can drive much traffic to a business’s website, leading to the high possibility of acquiring new customers.

However, in growth hacking, marketers focus on slightly different actions and do not rely on a high advertising budget to get new customers. Instead, growth hackers choose from basic traditional marketing practices the most trackable, testable, and scalable options.

Growth Hacking Benefits

As you probably already learned, growth hacking has several significant benefits. And besides the most noticeable one, which is basically the outcome of this practice, the growth of a company, let’s see which are some of the most important growth hacking benefits.

It is cost-effective – As we mentioned before, growth hacking is all about achieving more with less. Growth hackers get creative and find lucrative practices that lead to a business’s growth;
It can suit several situations – Growth hacking can suit many businesses and industries. After all, every company focuses on growth. And growth hacking can be measured in many ways, depending on a company’s specific goal. And while metrics can differ from one case to another, the main focus will stay the same. And one of the most intriguing facts about growth hacking is that there is no “one-size-fits-all” approach to this concept. Instead, growth hacking is all about adapting a basic concept to your needs and business type;
It can generate quality leads – the process of growth hacking itself is built so that it can generate numerous quality leads. Furthermore, growth hacking can be extremely helpful in learning more about your audience and how you can fulfil your customers’ needs and wishes;
It contributes to product optimization – Is there a better way of learning how you could improve your products than without investing huge budgets in this goal? Growth hacking can offer you valuable insights regarding what could be improved regarding your products or services. And the most exciting fact is that it does so with minimum costs.

Do I Need Growth Hacking?

Usually, the companies needing growth hacking the most are either startups or small businesses. And the reason is pretty straightforward: as a startup, you need to recover the investment fast, if not even see some profit as soon as possible.

On the other hand, as a small business, you may not have significant budgets that you can use for advertising. Thus, you rely on growth hacking to increase your overall success.

However, Sean Ellis considers growth hacking to suit many other companies. He thinks of growth hacking as a concept that can help any company, regardless of its goals, industry, or size.

Every business should focus on growth, of course, according to its specifications and resources. The growth hacking principles are about building a culture of experimentation, designing a relationship between product and growth, where growth fulfils the market potential that a product or a concept creates.

Growth Hacking Techniques Step-by-Step

Among all the techniques a growth hacker usually works with, we have decided to talk about 3 of those that may be the most effective.

Optimize. Always.

Be it a website, an app, or a product, they all need optimization, especially when you are in the middle of a growth hacking process. And this should not be the case only for small businesses or startups.

Take Instagram or Pinterest, for example. To create “stickiness” or to optimize the load time, they organize the posts in a certain way (Instagram, for instance, places the most popular posts on top) to make users scroll down as much as possible.

A/B Test

When your budget is tight, one of the best growth hacking techniques is to perform A/B testing as much as possible. And this can work for your ads or website especially.

A/B testing is another great way of finding what you should optimize to get a higher CR (Conversion Rate) or increased sales. If you are looking for more ways of optimizing your website, you can also check this guide.

Coupons and Offers

Customers stay close to a business thanks to its products, indeed. However, there are multiple ways to keep consumers incentivized, and one of them implies offering them something for free. And this can also work when you are working with growth hacking.

Giving something away for free can bring you even more new customers, while also keeping more established users close to your brand.

Growth Hacking Best Practices

While growth hacking is a concept that implies trying several techniques and focusing on CRO (Conversion Rate Optimization) and achieving more with less, there are some practices that may help you grow your company.

Get Creative

Growth hacking allows you to make various experiments, and, most importantly, it gives you the opportunity to get as creative as possible. And the example we are about to give you may not be focusing on correctness, but it surely shows how creative you can get with growth hacking.

Reddit was founded in 2005 and became popular thanks to a growth hacking technique Steve Huffman and Alexis Ohanian used. To populate the website in the first place, the founders used several fake user accounts.

Combining this tactic with multiple high-quality articles, Huffman and Ohanian helped early users become involved themselves without feeling intimidated, as they felt like there were already many users on the platform.

Getting creative helped Reddit reach 430 million monthly active users in 2020. And while this strategy may seem rather dishonest, the thing to keep in mind is that creativity is one of the most important qualities a growth hacker should have.

Retention over Acquisition

Acquiring new customers is great. But what about keeping those you already have?

While it is extremely important to widen your customer base, it is also vital to keep those you already have close. And this is why you should mind retention over acquisition. Keep in mind that retained customers are those who have already passed the acquisition and activation phases. This means that focusing on keeping them close may require less resources than getting other consumers through the whole sales funnel.

However, try to find the best way of focusing on both stages at the same time. This way, you can keep on bringing in new customers, while also keeping those you already have incentivized.

Test Multiple Tactics

As we mentioned before, growth hacking is all about testing multiple tactics, in order to find what works best for your company and products. While an online shop for car parts may have some needs, a brick & mortar pastry shop surely has others.

Take eBay, for example. It started with the simple idea that one’s trash is another’s treasure. And to prove that, the first item sold on eBay was a broken laser pointer.

The item was posted on eBay as a test for the system, and nobody had any hope that it would be sold. However, the product was sold for the surprising amount of $14.83 (for a broken laser pointer sold in 1995, the price was indeed startling).

When the eBay founder contacted the winner to let him know that the laser pointer does not work, he received a pretty simple reply: “I’m a collector of broken laser pointers”.

Thus, from a simple test, Pierre Omidyar, the founder of eBay, found that its project can help many users find what they are looking for. These days, eBay is available in 32 countries and has over 135 million users worldwide.

Final Thoughts

Growth hacking is a subfield of marketing that implies conducting marketing experiments to uncover strategies to acquire and retain users or customers using data. Growth hackers constantly focus on growth, so that they can get the most positive outcome possible with little investments.

According to Sean Ellis, who coined the term growth hacking, this practice has the primary goal of increasing the North Star Metric, while using a sales funnel called the Pirate (or AARR) funnel.

Some of the most effective techniques to use in growth hacking include optimizing your products or website, A/B testing, and offering something for free. Furthermore, you can focus on creativity and testing multiple tactics. You may also want to consider retention over acquisition, as it is vital to keep your customers close, while also acquiring new ones.