Is Growth Hacking the Future of Marketing?


Today’s guest post is by bestselling author and Director of Marketing at American Apparel, Ryan Holiday.

You've probably heard some buzz about "growth hacking" by now.

That it was the secret weapon behind the astounding growth of brands like Uber, like Facebook, like Twitter, like Dropbox and Airbnb. It's become almost axiomatic in the Silicon Valley these days that "growth hackers are the new VPs of marketing."

But like a lot of buzz words, it can be hard to pin down exactly what growth hacking is and more importantly, exactly how you're supposed to apply it to your business. I know this because I was there myself.

As the director of marketing at American Apparel, I was rudely awakened one day by the news that my job was suddenly obsolete. At first, I brushed it off. But then, digging into the incredible success of the growth hackers and their proponents, I decided to explore it.

The result was a series of articles for Fast Company and ultimately a short book for Portfolio/Penguin that sought to explain what growth hacking really was, how it worked and how it might replaced or enhance our traditional marketing efforts.

Because at the end of the day, all of us want to grow our business. We all want to make more money - and ideally, we want to do with without expensive and unquantifiable techniques like television or print advertisements.

My friends here at Shopify have asked me to put together some real practical tips and explanations of growth hacking to help you grow your brand, business or operation.

Growth Hacking: A Definition

A marketer or advertiser sits down and thinks: How can we get awareness and attention? A growth hacker thinks: How can we get users? Their job is to bring people in, and not just anyone, actual users who sign up, who buy, who stick around.

To accomplish this, they throw out the playbook of traditional marketing and replace it with only what is testable, trackable, and scalable. Growth hackers use tools like e-mails, pay-per-click ads, blogs, and platform APIs instead of commercials, publicity, and money.

But of course, these tools vary from company to company. Airbnb may have coded an API solution that took advantage of Craigslist, while Dropbox and Groupon created leading referral programs. Growth hacking is, at the end of the day, a mindset.

Let's look at three ways you can adopt it.

The Single Best Marketing Decision You Can Make

One of the best pieces of marketing advice I’ve ever heard actually came from Paul Graham who is the founder of Y Combinator (the angel investor behind AirBnb, Looped, Reddit, many of the web services that have become integral to our lives). Founders come in and ask him “Ok how can we get people to try our company?” And he just says, “Make stuff that people want.”

Instead of thinking about “marketing” we ought to think about only selling the things customers truly, truly want. Then they’ll do the marketing for us.

This really seems simple and we nod and think, “ Oh yeah people want [whatever we're selling],” but we really don't know or aren't open to hearing differently.

A Growth Hacker is far more flexible about their idea, product or service than a traditional marketing. Think of Instagram, which actually started as a geolocation service like Foursquare. Do you know how why it turned into a photo app? Because it became clear that that is what the users actually wanted. As a result Instagram changed their whole business based on real feedback and usage patterns.

In other words, their billion dollar exit came from that pivotal marketing decision and not much else. Imagine if they'd been locked in and unwilling to change, we would not even know who they are today. What about you and your products? Are you prepared to be that flexible? Are you using tools like SurveyMonkey and Qualaroo to evaluate what's happening and what you can improve?

In short, if your online store has stalled and none of your marketing efforts seem to revive it, it’s time to think about fundamentally changing what you do instead of trying harder and harder at the same things. It’s never been easier to pivot, to reposition, to tweak or to reinvent yourself. And who knows, that might be the secret to unlocking your growth explosion.

It’ll be the single best marketing decision you make.

Forget CNN and the New York Times

For some reason, we’ve internalized and idealized the massive launch. I think this comes out of a generation of blockbuster movies. We think it’s all about opening week. What’s hidden during those launches is the enormous cost (in advertising, in PR, in distribution) and what’s obscured is all the times it doesn’t work (all the flops).

Hoping you’ll magically get tons and tons of media exposure is not a marketing strategy. It’s a pipe-dream.  So instead of thinking about how to pull off a PR explosion, you should be thinking: How can I pull in 10 more customers? How can I get my first 1,000 fans? Think smaller, not bigger.

"But that’s not enough!" you say. First off, it can be plenty. I’ve helped clients sell tens of thousands of books through very small blogs, and then helped them get in the New York Times and watch their Amazon rank do nothing. Remember, blogs are starving for stuff to talk about. You could be that thing - but look for the best and the most relevant, not the biggest.

Second, if you’ve truly done your work building a remarkable, spreadable and shareable product, each customer will drive more customers. This is why Dropbox has been so successful. It essentially pays users to encourage their friends to join by linking their account with Facebook and Twitter. Why? So you’ll broadcast your activity and usage and encourage more sign ups.

Bringing in a small group of early adopters and then using built in viral distribution features to expand from there is the growth strategy behind basically every single web success story from Hotmail to Gmail to Facebook to Mailbox. And the crazy thing is that it costs essentially nothing.

Think More From Your Customers, Not More Customers

It's incredibly tempting to always be thinking "We need more customers". What growth hackers have realized (even though it's common sense), is that there are other and better ways of growing your business. Chasing new customers is expensive, it's tough and it takes your eye off the ball. You'd be better off trying to improve the customers you already have.

As Archie Abrams, a growth hacker at Udemy put it, "Ultimately, sustainable growth boils down to LTV (long term value). It's better to have 500k users, each spending $20 than it is to have 10mm users each spending $0.05. Having a product that people love is a necessary, but not a sufficient condition to driving retention and monetization. Companies that win find a channel like email, Facebook notifications, or push notifications that can sustainably drive users back to their product."

Take Uber for example, which is always sending all sorts of great coupons and alerts the second you stop using the service. They’re trying to pull you back in (instead of trying to replace you with someone else).

Think of Amazon’s excellent reminders to “Treat Yourself” or suggest new products that they think you might be interested in. Think of Twitter which rolled out the “Suggested Users” list because data showed that when new users followed other users they liked the service better.

A traditional marketer thinks that developing initiatives like that would be someone else’s job. A growth hacker doesn’t care. Whatever increases sales and users is marketing.

So put aside the Google Adwords for a second, ignore the urge to be featured in the media and spend your time on activating and re-activating the customers who have already heard of you.

According to Bain & Company, a 5 percent increase in customer retention can mean a 30 percent increase in profitability for the company. And according to Market Metrics, the probability of selling to an existing customer is 60–70 percent, while to a new prospect it’s just 5–20 percent.

Bronson Taylor, host of Growth Hacker TV, puts it in a phrase: “Retention trumps acquisition.”

That’s what you want to focus on.

Some Next Steps

Growth hacking is a significant shift in mindset. It’s internal while marketing is external. It’s data driven while marketing is status driven. It’s lean where marketing requires an investment.

But the most crucial difference? It actually works and you can track it.

We’ve already seen how the products of the Silicon Valley have disrupted many of our deepest held assumptions and oldest industries. Well, growth hacking is the next wave. It will totally change how we market, how we promote and how we sell our products and services.  

Whether we’re pushing a startup or a clothing line, a restaurant or a book, growth hacking will serve us better than the “Spend & Hope” mentality of traditional marketing. So it’s time to jump on board.

We can’t wait to see how you use growth hacking to build your brand.

About the Author: Ryan Holiday is a bestselling author and advisor to many brands and writers. His newest book Growth Hacker Marketing: A Primer on the Future of PR, Marketing and Advertising focuses on the untraditional tactics behind a new class of thinkers who disrupted the marketing industry.