Growth hacking has been gaining attention in recent years as an indispensable method for growing products and services.
However, many people may be wondering, “What is a growth hack?” and “How do I get started?”
In Internet services, the line between product development and sales has become thinner. In an era where needs are diversifying and rapidly changing, it’s hard to know what will be a hit. For this reason, there is an increasing movement to introduce the PDCA cycle not only in how products are created, but also in how they are sold, in order to increase the probability of success.
Here, we will introduce the basic concept of “Growth Hack” and some examples.
What is a growth hack?
Growth Hack is a marketing method that analyzes data obtained from users and makes repeated improvements to grow products and services.
Specifically, by analyzing growth impediments based on trend data of users who use services and products, and rapidly implementing the PDCA cycle for testing and improvement measures, we can continue to acquire customers and increase sales. This is a method that aims to expand and ultimately grow the company.
It is also attracting attention as a way to achieve results without incurring large amounts of advertising and marketing costs.
Changes in growth hacking
Growth hacking is a coined word that combines the word growth, which means growth, and hacker, which means “a person who is familiar with computer technology.” This phrase was proposed in 2010 by Sean Ellis, an entrepreneur who supported Dropbox’s marketing immediately after its founding.
Growth hacking is mainly used in the field of internet services, but essentially any product can be grown using growth hacking. In addition, growth hacking is not only targeted at services and products, but also measures to improve brand value, succeed in recruitment activities, and acquire fans.
In contrast to general marketing methods that carry out promotional activities for completed products and services, growth hacking differs greatly in that it also involves the development and improvement of the service itself.
With the market for web services and apps becoming saturated, growth hacks that comprehensively cover everything from development and design to marketing have been attracting attention, not just marketing after a service is released.
Because growth hacks are involved from the development of services, there are many cases in which people or teams with multiple qualifications, such as producers and engineers, are in charge of not only marketers. A characteristic of growth hacking is the idea of changing the service itself to suit the needs of the market and users.
If needs change, the service itself may change, so detailed research and analysis of user trends is necessary, with a view to changing the direction of the service. Therefore, growth hacks tend to emphasize data.
Specific growth hacking measures and roles required of growth hackers
What is the flow of actual growth hacking measures? Growth Hack constantly analyzes market and user trends to improve services and develop marketing strategies and measures.
The main flow is as follows.
① Design and develop the service ② Analyze users and the market and formulate hypotheses and KPIs for growth and improvement ③ Implement improvement measures (in some cases, review the service design itself)
④ Analyze again and make improvements repeatedly
Growth hackers grow services by comprehensively performing this series of operations and repeating the PDCA cycle. Therefore, growth hackers are required to have the ability to analyze the true needs of users and identify issues in both marketing strategy and product development.
A growth hacker is a specialist who can rapidly grow a business by formulating solutions to all problems that can be improved and quickly implementing them, starting with the most important ones.
Check the degree of growth using AARRR
AARRR is an effective framework for growth hacking. AARRR is a method of monitoring business growth by capturing the status of users using products and services step by step. It’s called AARRR, an acronym for the user’s next five steps, pronounced “ah”.
1. Acquisition (=user acquisition)
2. Activation (=user activation)
3. Retention (=user’s continued use)
4. Referral (=introduction to the outside)
5. Revenue
Rather than focusing only on user acquisition and monetization, AARRR aims to grow the product by being aware of the various phases of the customer and examining whether there are any issues that need to be solved at each stage. It’s purpose-based.
At each stage, we set target values such as the number of acquisitions and measure the degree of product growth.
for example,
1. Acquisition (=user acquisition)
⇒The number of site visits and user registrations are used as indicators to judge the situation.
2. Activation (=user activation) and 3. Retention (=user’s continued use)
⇒The number of users who continue using the service and the number of paid members are used as indicators.
In steps 2 and 3, we measure user quality and satisfaction by looking at what features of the service users use and how often they return to the service.
4. In the Referral step, you can monitor the satisfaction level of the referring users by the number of referred users and the number of media appearances.
By improving the issues identified by the indicators in each of the four steps, we aim to ultimately lead to sales and profits in 5. Revenue and grow the business.
A growth hack that incorporates a “self-growth mechanism” into the service itself
Growth Hack not only uses traditional marketing methods, but also uses a system that expands its presence and sales through use by users.
Traditionally, web marketing involves placing advertisements on search sites and portal sites such as Google and Yahoo!, and gathering traffic through SEO and access analysis.
On the other hand, growth hacks incorporate a system that allows services to spread through user reviews. For example, Facebook and Instagram have a feature that allows you to tag people when you post a photo of them. By tagging someone, even people who don’t normally use Facebook will receive a notification and encourage them to use it.
You can also increase your storage space with Dropbox by introducing it to your friends and acquaintances. It is possible to spread the service through users’ own actions without advertising.
Is growth hacking low cost and high return?
Growth hacking requires the skill to build an overall blueprint for growth with as little money as possible.
First, from a UX design perspective, before creating and launching a product, a growth hacker creates a persona (a specific image of the intended user) and a customer journey map (a timeline that shows what actions the user will take). We will build an analysis diagram (understood in the above) and constantly improve it.
Growth hackers also formulate and prove hypotheses regarding UX design. For example, regarding the color and size of the application button, we will formulate and verify a hypothesis that if it is made red, the conversion rate (contract rate) will increase by 1.5 times.
Use free analytics tools like Google Analytics and Google Optimize for validation. Growth hackers also require technical knowledge. We provide instructions to engineers by estimating what is technically possible and what improvements can be made at low cost and with high returns.
Low cost does not mean “no advertising expenses.”
In the past, UBER gave a gift of 4,000 yen to the introducer and friend when they introduced the service to a friend. The reason behind this bold campaign is that data shows that the lifetime value of each customer (LTV) exceeds the cost per customer (CPA). Generally, one of the criteria for measuring the success of a growth hack is “CPA☓3≦LTV”.
In other words, if you get close to this standard, “discounted costs” won’t be a big issue. “Low cost” = “no advertising expenses” is just one element, and in growth hacking, “cost effectiveness” from a long-term perspective is also important.
Also, before creating a product, releasing a beta version only to those who have registered their email address, or creating a teaser site where people can sign up (user registration) in advance, is part of a “long-term strategy.” You could say it’s one.
Analysis is more important in growth hacking
At Growth Hack, we spend more time on analysis than traditional web marketing.
For example, in conventional web marketing, the targets of analysis are whether the inflow came from a direct URL entry or a search, what the search keyword was, and how many page views each page had. In addition to that, at Growth Hack, we will conduct analyzes that grasp the overall picture, such as “cohort analysis” and “funnel analysis.”
“Cohort analysis” is a method that divides users into groups based on certain conditions or attributes and analyzes changes in the behavior of each group over time.
For example, for a homepage that runs seasonal campaigns, track the site’s retention rate in each season: spring, summer, fall, and winter. When tracking the retention rate on the site after one month, two months, three months, etc., we found that “in the summer campaign, the initial purchase amount was high, but when looked at over a three-month period, the purchase amount was higher in the winter. You can deeply analyze the reason.
On the other hand, “funnel analysis” is a method to analyze where problems exist in the flow from customer acquisition to revenue. Funnel means “funnel,” and it describes where users leave the homepage before they convert (jump to another site or close their browser). It is possible to visualize problems on your homepage.
Specific examples of services that grew through growth hacking
Twitter
When Twitter first started its service, it had the problem of not being able to attract users.
As a result of data analysis, we found that users with a high retention rate follow multiple people on the day of registration.
Therefore, we added a “recommended users” feature that allows users to recommend newly registered users to follow them. The number of users who followed us increased on the first day, and the retention rate increased.
Dropbox
Dropbox’s growth hacking method has significantly increased the number of members.
One of these is an incentivized referral system. We increased the number of new users by offering a bonus for getting additional storage space for free when you refer a friend to Dropbox.
This is an example of a famous growth hack that, according to Dropbox’s CEO, led to a 60% increase in user acquisition.
cookpad
Cookpad is also one of the services that grew through growth hacking.
We performed a growth hack in converting free trial customers to paid customers and promoting continued usage.
We doubled the number of daily registrations through measures such as free coupons for birthday months and September 9th as “Cook Day” where we distributed free coupons for 2 months to everyone. In addition, we constantly verify the effectiveness of user-friendly UI and copy, and repeatedly make small improvements to encourage continued use.
american presidential election
Growth hackers were invited to the Republican Mitt Romney campaign in the 2012 US presidential election. Aaron Jean, who was 24 years old at the time but had a proven track record as a growth hacker, received a request to create a website that was highly likable. Repeat and improve the site. As a result, it is said that they were able to collect $180 million in political donations.
Airbnb
Airbnb, which many people know by now, is another successful example of a growth hack.
Airbnb is a service that matches people who want to rent a spare room with people who need a room to stay in, and is used all over the world. In recent years, the word “minpaku” has become very familiar, but when the service first started, it was difficult for the number of users to increase.
Airbnb has achieved explosive growth through a number of growth hacks, but one of the most famous is the method of linking it to a community site called Craigslist. Craigslist, which already has a large number of users, is a website that collects local property information, so we have built a system that automatically reflects Airbnb’s accommodation listings on Craigslist.
This measure was successful and began to produce a great PR effect.
The key point is that the technical capabilities of the engineers led to the success of the promotion, and the number of users increased without incurring advertising costs other than the engineers’ labor costs. This is a strategic example of a growth hack that does not require unnecessary costs.
Spotify
Spotify is a music streaming service operated by the Swedish company Spotify Technology. Although it offers over 40 million songs for a monthly fee, it is increasing its user base by also offering a free plan with limited functionality. We have established a Japanese subsidiary, and in recent years the service has become so familiar that TV commercials have been broadcast.
The highlight of Spotify’s growth hack is its collaboration with Facebook. When registering to use Spotify, having a Facebook account will not only make the registration process smoother, but it will also allow you to see the songs the user is listening to on their Facebook timeline, allowing people to connect with you on Facebook. We created a system for Spotify to be recognized.
It is also set to appear on Spotify when your Facebook friends sign up for Spotify. We believe that Growth Hack was successful not just through the integration of APIs, but because we firmly grasped user psychology in a context where the artistic culture of music is deeply rooted and the spread of information through SNS has become the norm.
Hotmail
This is an old example from the 1990s, but Hotmail, famous for its free email service, has gained many users through growth hacks.
The strategy is simple: encourage email recipients to open a free email account in the footer below their email signature field. At a time when the Internet was not yet widespread, the service, which had just started, built up a track record of gaining 12 million users.
The ingenuity within our own services served as powerful advertising without spending on advertising. This is an impactful example of a service that has grown dramatically.
summary
In the field of Internet services, where a variety of products are being released and the level of user demand is increasing, it is not possible to differentiate yourself from others simply by creating a strategy that separates product development and marketing. The key to winning in the market is to comprehensively look at all stages of a product, from development to modification to sales, and to perform data verification and continuous improvement. The growth hacking method of constantly keeping an eye on data and repeating the PDCA cycle to avoid overlooking user needs will become more important for corporate growth. If you are putting effort into SEO and content marketing, but your profits are not increasing as much as you expected, why not try adopting a “growth hack” perspective?