Growth hacking has become a popular strategy for many businesses to quickly get a foothold in the market while spending the least money. The entire strategy focuses on growth and setting goals to achieve that. However, how does growth hacking work, and is it worthwhile?
This article will explore growth marketing and how the process works. We’ll be covering the funnel used, popular metrics to monitor, and tools to scrape Instagramdata from the social media platform to use in your strategy.
What Is Growth Hacking? Explained
Growth hacking is a strategy that was first coined in 2010 by digital marketer Sean Ellis. With the field of digital marketing constantly changing, marketing techniques and strategies need to be flexible enough to adapt to new environments. Growth hacking is one of the newer strategies that focus on growing your business above all other metrics.
No two businesses or products are the same. Therefore, no two growth hacking strategies are alike. You need to build your strategy through experimentation and evaluating the response from your audience. In order for growth hacking to be used successfully, you need to have a deep understanding of your audience, know how to collect valuable data to evaluate and monitor your success and be able to draw conclusions from the results achieved through your experiments.
The Growth Hacking Funnel
Setting up a successful growth marketing strategy relies on a good understanding of the growth hacking funnel. The sales funnel describes the process consumers go through before reaching a conversion. The conversion is your end goal, i.e. do you want them to sign up for a newsletter, register an account or buy a product or service?
The funnel most frequently used for growth hacking is known as the pirate funnel (or AAARRR). The process flows like this:
Once you understand how your consumers move through your funnel, you’ll be able to set important growth performance metrics for each phase within the funnel. You want to include metrics that show growth and are easily defined for the best results. For each of these metrics, you should also set a goal. These goals should be simple, realistic, and attainable.
Key Performance Metrics to Monitor Your Growth
Let’s take a look at some of the Key performance indicators (KPI) that are often used to measure the success of a growth hacking strategy.
This metric approximates how much it costs to acquire the client. To calculate the CPA, you divide the combined marketing and sales expenses by the number of acquisitions.
Lifetime Value (LV)
This metric displays the total lifetime revenue you expect from a single client. For example, subscription services tend to have a higher lifetime value than commercial sites as they offer a service clients will continually come back for.
Churn or abandonment rate is the percentage of clients that end their relationship with you in a month. They can either cancel subscriptions or simply not return to your business. Albeit a depressing metric, it gives you an overview of how many clients you’ve lost. Monitoring this metric will also show you if you’re going wrong somewhere along the sales funnel.
Daily or Monthly Active Users
This performance metric shows you how many of your acquired users are active on your platform. It can be measured on a daily, weekly or even monthly basis.
Other Key Performance Metrics Frequently Used
The above metrics are only a few that can be used; there are many more. The other metrics that are frequently used in growth hacking include:
- Lead Velocity Rate (LVR)
- Customer Involvement Score
- Renewal Rate
- Viral Coefficient
- Quick Ratio
- Recurring Monthly Revenue
Steps Used in Growth Hacking
Now that we understand a bit more about growth hacking and the metrics used to monitor performance let’s look at the actual steps to start implementing this strategy.
Perfect Your Product
Analyze the needs and preferences of your target market using market research. Use this information to improve and perfect your product or service for that market. In this case, you can scrape Instagram and other social media platforms to get more data on your audience’s preferences.
Set Measurable Goals
For growth hacking to be successful, you need to set definite, actionable goals that contribute to the company’s overall growth. These set goals will keep you from broadening your efforts and will ensure your focus remains centered.
Collect data through web scraping and market research to form the baseline of your goals. For example, you can scrape Instagram to find out the number of followers that competitors have so that you can set an achievable goal for how many followers to gain.
Design a Test for Your Hypothesis
Experimentation is a key part of growth hacking. You need to be able to think of ways to meet your goals, test your hypothesis and adjust according to the results.
Analyze the Performance
Analyzing the performance of your chosen key metrics is essential to see what strategies work and which don’t. As you start collecting more data specific to your business, you’ll soon be able to use and adjust the information to benefit other areas of your strategy.
Based on the performance results, you can start optimizing your efforts. This can mean making changes to areas showing low performance, replicating successful strategies or improving existing ones to get even more benefits.
Growth hacking is a smart strategy that helps startups and small businesses grow quickly. This technique doesn’t require expensive marketing tools or consultants. Instead, you just need to set your growth goals, determine how you’ll measure them and analyze the results to see where you need to make adjustments.