What is growth marketing and why do you need it ?

If you have ever dabbled in marketing even for a bit, you must have heard the catchy new term ‘growth marketing’ (also known as growth hacking). But how well are you actually aware of what this term stands for?

In this article, we are going to discuss the meaning behind the term, how it can be applied to your business, and, most importantly, what you can expect to gain as a result. So make yourself comfortable and enjoy the read!

Growth Marketing

« If you’re not testing, you’re losing. »

Growth marketing is about (you guessed it!) — growth. More precisely, it is about the growth of key metrics at each stage of your funnel. Growth marketing takes traditional marketing to the next level by adding layers of experimentation, data-driven approaches, and user experience optimisation.

The term ‘growth hacking’ was first coined by Sean Ellis in 2010. Soon enough the term caught on all across the globe: it became the topic of dozens of books and thousands of articles, while both small marketing teams and large departments alike eagerly took it on board.

The fundamental aspect behind growth marketing is rapid experimentation across all marketing channels and product development to identify the most efficient methods to achieve business growth. The primary goal of raising the revenue is done not only by attracting new customers but also through the activation and retention of the existing ones.

Furthermore, growth marketing does not end where the funnel ends. Instead, its goal is to build trust and loyalty between the customers and your brand, converting them into devoted customers who buy more and willingly promote your company to their buddies.

What Does a Growth Marketer Do?

Growth marketing aims to attract as many customers as possible while spending as little as possible. Hence, a growth marketer is a person who uses low-cost strategies to acquire and retain customers.

The ideal growth marker knows how to set priorities for growth, identify new channels and opportunities, scale growth and measure success. Therefore, growth marketers need a broad skill set with robust base knowledge and a marketing foundation. Here is an example of how a T-shaped skillset of a growth marketer looks like:

Personally, I am an avid user of this framework for my own personal development. It is a great skill map that illustrates what other marketing domains are out there, and you should use it to transform yourself into a highly demanded specialist on the market. So my advice for you is to take a screenshot of this image and challenge yourself to define your next steps in your personal development.

Traditional Marketing vs. Growth Marketing

Traditional marketing has a more simplistic approach of presenting a product or a service to the audience with the ultimate aim of making the consumer acquire that said product. Companies with substantial marketing budgets focus on investing in media channels such as TV, print advertising, and radio. As a result, traditional marketing tends to mostly be focused on the stages of awareness and acquisition, thereby failing to consider other stages of the funnel.

Unlike traditional marketing, growth marketing presents an entirely different approach. The idea was born out of the limited budgets many startups have to work around, and it focuses on customer acquisition at lower costs. Growth marketing takes into account each step of the funnel (awareness, acquisition, activation, retention, referral, and revenue). Growth marketers know very well the importance of not only finding new customers but also of keeping them around, as it can certainly bring a company a higher return on investment (ROI).

Looking at the image below, you can see that traditional marketing ends the customer journey after the acquisition, whereas growth marketing digs deeper and taps into the activation, retention, revenue, and referral stages. This full-journey approach is also known as the Pirate funnel or the AARRR framework. You can learn more about it by following this article.

Examples of Growth Hacking

« Think big but start small. »

Now it is time for us to look at some of the examples of successful growth hacking campaigns.

Dropbox - Referral Program

A referral program is a commonly used strategy in growth marketing. It involves rewarding existing customers for inviting their family, friends, and other acquaintances to try the products and services the company has to offer.

One well-known example of a company that uses a referral program is Dropbox, which not only managed to attract thousands of new customers as a result but also turned it into a marketing strategy for growth. Dropbox successfully managed to do so by rewarding their current users with free storage space in return for recommending the company to prospective new users.

Each person invited to try Dropbox would receive 500 MB of free storage per referral, with a total of 16 GB combined from all potentially invited users. This way Dropbox allows the users to obtain up to 16 GB of free storage space, in comparison with the default 2 GB free storage limit.

As a result of this successful campaign, Dropbox acquired more than 4 million new users who signed to the service, in comparison to a mere 100,000 users registered before. Less than 10 years after the initial run of this campaign, Dropbox reached 40 million registered users with a $10 billion valuation.

Tinder: Do Things That Don’t Scale In Your Early Days

Tinder is a dating app that matches people around you. You might imagine that the founders had to spend a fortune to get people to register on Tinder. However, the founders were far more creative in using the old-fashioned strategy.

They went around their university and asked their peers in person to download and register on the app. That's right, they physically traveled to different campuses to create noise and excitement around their application for people to download and start using it. This is what it looked like.

Although this approach was difficult to scale, Tinder founders were able to form and expand their client base from 5,000 to 15,000 people.

The main takeaway from this story is that you have to go out there and talk to your customers. Such a direct sales approach where a business makes a sales presentation themselves will help you learn a great deal about your customers and build a relationship of trust with your clientele, which will, later on, become the fundamental basis for growing and scaling your business.

Hotmail: Your Existing Customers Are Your Most Valuable Sellers

Hotmail is one of the first free email providers on the internet. When the company originally entered the market in 1996, advertising was too expensive, so they came up with one simple growth hack, long before the term was introduced in 2010.

This trick was suggested by one of the investors. The idea was to put the text “PS: I love you. Get your free E-mail at Hotmail” at the bottom of every email sent from their platform. It may seem trivial now, but at that time it was one of the very first phrases alongside others like "Sent from my iPhone" or "Sent from my Blackberry".

As a result, Hotmail managed to turn every single active user into a free advertiser for its services. The service gained popularity very shortly when it started receiving 3,000 new registrations a day. After 6 months from the launch of this strategy, Hotmail broke all records, reaching 1 million users, and in the 7th month, this figure grew to 2 million new customers.

The main takeaway for the companies here is to treat your existing customers as your most valuable sellers. In the case of Hotmail, the personal touch of this message and the fact that it was sent from a friend and not from the company itself made clicking almost irresistible.

Conclusion

Although there are several standards, tried-and-true approaches companies may wish to use for growth, there is no perfect strategy that will ensure quick and consistent business growth. Growth marketing can be as minute as changing a call to action and as complex as reorganising customers' entire journey.

You just need to test different strategies to find the one that works best for your company. So, I would recommend you get creative and bold in your growth strategy if you are yearning to capture the attention of potential customers.