TB: I’d pretty much define it as marketing. People often put a spin on it that it is about taking creative shortcuts for example the classic example of Airbnb realising it can steal an audience from Craigslist. These days, though, it’s pretty hard to blag your way to success using those kinds of guerrilla tactics. Growth hacking is essentially marketing for the startup world.
TB: It is partly the sheer volume of channels that makes growing a company at a reasonable cost quite difficult. For example, in e-commerce, how do you compete with a larger player that knows its exact CLV (customer lifetime value) and can easily outspend you in marketing? It becomes even more difficult if you do not have a unique product.
There is also the element of sheer speed that is needed. After brainstorming all possible marketing channels, it takes time to find out which ones work. As soon as someone finds an innovative channel that works, people will jump on the bandwagon. This has even seeped into offline world. A good case in point is tube car panels on the underground. Startups have rushed in droves towards tube advertising, making it increasingly more expensive and less effective.
Another challenge is a fundamental skills gap surrounding customer insight and the ability to craft an effective customer message. If you are a tech person you have may have mastered all the marketing channels in the world, but may not be able to turn a product into a single, focused customer solution.
TB: Generally, the initial stages of setting up a company involve acquiring customers or orders for the lowest CPA (cost per acquisition) or cost per order. This often gives valuable data on what works and what doesn’t. Later on, it becomes more about how you build appetite for the product. This is where the likes of tube advertising or other large campaigns become useful.
TB: I joined OneFineStay after its Series A round. The initial challenge was how to acquire new ‘hosts’ in a scalable way. Previously it had all been through PR and word of mouth. The team and I mapped out out all the marketing channels both digital and offline, the volumes they could generate, the average associated production and media costs, and what their conversions were. With this, we built a prioritized list of channels to test out.
One contentious, but ultimately successful channel we decided to use was a door drops. People are usually bombarded with leaflets through their door, but we decided to fashion them into doorhangers (much like in hotels). This was enough to tempt many homeowners within a few seconds to go on the OneFineStay website.
‘Growth Hacking’ is therefore as much an art - using more creative instincts - as a science - keeping track of which channels can acquire customers cost effectively and at scale.
Tom Beverley advises EC1 Capital on growth hacking (or marketing). He is co-founder & CEO of project J and had held senior marketing roles at Fab.com, onefinestay and Confused.com.