What is growth hacker marketing?

Traditional marketing, as we know it, is creating brand awareness via TV, radio, print, billboards, getting celebrity endorsers, etc.  The book "Growth Hacker Marketing" by Ryan Holiday explains how a new generation of megabrands like Facebook and Dropbox have successfully created global brand awareness without spending big budgets on traditional marketing.

In an article written by an influential technologist and entrepreneur, it is predicted that growth hackers will replace marketing. 

So what is growth hacking and what do growth hackers do? 

Here's the simplest definition I could find in the book: 

The end goal of every growth hacker is to build a self-perpetuating marketing machine that reaches millions by itself. - Aaron Ginn

One of the earliest examples of growth hacking actually dates back to 1996 when Hotmail was launched. During a meeting between the Hotmail founders and a venture capitalist, the VC asked the founders - could you put a message at the bottom of everybody’s screen?

So Hotmail put this at the bottom of each message sent via Hotmail: 

P.S. I love you.  Get your free Hotmail. 

By just adding that one-liner, Hotmail's growth became exponential - 1M users within 6 months.  Users doubled in 5 weeks.  By December 1997, with nearly 10M users, Hotmail was sold to Microsoft for USD400M.  Everything was implemented and executed by people without the slightest bit of marketing experience.   (The stats may not look impressive today but don't forget, in 1996, the global internet penetration was less than 1%.)  

Given the Hotmail case study, you could say that the job of a growth hacker isn’t to do “marketing”, it’s to grow companies really fast ... to take something from nothing to make it something enormous within an incredibly tight window.   

What else makes growth hackers different from marketers? 

A growth hacker is someone who has thrown out the playbook of traditional marketing and replaced it with only what is testable, trackable, and scalable.  Their tools are emails, pay per click ads, blogs, and platform APIs instead of commercials, publicity, and money.  While their marketing brethren chase vague notions like “branding” and “mind share” , growth hackers relentlessly pursue users and growth - and when they do it right, those users beget more users, who beget more users.  They are the inventors, operators, and mechanics of their own self-sustaining and self-propagating growth machine that can take a startup from nothing to something.

But beyond getting the product out there, the book also highlights the important of the product itself.  Holiday cites that the single worst marketing decision you can make is starting with a product nobody wants or nobody needs.   Or to put it another way - the best marketing decision you can make is to have a product or business that fulfills a real and compelling need for a real and defined group of people  - no matter how much tweaking and refining this takes.

  

An example of tweaking or refining would be Instagram.  Did you know that Instagram didn't start as Instagram?  It was previously called Burbn and its purpose was a location-based social network with an optional photo feature.  

The founders realized that its users were flocking to only one part of the app - the photos and filters.   In one meeting, one of the founders asked - how are we going to evolve this product into something millions of people will want to use?  What is the one thing that makes this product unique and interesting?    

So Burbn was tweaked and refined.  It became Instagram - a mobile app for posting photos with filters.  The result?  100,000 users within a week of relaunching.  Within 18 months, the founders sold Instagram to FB for USD1Billion. Whoa...

When a product reaches a point where its value proposition and customers are in perfect sync with each other, this is called the Product Market Fit (PMF).  It's considered the holy grail for every growth hacker.  And this isn't expected to happen at launch. Achieving PMF could be after several tweaks resulting from understanding user feedback. 

And achieving PMF, as Holiday pointed out, is very critical because he explains that the prize and spoils no longer go to the person who make it to market first.  They go to the person who makes it to Product Market Fit first.

The last important point discussed in the book is about virality.  I like how virality was defined in the book - Virality is not an accident.  It is engineered.

How do you engineer virality?

1. The product must be inherently worth sharing.

2. Don't just encourage sharing but create powerful incentives to do so.  If you do it right, people will advertise your product and feel like they are the ones getting something out of it. 

The best example for me here is Dropbox.  You get rewarded for various user actions.  Link your account to FB and get free 150MB storage, refer a friend and get 500MB free storage, and so on.   And guess what?  35% of Dropbox customers come from referrals.  Wow.    

Since everything in growth hacking is trackable, the virality of a product is measured by  its K factor.  K factor, in the medicine world, is used to describe the contagion of disease.  In the startup world, the viral coefficient measures the number of new users that each existing user is able to convert.  

The book has a lot of other interesting things and this is just a peek.  It's an easy and fast read - only about 100 pages.  I have the revised and expanded version published in 2014; the original version was published in 2013.

In the expanded version, there are additional sections like the FAQs with Holiday - these are frequently asked questions Holiday gets via email and Twitter. I picked one question that's the most useful for startups.  Here you go:

If you were launching a startup or new product, what questions would you ask yourself before launching?

- Who are my ideal early adopters?

- How can i make my platform particularly enticing to them right now?

- Why is this service indispensable? Or how do i make it indispensable to them?

- Once they come on board, does the service provide/encourage/facilitate them inviting or bringing more users with them?

- How willing and prepared am I to improve based on the feedback and behavior of these users?

- What kind of crazy/cool thing can I do to get attention - something that, ideally, no one has ever done before?

If you're into marketing, or thinking of having a startup, or have a startup already, or just simply interested in technology, Growth Hacker Marketing is a great read.  :)

Lessons from the Milkshake: How to make your product or service better

When you're in marketing, the general question you continually ask yourself is how can you make your product better, faster and more affordable.   But while reading "How will you measure your life" by Clayton Christensen, a case struck me that sometimes, the way to improve one's product or service isn't in the product's inherent attributes.

For example, the case that was cited in the book was for a fast food chain that wanted to ramp up the sales for its milkshakes.  (Ooops, before I continue, the book "How will you measure your life" isn't actually a business book.  It's about achieving a fulfilling life but it uses a lot of analogies from the corporate setting and I really enjoyed reading the business cases.)

Source

Anyway, going back to the milkshake case, the most logical thing to do was to conduct a survey.  Get a sample size from your target market (certain age range, gender, socio-eco class, etc.) and ask them "What will make you buy more of our milkshake?  Do you want it chocolatier? Cheaper? Chunkier?"  And that's what exactly the company did.  

The company tallied the results of the survey and improved the product based on the dimensions identified.  But the chocolatier, chunkier milkshake didn't translate to sales or profits.

The company got the author's colleague as a consultant to look into it.  What he proposed was a new way to look at the milkshake problem.  He asked the question - what "job" arises in people's lives that causes them to "hire" a milkshake?

With this paradigm shift, they conducted a new and different study.  They weren't focused on the demographics of their target market or the key attributes of a milkshake.  Instead, they observed what time people bought milkshakes, were they alone, what were they wearing, did they buy other food with the milkshake, did they consume the milkshake in the restaurant or took it out, etc.

The results were surprising.  Almost half of the milkshakes were sold early morning by people who were alone, who didn't buy any other food and who took out the milkshake and drove off in a car.

To further probe, they interviewed the people who came back the following mornings by asking "Can you help me understand what job you are trying to do with that milkshake?" When people struggled to answer the question, they asked "Think about the last time you were in this same situation needing to get the same job done but you didn't come here to hire that milkshake.  What did you hire?  

There were various answers - bananas, doughnuts, candy bars, bagels... but their favorite was the milkshake.

Based on the study, they found out that most buyers in the early morning had a long and boring ride to work.  So they were hiring the milkshake to keep their commute interesting.  They weren't hungry yet but they needed something to so they won't get hungry by mid-morning.

And when each of the alternatives was analyzed, they began to understand why the customers preferred the milkshake over all others.

Bananas get easily digested and thus, they get hungry again by mid-morning.
Doughnuts were messy to eat making their fingers sticky and leaving crumbs on clothes and sugar on the steering wheel.
Bagels are tasteless so they were forced to spread cream cheese and jam on bagels as they drove.

They liked milkshake the most because it took a long time (around 20 minutes) to finish the thick milkshake with its thin straw.   And they felt full the whole morning.

The fast food company also discovered that in the afternoon and evening - there was another different  group of buyers who hired the milkshake to do a different job.  The buyers in the afternoon and evening were dads who brought their kids with them.  And they said "yes" to a "milkshake" to their sons/daughters because they have said "no" to their children all week long already - no to playing, no to sleeping late, no to a new toy. It was time to say yes to something when their kids asked.  Yes to a milkshake.

Unfortunately, when they observed this group, the fast food company realized that the milkshake wasn't doing a good job because what happens is that the dad usually finishes his meal ahead of the child. And after the child finishes his/her meal, he/she still had to finish his milkshake but it usually takes forever to suck it up in the thin straw.

The milkshake, thus, wasn't doing a good job because it was hired to make the dads look nice, and not to entertain the kids. So what eventually happens is that the dads would grow impatient as they waited for the kids to finish the milkshake.  Then they would tell the kids that they don't have the whole night so they clean up the table and the milkshakes are left unfinished.

So given the findings, what would make people "hire" more milkshakes?  For the morning buyers, allow them to get their milkshakes faster so they are out of the store to drive off to work more quickly.  For the evening buyers, find a way for the kids to consume the milkshakes within a reasonable time - maybe a smaller-sized milkshake, or a less thicker milkshake, or a thicker straw.  Of course, the case didn't state anymore what were the improvements that helped the fast food company successfully achieve its goals.

Anyway, the next time you're brainstorming on how to make your product or service better, it's time to revisit the lessons from this Milkshake Case. :)

What quality means for the Japanese, American and French

The Japanese are known for their attention to detail and unyielding demand for quality.   I read this interesting anecdote from Dana Thomas’ Deluxe.

In the 1980s, Chanel’s Japan president Colasse used to work for another luxury brand. A Japanese woman returned a dress to the store and said it was defective. He inspected it and saw a 2-inch thread dangling from the hem. He exchanged it and apologized profusely. Then he did a test. He took the dress to a French woman. She tried it on, like it, saw the thread and said “I can cut it”.  He took the same dress to an American who tried it on, liked it and who never saw the thread.

Amazing how a 2-inch dangling thread can make a big difference to 3 nationalities.  :)