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Blog | Mar 9
WRITTEN BY Reetta Heiskanen
Growth hacking is a data-driven and test-oriented approach to growing a business. It is a mindset first and a set of tools and strategies second that calls for a strong commitment to testing and trying out new things, failing and iterating fast, and driving real business impact. All of which are quintessential for an upstart, or any venture, looking to grow and scale.
Before entering the VC side of the table I worked at the startup Brella, building the company’s customer success function, setting up U.S. operations and leading communications. During my first year, the company saw revenue growth from $200k to $1,5M. Here are the key learnings gathered through this growth phase:
Start by defining the KPIs that are closely tied to business performance – a couple of the usual suspects are Cost per New User, Customer Lifetime Value, Retention, and ROI. To ensure your efforts aren’t overstretched, pick one KPI that really matters and reverse engineer the other metrics from there. For example, if you pick Customer Lifetime Value to optimize for, the other supporting KPIs are the ones that correlates with it – such as ‘Customer Acquisition Cost’ and ‘Customer Retention Rate’.
Avoid vanity metrics that don't really have an impact on your business. For example, website visitors for the sake of having website visitors is a vanity metric unless it is directly linked to your business – to make the metric more relevant, consider tracking website visitors that lead to inbound leads.
Understand your customer – easier said than done? Here's how startups can approach this with four easy questions:
a) Who are your customers? This should help you identify your potential target audience demographics and behaviors to start iterating with.
b) Where are they? This should show where your customers spend time and thus, help you map and test the best channels for reaching out to them
c) What do they want? With this, you should find out the biggest selling points and key messages that resonate the most
d) How do they interact with your business? Companies often have a good grasp of the ‘who’, ‘what’, and ‘where’, but they don’t understand how their business relates to their customers. Mapping out the customer journey (from awareness to consideration to conversion) is a great exercise. It can help you find the places for improvement or obvious steps to cut out entirely.
The early employees building customer success and marketing in a startup work tightly hand in hand. Despite all of the clever and crafty ways to grow a business, ‘word of mouth’ is still one of the most regarded and effective means to go about it. If you think back, one of the key reasons why you buy (or buy into) things is most likely because someone you know and trust recommended it to you.
So, turn your best customers into advocates for your business using tools like case studies or referral programs. This will help you to create the social proof that helps new customers to quickly trust your business and the solutions you’re creating – which in return will continuously feed your growth loop.
When it comes to growth, ultimately, all roads should lead to conversion and lead generation – and digital marketing is one of the most effective ways to go about it. At the heart of digital marketing efforts is the company website, which is often the representation of your entire business. Therefore, whether you want potential customers to submit a contact form, register as a user, attend an event, or whatever the conversion is, make sure your company website helps with that.
Constantly work on your SEO while keeping the messaging and branding consistent. This will give your customers a chance to engage with you. Most importantly, make sure the customer knows what the next step is when they are interacting with you.
It's a great strategy used everywhere from SaaS startups to consumer brands like Apple with their various plus and pro models, as it's always more sustainable and easier to grow the average value of existing customers than bring in new ones. In the context of SaaS business, this could mean introducing Freelance, Pro, or Enterprise tiers to your product.
Tiering lets you move away from a one-size-fits-all approach and give your customers the personalization that they need. It helps you to tailor your solution to the needs, characteristics, and potential value of your customers, and allocate your resources to building potential high-value relationships.
It’s important to bear in mind that experimentation and tangible results don’t have to be mutually exclusive. Simply, set a metric that can be considered as a tangible result, or at least correlates with one, to measure your experimentations. If, for example, ‘lead form submission on the website’ is the result you’re looking for – ‘cost per visitor who has visited 3+ pages on the website’ could be the correlating experimentation metric.
Break down your growth strategy into smaller pieces and experiment with different audiences and different parts of the funnel simultaneously. Quickly develop the skills to know when to keep trying, when to adapt, and when to discard efforts that show no real added business or value.