According to figures from the GEM 2015/2016 Global Report, about 100 million businesses are launched annually. However, 90 percent fail, leaving only 10 percent of new startups as the survivors succeeding in their endeavors.
Have you ever wondered how is it that some startups grow into massive multinational corporations while others keep struggling throughout their lives? The secret to business success lies in ‘growth hacking.’ This concept has gained popularity in recent times and changed the game for modern marketers.
The initial growth phase is the most critical period for any startup because this is when you need to get your name out there and build a strong customer base. The truth is, it is almost impossible for startups to compete with the existing big players using only traditional methods. They need to come up with innovative and creative marketing practices to ensure quick growth. It is possible through growth hacking.
Take the example of Pinterest. The company was able to build a strong user base of 70 million and 500,000 business accounts within just three years. In fact, it is one of the biggest social platforms today. According to a 2015 report by Shareaholic, Pinterest is the second largest social platform, after Facebook, in terms of referral traffic. The secret to this massive growth is that the company was able to build a product that was and still is highly appealing to the users. The platform is so addictive that its users spend hours saving, sorting, and managing their pins.
Moreover, what made Pinterest even more appealing was the fact that is was originally launched as an invitation-only platform. Once the company achieved the desired level of hype, it dropped its invitation-only approach (around 2012) and became open to the general public.
Would you want your startup to see this kind of success? Here’s more on the growth hacks that will work like magic for your company:
Offer a Free Service (or Products)
People love getting things for free. In fact, offering freebies is a great way to attract attention and increase your customer base. Take the example of Hotmail, one of the first email providers. Hotmail offered free email services to its users and got 20,000 people to sign up. But that was not enough. They went a step further and added unique messages such as ‘Get Your Free Email at Hotmail’ at the end of each email sent by existing Hotmail users. This message helped them pitch their product to the friends and families of the existing customers. Initially, they started getting 3,000 new users per day, and within six months they had already roped in 1 million users. Before selling the company to Microsoft, Hotmail had created a strong user base of 8.5 million users.
Takeaway: If you believe you have a reliable product that will appeal to your target audience, consider offering it free of cost for a limited period. This will help you attract initial attention. Once you have built a robust customer base, make your customers your brand ambassadors and let them spread the word about your brand.
Dual-Sided Referral Programs Work Wonders
One reason why many startups fail is because the cost of acquiring new customers is high and it often exceeds the company’s ability to monetize customers. Most startups work on a limited budget, so high cost per acquisition and low returns exhaust the funds and eventually lead to a shutdown.
To ensure success, startups need to devise new methods to churn more out of the existing client base. Referral programs often prove to be an efficient method to monetize customers. For example, the initial cost per acquisition for Dropbox, a file hosting service, was a whopping $233-388 with a low LTV (Lifetime Value) of $99. This was when they came up with their referral program—invite a friend, and both get extra free space. The user base grew from 100,000 registered users to four million registered users within just 15 months, which was an increase by 3,900 percent!
Uber also did a great job introducing its referral program. The ride-sharing app offered a unique personalized referral code as soon as a new account was activated. Every time an account was created using the referral code, both parties got free rides.
Dual-sided rewards encourage users to approach their contacts and engage in word-of-mouth marketing. By leveraging this approach, startups can grow tremendously within short periods. However, make sure everyone gets something worthwhile. You will need to track the referral programs consistently to stay in control of them. Remember, if the referral program goes wrong, it can affect your brand adversely.
Create Amazing Videos
Telling stories is an effective way to attract and retain attention. The same approach can be used to create awareness and visibility of your brand. Visual content gets viewed and shared on a massive scale, so you can get the word out with little effort.
However, not just any kind of visual content will work. Video is the most impactful form of visual content and leveraging it can be one of the greatest growth hacking avenues available to startups. According to Buffer, videos get the most engagement on Facebook.
Moreover, according to Syndcast, video will account for 74% of all online traffic by 2017. Therefore, startups must make the most of video marketing and leverage it as a growth hacking technique. Make sure your videos offer value and address the needs of the target audience. Red Bull, for example, has been able to win over 4 million subscribers for their YouTube channel and reached a total of a billion views in 6 years. Being an energy drink brand, Red Bull posts videos featuring athletes, daredevils, and other risk takers that appeal to their target audience.
Creating product-explainer videos can also be helpful, especially for product-based companies. Videos help you deliver your business message in an entertaining manner.
Take a Growth Manager on Board
Appointing a growth manager can be a turning point for your start-up. A growth manager works cross-functionally with different departments such as engineering, design, analytics, operations, and product management to develop and execute growth initiatives.
Creativity, strategic thinking, and leadership qualities are characteristics every growth manager should possess. Apart from this, the person carrying out that role should be fluent in managing acquisition channels that include owned, paid, and earned media. In short, growth managers design strategies that ensure quick growth for their organizations.
However, appointing a growth manager can be troublesome during the formative years (of the startup). This is because growth managers tend to be very expensive, which is why it may not be possible for startups with limited initial budgets to hire an experienced growth manager.
However, being a business owner, you can wear the hat of the growth manager yourself, or encourage one of your employee who has the qualities to take up the role. With proper training, correct knowledge, and specialized accreditations, such as PMP certification, which will enhance your knowledge in the field of project management, you will be able to tackle complex projects with ease, using fewer resources. You can then become an efficient growth manager for your organization. Moreover, with the availability of various project management tools such as Basecamp, Workzone, Trello, and others, you can make the task of tracking and completing projects easier.
Going back to the Pinterest example, the secret of growth hacking lies in building something appealing and valuable for customers. Consider the internet as a temple to consumerism and offer what you do the best. If you get that straight, the rest of the growth hacking part will become easier.
Also, remember that when it comes to growth hacking, you need to identify a foolproof method that will work wonders for your company. So, it would be wise to try different methods and see which one clicks. To get started, try the above tips, and you may find your growth graph soaring high.