How startups with low budgets can explore growth-hacking to expand
The term ‘growth hacking’ refers to a wide range of tactics including sales, marketing and engineering that are employed - initially as experiments - to fuel massive growth. It is an essential element of scaling startups today, since most of them deal with meagre budgets at the outset, during which they can attempt only small experiments. Once these experiments reveal tangible results, the successful ones are focused on and significant budgets are allocated to them.
Growth hacking in sales typically involves finding which of the classic tactics work best for generating leads and converting these leads into customers.
These tactics include intense networking at industry conferences, cold outreach through LinkedIn, good old Rolodex harvesting, working in tandem with marketing groups to attract people through websites and emails, and classic cold-calling. Within weeks, smart sales teams figure out that powerful silver bullet which effectively seals deals and then ruthlessly execute on them.
Engineering growth-hacking is best described by a credo called 'Perpetual Beta' - a state of continuous innovation - whereby any product is technically available for launch to the public at any time.
By extension, the product is undergoing constant change and innovation, with features being added and tested for popularity. This is aided by an architectural construct called 'modular programming' that enables the addition and deprecation of these features with ease.
The key point here is that product capabilities can be incrementally added or deprecated with ease. Decisions on what to add and remove can be made based on early market feedback, response to competitive pressures, fast-changing needs of the marketplace, changes in regulation and compliance, and so on.
Engineers can growth-hack their startup to great heights by a deft and adroit use of the above techniques - something we have seen regularly across the globe, especially in Silicon Valley.
Marketing growth-hacking can be described, at least in the business-to-business (B2B) startup context, as ideating and implementing tactics that result in qualified lead generation at the lowest cost, and using a variety of messaging channels to convert the maximum number of these leads into paying customers.
B2C (business-to-customer) marketing is a slight variant of this. Replace 'leads' with 'free users' and 'customers' with 'paid users' - where paid means an actual subscription or scenarios by which free users can be monetised by advertisers.
Qualified lead generation revolves around trying out different lead sources - online advertising (Google, LinkedIn, others), sponsoring events at conferences (booths, keynotes), list buying and harvesting, lead hooks on websites, and public relations activities that either generate leads directly or amplify the effect of other campaigns.
A lot of effort goes into optimising content to ensure maximum yield from any website visitor - essentially goading the visitor to fill in a form or chatting with agents to get answers on pricing, features, competitive analysis and other factors crucial to making buying decisions.
Sites with high traffic and ones whose business model is predicated on maximising online activity use A/B testing (two-sample experiments), and multivariate, testing to optimise online content.
A/B testing is a classic case of marketing growth hacking. It allows marketers to quickly change the location, colour, and attributes of any website artefact to ensure that the visitor interacts favourably with that page. ‘Favourably' here means buying a product, subscribing to a service, getting all requisite product information, referring a friend, recommending an offering, or any such action accretive to business growth.
Then, once enough leads have been generated, the 'conversion engine' takes over - usually through marketing automation software - to send regular and targeted messages to educate leads with relevant information to convert them into customers.
These messages are again optimised (by A/B testing or other tactics) to maximise open/click rates and downstream activities towards a specific goal.
Startups that successfully execute all, or at least most, of these tactics achieve rapid growth with low budgets - treading the path to their promised land.
Devang Mehta is a partner at Anthill Ventures, an early-stage investment firm and scaling platform. The views expressed are personal.