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What exactly is “growth hacking”?

04/12/2017 10:06
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Analytics, creativity and a lot of experimentation. Growth hacking is a tool that’s ideal for startups and one that big companies should pay attention to.

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“”We marketing people are like lawyers – we change our jargon in order to be able to charge our clients more,” says Sergio Campano, assistant professor at the Instituto de Empresa business school in Madrid. He made the remark during a recent talk at Google’s Madrid Campus about the fashionable new term in the digital world: growth hacking.

Don´t panic, anyone: Campano was just trying to attract the audience’s attention. Growth hacking is not an expensive hoax - just the opposite. If growth hacking is anything, it´s cheap. It´s simply the application of techniques to quickly increase the number of users of an online product or service, at a very low cost -  or if possible, at no cost.

As Néstor Guerra, entrepreneur and professor at the EOI (Escuela de Organización Industrial) business school explains it, growth hacking “is the use of techniques to grow through alternative media, using analytics as the main focus. We think of growth hackers as kids in a garage, but they’re data scientists.”

Definitions always work better when used with examples. The term “growth hacking” is relatively new; it was coined in 2010 by the entrepreneur Sean Ellis, who has since devoted himself professionally to exploiting the concept. There are already many examples of digital companies that have grown thanks to these techniques, which involve a certain degree of cunning. There are many examples, but let´s take the best-known one, Airbnb.

Today, the company created by Brian Chesky and Joe Gebbia manages more rooms than the Hilton Hotel chain. But in 2010, when it was only two years old, Airbnb had a serious problem. It need to increase its user base, and that was precisely what craigslist, the popular online classified ad company, had. Airbnb´s strategy was to offer everyone who advertised a place to sleep on its website an ad in craigslist– but without letting craigslist know.

How did Airbnb do it? Basically, by creating a specific bot that replicated the craiglist data bases, making the users of one site de facto users of the other. Airbnb had everything to gain from that integration, as its ads were more attractive, better presented and had better photos than those of craigslist. The result was that, little by little, the users began to forget about craigslist and started to visit Airbnb directly. When craigslist discovered the play and took the technological measures to prevent it, it was already too late.

The Airbnb case has become a paradigm of growth hacking, but Nestor Guerra cautions: “Success stories always grow more beautiful as time passes, but Airbnb made hundreds of mistakes before finding its traction model. Now, a lot of startups make the mistake of trying to imitate the strategy of Airbnb or Dropbox,” another often-cited example of growth hacking.

Guerra believes startups that want to do growth hacking should build their house from the bottom up. In his opinion, the bottom is the lean startup, that is, the methodology by which the most innovative startups measure their growth model, through constant experimentation and validation. The key is to test, then fully analyze the results of the test and adapt the company to the results.

That flexibility and resilience is natural in small companies, but growth hacking is also reaching large companies. They can increase their user and customer numbers by making big investments in marketing. But why forego a practice that can take you, for very little money, to the place you want to be after investing six- or seven-digit figures? Growth hacking fits the needs and characteristics of startups like a glove, but it’s not just for companies that were born in garages. 

 

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