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Want to Hack Serious Business Growth? Do a Lean Start Up!

April 4, 2016 By Matt Janaway

To many entrepreneurs and businesses, ‘growth hacking’ may be a mystery wrapped in an enigma. And even more of them may be hearing the term ‘lean startup’ for the first time.

If that’s you, read on, because these are game changing concepts that are leading businesses to incredible growth by changing everything about startups and product development.

In this post, we’ll just scratch the surface of these exciting ideas and see how the two relate to exponential business growth, and each other.

 

Table of Contents

  • So, What is Growth Hacking?
  • What Comes Before Growth Hacking
  • Lean Startup Vs Conventional Startup
  • What is Lean Startup
    • Conclusion
    • Wait! Before You Go, Read:

So, What is Growth Hacking?

It might seem like a trending hipster term but it can be very useful.

In part, it can be described as a kind of marketing, though there’s more to marketing than growth hacking.

In marketing you:

  • Research the market, identify a need, and come up with a targeted offer that satisfies that need
  • Select the ways (or channels) to communicate the offer, attract people, and sell it most profitably

Growth hacking focuses on the second part.

A growth hacker identifies the best channels for communication and customer acquisition in order to seriously boost sales and profits. But this is what a conventional marketer does too, so what’s the difference?

A conventional marketer depends on subjective methods, such as planning and his/her gut feeling to run marketing campaigns, hoping to attract potential customers to the top of sales funnel.

A growth hacker leverages business intelligence or analytics technology to analyze the sales funnels and find the openings for rapid business expansion. In particular, growth hackers exploit digital and social media to make the product go viral – often their solution can be a simple tweak or change.

There are no right and wrong ways to growth hack, just successful and unsuccessful growth hacks. Instagram growth hacking can work very well for some startups and Twitter can work as a great platform for others.

But much before that, a growth hacker helps create the perfect product in order to achieve the growth..

 

What Comes Before Growth Hacking

Marketing today is driven not by advertising, but by product. Word-of-mouth spreads fast on social media, and with the strong demand for quality design, a poor product simply can’t be growth-hacked.

One of the favorite examples growth hackers love to quote is Hotmail, how it grew the subscriptions to 1 million users within 6 months by using the simplest growth hack ever. It was the tagline,

‘PS: We love you! Get your free email at Hotmail,’ which they added at the end of every outgoing email, and saw their growth curve transform into a hockey stick.

Hotmail-Growth

Hotmail’s growth curve: (Source: SmartInsights)

However, think about it for a second. Would the results be the same if Hotmail had a poor product?

What would happen if the link to the subscription page didn’t work, or if the servers were jammed, or the interface had a poor design? In all likelihood, they would lose their existing subscribers instead of acquiring new ones.

The same is true for PayPal, GroupOn, Dropbox, Air BnB, and other widely quoted growth hacking examples.

Before they achieved their historical triple-digit growths, they had a product or a solution that a large number of people really liked and wanted.

So, here’s your first step to growth hacking: STOP!

If you’re trying to sell a poor product, stop. Even if you have a titanic advertising budget, you’ll be sinking it without hacking any significant growth. As Dave McClure puts it in his presentation:

Do not try to do a viral marketing campaign until your product doesn’t suck, because, what will happen is people will tell other people that your product sucks, so don’t do that.

But how do I know if I have a great product?

The answer is that you can never know, until you ask your customers.

You might think it’s great but your opinion here doesn’t matter.

 

Lean Startup Vs Conventional Startup

This is why the lean startup movement has been gathering momentum in the recent years. It is a methodology for developing businesses and products first proposed by Eric Ries in 2008.

In the traditional startup, you conceive a product, write a business plan, raise the capital, recruit a team, and start selling like hell. Basically, what you’re doing is building castles in the air.

You have no way of knowing that a large enough market does care about your product. And while you have put down your acquisition and sales targets in your business plan, you have little idea about how to achieve them.

The typical startup begins with a business plan, which is developed after months of research and number crunching, all the while sitting in isolation at a desk.

It’s virtually a work of fiction that describes the opportunity or the need, the market size, the product and how it fulfills that need, and includes a projection of sales revenues, income, and cash flow for the next 5 years.

The product development also progresses in isolation, or even secrecy. A considerable (read fatal) amount of investment has already been made by the time the product sees the daylight, and the entrepreneur realizes people don’t want or like the way it is designed.

Unsurprisingly, then, 75% of all startups fail! The daydreamed business plan evaporates as soon as it enters the real world. As Mike Tyson once put it, “everybody has a plan until they get punched in the mouth.”

 

What is Lean Startup

A lean startup is the antithesis of this decade old formula. It involves experimentation, customer feedback, and adaptive design, as opposed to baseless planning, gut feeling, and the design-first mantra.

In a way, a lean startup is a staunch implementation of the basic marketing concepts, right down to where marketing should actually start—the end customer. ‘Build it and they will come’ has never worked.

Instead of the business plan, a lean start-up entrepreneur/growth hacker develops a set of hypotheses.

Then, he/she extensively tests those hypotheses by going out into the market and asking questions from his potential customers, distributors, and opinion leaders.

These questions concern the features, pricing, distribution, and acquisition channels.

Business-Model-Canvas

The business model canvas for lean startup (Source: HBR)

The research, called customer development, is carried out in tandem with product development.

The lean startup methodology professes agile development, in which the founders quickly gather resources to develop the product up to a minimum level for testing.

Further development is made iteratively and incrementally, based on the customer responses. The emphasis is on quick turnaround and retesting. The goal is to create value in every aspect of the offer.

As a result of agile development, the costly errors and delays of conventional product development are eliminated, and virality is built into the product’s design. In the words of Seth Godin,

Virality isn’t something you do to a product, it’s something a product is.

 

Conclusion

In order to be hacked into a jaw-dropping growth, your product must give the user their ‘aha moment,’ compelling them to go ahead and share their experienced through their Facebook, Whatsapp, Twitter, or other social networks.

For serious growth, your referrals and repeat customers have to keep growing at an increasing rate.

Only great design will ensure that. And to develop a great design, you have to do a lean start up.

Wait! Before You Go, Read:

Improving Customer Service In Your eCommerce Business The New Kajabi: Easily Sell Your Content Online Why Mobile Flexibility is Vital in a Digital-First World The Impact of Your Driving History on Insurance Rates: What You Need to Know How to Build an Onboarding Funnel? Hostinger: High-Quality Cheap Web Hosting Blowfish Business: Make Yourself Look Bigger! 10 Online Business Ideas That Will Bring Money Next Year 6 Ways to Completely Blow Your Online Advertising Budget Perfecting The Art of Talent Sourcing for Modern Business How to Procure the Assets Necessary to Run a Small Business Using Technology To Benefit Your Organisation An in Depth Look at Creating the Ultimate Website for Your Business How to Handle Property Damages to Your Small Business Do You Know What Your Customers Really Want? 5 Ways to Build a Killer WordPress Site for Your Business An Effective Strategy to Increase the Sales of Your eCommerce Top 9 Email Marketing Tools For Small Businesses Default ThumbnailTips And Tricks For Promoting Your Product How to Split Online and Offline Marketing Budget How To Invest Your Pennies In The Right Place Five Benefits of Being a Multi-Income Individual Forminator plugin_screenshot taken WordPress_orgForminator: The Bulletproof WordPress Plugin for Building Any Type of Form 4 Tips to Improve Your Accounts Receivable Process At What Point Are You Classed as an Influencer?

Filed Under: Small Business Tips, Social Media & Marketing Tagged With: business, marketing, startup, strategy

About Matt Janaway

Comments

  1. Carlton says

    April 5, 2016 at 3:41 pm

    Great post Matt and an enjoyable read. I think many will appreciate that simple breakdown you did in the beginning on what growth hacking is compared to conventional marketing. I always felt like growth hacking was a fancy way of “using common sense in marketing” but you definitely pin-pointed it.

  2. GRONADE says

    October 17, 2016 at 8:30 am

    Good post Matt. This post is absolutely new to me and is very informative for other newbies too.
    Thanks for sharing.

  3. Brian says

    October 27, 2016 at 8:07 pm

    This is good information. I had never heard of some of these terms but it is important to understand them to grow a business. Love the Mike Tyson quote. Thanks for sharing.

  4. Cook says

    December 30, 2016 at 1:17 pm

    Hi, Matt, Such new kinds of business thinking I have never seen before. Growth hacking in very much effective though I didn’t know it before. Thanks for sharing this amazing idea with us. Hope we will get this type of rate post regularly. Thanks.

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