How to ‘Growth Hack’ Your Business
By Bill Cunningham
SCORE Rhode Island recently held a web seminar on “How to ‘Growth Hack’ Your Business”. I gave the presentation and was joined by Tyla Bucher and James Mutschler, also SCORE Rhode Island mentors. An on-demand replay can be found online by clicking here.
Growth hacking is a framework perfected by a group of smart growth specialists in the tech industry. Here is an example from the early days of Airbnb. The co-founders noticed that their New York City bookings were lagging. They noted that the listing photos were really bad, so they decided to do a small and relatively inexpensive test. The two co-founders booked a flight to New York, rented a high-end camera, took photos of many of their New York properties which they uploaded, and then monitored their listing data. The new images increased those particular customer bookings two to three times their previous bookings. The cofounders didn't hire a consulting firm or spend millions on advertising. The problem was solved with a couple thousand dollars. Then they took what they learned and applied it to other properties and markets.
“Growth hacking” is continuously testing ideas to generate growth, then using the data generated by those tests to increase your understanding of how to deliver more value to your customers and captures more value for your business. It is a strategy for growing your business without wasting money or your time. Growth hacking is about getting specific results such as new leads, new customers, increased sales, or lower manufacturing costs.
So what isn't growth hacking? It's not a quick rich scheme or a silver bullet. It's not about hiring a whiz kid or a mentor who will magically find a pot of gold for you. It's not just about acquiring customers or fixing a marketing problem. It's about every aspect of your business model. It involves your entire team and every skill that your team possesses to generate more growth.
Before you try to hack your growth I suggest assessing your core products and services to determine whether you have a good product market fit. Product market fit is the degree your product satisfies a strong market demand. In other words, does your customers want your product? Here are some questions that you should be asking yourself: What's your competitive advantage? Why do customers use your products and not your competitors? Do your customers consider your core products or services a “must have”? How deeply disappointed would they be if your business went under? Do your products or services provide benefits to your customers, fulfill their needs, or solve their problems? Which products or services in your customers view constitute your core value proposition?
Growth hacking involves seven simple steps. First, decide what area of your business you really want to focus on. Second, generate some growth ideas on how to make those improvements. Third, select one of those ideas. Fourth, create a simple growth formula on how your idea will capture value for your business. Fifth, develop a simple test to validate that idea. Sixth run your tests, and finally learn from the results.
For the first two steps, generally focus on those areas of your business that will capture the most value for your business. For instance, if you're an online business, you may want to focus on your website before spending time on a secondary sales channel such as Amazon or eBay. Having one great performing sales channel is preferable to several poorly performing channels. If most of your sales come from wholesale accounts, you may want to focus on increasing the number of stores that carry your products or generating more product awareness for those customers that shop at those stores.
The third step involves selecting which idea you want to test first. I recommend focusing on two simple questions. Which idea will generate the most impact on your business? And which idea is the easiest (will take less time and less money) to test? One example of a relatively easy test is called an A/B test. In an A/B test you create two versions of something such as an advertisement or a letter of introduction. Then you send half to a one group and half to a second group. You gain insight if one performs better than the other.
You may find that many of your ideas fail. However, you'll also learn that those failures are just as valuable as your successes. You'll learn to trust your ideas, backed by test results, more than untested ideas that you initially thought were great.
Every business should identify one key metric called a north star that defines what ultimate success is for your business. If you have an existing business most marketing experts will tell you to focus first on your existing customers. You will want to generate and test ideas on how to acquire new customers, retain existing customers, and increase your customers’ lifetime value.
You will also want to generate and test ideas for your entire customer experience, including your sales funnel activities, product packaging, and even back office activities such as payment processing, shipping, and customer feedback. In fact you can even employ another great framework, called “Lean Thinking”, to find waste in your operations in areas such as transportation, inventory, waiting, over processing, and defects. Believe it or not, Toyota built their car company into one of the world's largest automobile companies using simple lean concepts such as minimizing and eliminating waste. While these concepts were focused on improving manufacturing processes, they are currently used by hospitals, accounting firms, governments and other businesses.
Since the seminar covered far more material than I could above, for the full analysis check out the web seminar recording online by clicking here. In addition, SCORE volunteers are available to assist you. Feel free to reach out to your local SCORE chapter at www.score.org or call 401-226-0077.
For more than 50 years, SCORE has helped more than 11 million aspiring entrepreneurs and small business owners through mentoring and business workshops. More than 11,000 volunteer business mentors in more than 300 chapters serve their communities.
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