Growth Marketing Explained
What is Growth Marketing?
Marketing new products is hard. If your product is new, you know very little about:
- Where to find customers
- Who (if anyone) will buy
- Whether customers will stay and for how long
- How much they will pay
- What features they value the most
So how do you market a product you don’t know anything about?
The key is to build a system that produces growth, rather than focusing on a particular channel, tactic or funnel stage. And to learn as much as possible, as quickly as possible, about who wants your product and where they can be found.
An Experimental Approach
Most marketers know about A/B testing:
- You have a page (for example) that you want to increase conversions from
- You have an idea for a way to increase that conversion rate
- So, you put a new version of the page up on your site, and you also keep the old version. You randomly send 50% of the traffic to each, and measure which one drives more conversions.
By running an experiment, and by closely watching the data, you’ll have evidence that one variation performs better (or doesn’t). You end up with validated learning — learning that’s backed up by data.
This process of validated learning is fundamental to the entire growth marketing approach.
- Before doing anything, a growth marketer might articulate a guess about the effect of a specific change. For example, she might guess that making a certain change to a pricing page will drive 5% more conversions. Or that making a certain change to the product will increase feature usage by 10%.
- She then designs a test to test that assumption. Seeing whether a new version of a pricing page will drive more conversions is fairly straightforward; the new page can simply be A/B tested against the first. Testing whether a major product change will drive growth is a little more complicated, and instead of just going ahead and making the change, a growth marketer tries to design small tests, so that she can collect information about whether the change makes sense to develop, before all the work is done.
- The growth marketer then tracks the results from the test, and uses that information either to act, or to design further tests.
A good way to track this information is in a spreadsheet. For example, this table catalogs hypotheses, the tests of those hypotheses, and the result. (It also shows other helpful columns like who owns a particular test, and when it is expected to be complete.)
|Prospects in the nurture track and confused by the amount of information we put in each email, which causes them not to click|
|Test||A/B test version of nurture track with shorter emails.|
|Results Due||March 23|
|Prospects in the nurture track and confused by the amount of information we put in each email, which causes them not to click||A/B test version of nurture track with shorter emails.||March 23||Tom|
An experimental approach does a few important things in an uncertain environment:
- It makes you accountable for specific results.
- It helps you improve your intuition over time.
- It functions as a knowledge base.
And of course, every experiment is underpinned by data, which means that good growth marketers have to be very comfortable with what to measure, and how to measure it. This data provides the criteria for deciding whether an approach you’re experimenting with is better, or not, and what you measure depends on what you’re trying to achieve:
- On a micro level, you might measure email opens, clicks, pageviews, and so on.
- In your app, you might measure event data: who’s doing what, when?
- At a higher level, you’re looking at the entire funnel toward a conversion event, so you can see what’s most important to test.
- Or you’re looking at a cohort analysis, to show you whether ongoing marketing efforts are improving the experiences of successive sets of users.
- Of course, you’re also looking at revenue, retention and customer lifetime value.
Because good analytics are critical to successful growth marketing, growth marketers tend to focus heavily on digital channels such search, social, web, email and display. The effectiveness of digital channels can be much more easily assessed than the effectiveness of traditional channels such as TV and print.
Cross-Channel, Cross-Funnel, and Cross-Department
When the experimental approach works, it gives growth marketers a lot of power to try different tactics and approaches, and see what works. This is important because the growth marketer’s role isn’t limited to a particular channel, tactic, or even department. A growth marketer’s job is to find growth wherever he or she can.
A growth marketer works cross-channel:
- He might see that Google AdWords ads have a 40% higher cost per acquisition than ads run on Facebook. As a result, he’ll shift money to Facebook.
- Or he might notice that a lot of new signups come from referrals. As a result, he’ll run an experiment to try in-person events as a channel to acquire new users.
- An important channel that’s often overlooked is the product itself. Good growth marketers might look at ways to show messages to users of the product that point to new features or other revenue-generation opportunities. Or they might pull data on a specific set of features to understand which features are best for marketing opportunities. Or they might pull certain segments of users, and target messages toward those segments to improve retention, revenue, or referrals from those users.
A growth marketer also works cross-funnel:
- She might run a new landing page variation one day to increase acquisition efficiency. But the next day, she’ll focus on reducing churn, because the math shows that reducing churn will lead to greater revenue gains than other new acquisition channels.
- Or she might test a new type of push notification to advertise a sale, and see that while the new type has a higher open rate, it actually results in a lower sale volume, and therefore shouldn’t be used.
And lastly, a growth marketer works across departments:
- Using the product as a marketing channel requires collaboration with the product team to understand who should receive a marketing message, and how. But there can also be challenges to revenue growth that are not directly related to marketing, and are more related to user experience problems, or even customer support issues. Working closely with these teams gives growth marketers another way to grow revenue.
- For many products, personal contact from sales plays a key role in acquiring, retaining, or upselling new accounts. A good growth marketer can work closely with the sales department to make sure their contact with customers is as efficient as it can be in achieving growth goals.
Growth Marketing vs. Growth Hacking
“Growth hacking” is often used as a synonym for “growth marketing”. But while growth marketing is about building a system that produces growth, “growth hacking” is an application of the growth marketing system to find ways to find unexpected ways to grow, very, very quickly.
A few classic examples of growth hacks are:
- The YouTube embed code. YouTube was one of the first internet video services to allow people to embed video into their own websites. The ability to do this was incredibly valuable to users, and at the same time dramatically increased the number of people who became aware of YouTube online.
- The Dropbox referral program. Dropbox offered free space to users who talked about the service on social media or referred friends. This quickly increased Dropbox’s reach, since new users were motivated to refer their friends and others to the service.
- Hotmail. Hotmail added a link to the bottom of all emails sent using the service with a link back to the Hotmail service itself. This constituted an extremely well-placed advertisement, since a potential user would see the link while they were in their own, often competing, email client.
Growth hacking can be extremely valuable, but the best growth hacks usually emerge because of a sustained, thoughtful growth marketing effort.
Growth Marketing on Mobile
The best growth marketing channels are digital, and mobile is an especially valuable channel for applying growth marketing lessons. Mobile devices have huge audiences, are with users all day, and allow for extremely granular and detailed measurements of marketing effectiveness.
Want to learn more about how Growth Marketing can help you connect with customers at each stage of the customer lifecycle? Contact us today and let’s talk!