Growth Hacking: What it is and How SaaS Businesses Can Use it to Optimize Growth
In this article, we'll discuss growth hacking tips for SaaS entrepreneurs, founders, growth leads or anyone else who is trying to grow a startup in a short amount of time or on a tight budget.
Growth hacking is not merely the new buzzword for SaaS start-ups. Coined in 2010 by well-known entrepreneur and start-up advisor Sean Ellis, growth hacking is not to be confused with traditional marketing. It is a targeted, iterative process focused wholly on hypothesizing, prioritizing, testing, analyzing and refining strategies that will deliver almost astronomical growth in a short period and for very little money.
And though growth hacking has allowed SaaS founders and developers to realize incredible growth, the concept and strategies are still a bit nebulous for many SaaS teams.
How does growth hacking work?
Growth hacking is all about setting growth priorities, identifying channels for customer acquisition, collecting and analyzing metrics and scaling growth. In this sense, growth hacking is a unique process for each company, which allows for internal creativity and ingenuity to be leveraged fully. Regardless of how you approach a growth hack, the endgame always remains the same: increase traffic and visitors, convert visitors into users and transition users into loyal customers and advocates.
Growth hacking engages a familiar funnel based on what is known as pirate metrics (AARRR):
Acquisition using cost-effective channels to take your SaaS to your identified target audience
Activation gets people to try your product
Retention engages users to form a relationship with your SaaS
Revenue is generated as users invite their colleagues to use your SaaS
Referral ensures a revenue stream that provides sustainable growth.
Growth hacking strategies
Effective growth hacking relies heavily on buyer personas and a full understanding of your customer journey, which should be mapped in detail as part of your growth hacking strategies. Mapping allows you to identify and resolve potential hurdles and fallout points, reveal gaps between channels, build faster conversion rates and improve overall customer retention.
The initial hack is to know your target audience, what they like about your SaaS (and what frustrates them), what features they would like to see and at what cost, and so on. You then focus on this narrowly defined target audience and aggressively leverage what you know about it. Getting early majority adopters (usually about 50 percent of your potential user base) onboarded as effectively as possible allows you to focus on getting the late majority and resistors into the fold sooner rather than later.
Airbnb is a familiar example of hacking with a very targeted audience in mind. The company was very strategic in deploying growth hacks that would attract travelers' attention and, more specifically, travelers who did so on a budget but also valued experiential getaways. The company refined its initial product to meet this audience's needs first before adding on later features that would broaden its appeal and expand its user base.
With this knowledge in hand, growth hacking tends to fall into two general categories:
1. Content marketing to raise awareness of your service and drive inquiries toward your sales force. Typical content-marketing activities include:
Using your company blog to share content that underscores the value and return-on-investment of your SaaS
Guest blogging on SaaS-focused and industry-relevant blogs, having influential bloggers review your SaaS or providing influential SaaS bloggers with a free user account
Creating social media content that focuses on the benefits and value of your SaaS company
Creating ebooks and white papers on SaaS generally and your service niche specifically
Creating a SaaS-focused podcast or secure guest spots on industry podcasts
Designing and delivering webinars that educate people on the benefits of SaaS generally and your service specifically
Running contests and giveaways
Using email marketing to build a stronger connection with your current user base (always remember that personalization is the key to ROI in any email campaign)
Getting listed in SaaS-focused marketplaces, review sites, and the like.
2. Product marketing to make your service more appealing and stock your growth funnel. Typical activities in this category include:
Leveraging FOMO (fear of missing out) by creating an invite-only network of users (FOMO marketing is a real thing that creates a sense of urgency in hesitant and late adopters)
Gamifying the onboarding process that incentivizes each milestone or stage-gate with short-term freemiums or access to other value-add options
Incentivizing referrals and social shares by discounting premium add-ons or providing free trial periods for each converted referral (also known as leveraging social proof)
Using traditional social media and PPC advertising.
Dropbox is an exemplar of how a SaaS company can use incentivization as a growth hack. Not only does the company make it easy to refer a friend, but it also offers free additional storage to both users once signup is confirmed. It also offered extra free storage when a user connected their Facebook and Twitter accounts as well as for following Dropbox on Twitter.
Some essential best practices when considering growth hacks for your SaaS company:
1. Growth hacking is not one-size-fits-all and will likely prove frustrating (or fail outright) if you approach it that way. Your product is unique, your target audience is unique and your place in terms of the broader industry ecosystem is unique. Growth hacks that work for one SaaS might or might not work for another, so always start by asking questions, listening to the answers, analyzing what is working (and what is not) and unleashing your creativity to find possible solutions.
2. Narrow your focus and stay there. Trying to be everything to everyone is lousy life advice but can flatline a SaaS growth hack like a ninja assassin. Build detailed buyer personas and stay focused on one or two of them to ensure that you capture as much of your target audience as possible before casting a wider net.
3. The customer journey really matters, so take the time to carefully map it, analyze it critically and respond to user feedback quickly. Listening to users is key to any successful growth hack but is often overlooked as a critical driver of customer experience (CX).
According to a 2019 Garner report on high-impact customer experience strategy: “Most companies believe their CX teams must deliver an innovative customer experience to meet their business goals. However, CX leaders spend most of their time fixing existing CX pain points rather than developing new, innovative CX projects. Unfortunately, this “fix-first” strategy fails to have the desired impact on customer loyalty.” Remember: “CX drives over two-thirds of customer loyalty, outperforming brand and price combined,” so focus on growth hacks that create “salient experiences that enable customers’ self-affirmation, helping them feel confident about their purchase decision and the value they derive from it." An exceptional customer experience builds customer loyalty and advocacy, translating to more referrals, accelerated growth and growth hack glory.
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