What is Growth Hacking and How Does it Work?

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The term “growth hacking” has been thrown around a lot.

You’ve no doubt heard the phrase more and more—especially if you’re in the business or marketing world.

Just check Google Trends.

PC: Google Trends

But what does growth hacking actually mean? And more importantly, how can it help your business?

The Definition of Growth Hacking

Growth hacking is a strategy where businesses try to get more customers and grow while spending as little time and money as possible.

That's it. The concept is similar to a “life hack,” which saves you time and effort. The only difference being that growth hacking is used to describe the methods a business uses to reach its goals faster—and easier.

The goal is that you can put in a steady amount of resources (time, money, etc.) and generate exponential returns.

What Growth Hacking Isn’t

Different tactics bring different results for companies. For example, what works for a recruitment business might not work for a marketing agency.

That’s why one of the key things to remember is that growth hacking requires lots of analysis and testing to find the most suitable (and lucrative) strategies.

Still, there are misconceptions about what growth hacking is.

Growth hacking isn’t a term to describe bad practices, or one set of strategies that will skyrocket your sales. So, avoid any of the following tactics—even if they’re labeled as a “growth hack”:

  • Spamming the internet with bad content
  • Shady link-building (including bad outreach)
  • Employing tactics you think might work without hypothesizing or analyzing

PC: Prowly Magazine

Remember, growth hacking is a genuine, non-spammy strategy to spend little money and get lots of customers.

There is no one “hack” that will generate a small business $1 million overnight, but by doing a lot of small things well, you can grow your business exponentially without breaking the budget or overloading your to-do list.

The History of Growth Hacking

Marketer Sean Ellis coined the term to describe a process used by agile growth organizations like like Dropbox, LogMeIn, and Eventbrite. Growth hacking was the overriding strategy he’d used to help those businesses grow tenfold in a short span of time.

Sean later partnered with other marketers and entrepreneurs to host conferences.

The term “growth hacking” quickly snowballed into a range of tactics employed by startups and businesses to drive growth.

But despite its recent rage, the original concept remains the same. Ellis based growth hacking around the AARRR Framework (also known as Pirate Metrics) to turn visitors into customers. This includes:

Acquisition: Attract potential new customers to your website, app, store, or service offering. The majority of marketing campaigns fall into this stage.

Activation: Once you’ve attracted potential users to your business, the activation stage is where you engage them by providing a positive experience or helping to solve a problem they have. You’ll turn them into a qualified lead.

Retention: The focus is on getting users and customers to purchase from you over and over again, by continually engaging with and delighting them.

Referral: This is often a key element to fast-growing businesses. You incentivize customers to talk about you, and recommend your products or services to their own network.

Revenue: The end goal of business is to make money. The revenue stage of the AARRR framework finds methods to turn your users into long-term customers to drive sustainable income.

PC: Growth Rocks

The AARRR framework is similar to a sales or marketing funnel. But the purpose of growth hacking is to attract customers by guiding them through this funnel—with a focus on doing it as quickly (and easily) as possible.

What does a growth hacker do?

People working on this type of strategy are called “growth hackers.”

Their role is varied because growth hacking is a mixture of sales, marketing, and customer support. But they’ll typically handle these tasks:

  • Speaking to customers and creating case studies
  • Engaging in communities
  • Building their personal brand (and improving the business's brand by association)
  • Creating blog posts
  • Creating videos
  • Improving their or the business’s sign-up process
  • Driving traffic to their website through content, affiliates, or other channels

Again, growth hacking isn’t necessarily a single “hack”—it’s a bunch of low-cost techniques that get customers through the door.

A growth hacker’s responsibility is to focus on these tactics as a way of building the business.

How can you start trying to growth hack?

You’re a business owner and want to grow your customer base. You know what growth hacking isn’t, but what are the real-life strategies you can use to grow quickly at a low cost?

1. Start a blog.

A blog can be a great platform for generating awareness and capturing user attention, as well as for generating leads. That’s what makes it a great growth hacking strategy.

In fact, 67% of B2B marketers that blog generate more leads than those that don’t.

PC: Lyfe Marketing

You’ll need to create content that’s optimized for your keywords, and make your blog content helpful and actionable content. Think about what your target audience (and customer) will find useful—and create it. It’s that simple.

Here's how you can easily start:

  1. Have your marketing agency setup a Wordpress, Wix, or Squarespace account
  2. Create blog posts and other content that answer common questions your customers have
  3. Sprinkle in lead capture tools (like email subscriber opt-in forms) and calls to action ("Call us for a quote!")
  4. Repeat

The most helpful businesses tend to win this game.

2. Run an affiliate program.

Another great way to grow your business quickly is to have other people promote it for you.

Affiliate programs can do this. You’ll work with influencers in your industry who recommend your product. In return, they’ll get a percentage of their customers’ orders as commission.

The best part about this growth hacking strategy is that it’s low-cost and almost fool-proof.

You won’t need to fork out expensive fees to work with influencers or reach their audience. You simply share the revenue their customers generate when they hit “purchase.”

To start an affiliate program: 

  1. Find a niche market and niche partners
  2. Create promotional materials for your affiliate partners
  3. Send out regular updates and tips to help your partners best promote your products

3. Create a refer-a-friend bonus.

Similar to affiliate marketing, you can offer existing customers a chance to refer your products for an incentive.

Ask them to spread the word about your business, or introduce a friend who becomes a new customer. When their friend purchases, you could give your customer:

  • A discount to redeem on future orders
  • Free shipping on their next order
  • A subscription or package upgrade
  • A gift like branded swag or a gift card

PC: Mention Me

4. Offer incredible customer service.

Your business or product should exist because it solves an existing problem. But when you gain customers, pay close attention to your overall service.

A bad experience will turn people off—a customer will tell 15 people about a poor service experience, compared to just 11 people with a good experience.

Prevent this from stunting your growth by prioritizing customer experience. It’s as simple as making your service so good that people can’t stop coming back—and convincing them to tell others about it.

Here are some ways you can immediately improve customer service:

  • Listen and respond to feedback
  • Build trust by sticking to your company's values (and be sure new hires learn them)
  • Make sure you aren't sacrificing quality for growth

5. Keep testing (and learning).

Not every strategy you try will bring great results, but don’t let that get you down. Make a note of things that don’t work, then try something else. Think of it like A/B testing everything.

But when you find something that works, double down on it to drive as much growth as you can.

PC: Truconversion

5 Growth Hacking Case Studies

Need proof that growth hacking works?

Check out these case studies from brands and companies that saw rapid success with the strategies we just talked about.

1. Use your audience’s feedback, like Slack.

Workplace collaboration tool Slack is the fastest-growing B2B software company ever. They recently reached 10 million daily active users, and their company is valued at $20 billion.

That’s a huge achievement—and not one that many other companies can say. But how did they grow so quickly?

They defined their own workplace communications market after realizing that companies were using a mixture of communication tools without the “for business” label.

They also use a freemium business model to gain market share fast. Just 15% of the company’s customers pay for the premium option, which allows additional features like message archiving.

PC: Slack

The same concept applies to your small business. Run a survey and ask your existing customers how they’d best describe your product. They might view your niche as something totally different—and tweaking it could surge growth.

2. Create easy to consume content, like BuzzFeed.

Chances are, you’ve seen Buzzfeed crop up in your social media feeds.

If it’s not the actual Buzzfeed brand, it might be one of the brands that fall under the Buzzfeed umbrella, such as:

This media company has seen incredible growth. They went from a simple social media page to a multi-million dollar brand using growth hacks—this time, in the form of memes and viral challenges.

At BuzzFeed’s core (and the heart of its success) is an ability to create easily consumable content that people love to share. And that sharing has led to huge growth, which the publisher has monetized through advertising and sponsored content partnerships.

PC: 2x Media

They generated over $300 million in revenue last year. Not a bad growth hacking case study for a simple social media brand surviving on memes.

3. Launch a referral program, like Dropbox.

Dropbox is a leader in cloud storage.

But when they started, they had a major problem that could’ve caused their business to collapse. They were spending $350 to acquire a customer through Google Ads—yet each customer brought in a revenue of $99 per year.

They were spending more than they were bringing in, which is the opposite of growth hacking.

So, how did Dropbox go from that huge failure to a valuation of $10 billion?

Their referral program plays a huge role. For every new user an existing Dropbox customer refers, they get an extra 500MB of storage for free.

PC: Dropbox

Within just 15 months of launching a referral program as part of their growth hacking strategy, Dropbox’s customer base grew from 100,000 to 4 million.

It’s an epic case study which proves referral programs could help any size business—even if they’re on the brink of collapsing.

4. Be a guide for your customers, like HubSpot Academy.

HubSpot is a huge player in the software world.

But they aren't just a CRM. They’ve added another branch to their business’s tree in the form of the HubSpot Academy—a place where they host courses that teach marketers how to be better marketers.

Growth hacking is responsible for the growth of HubSpot Academy.

Why? Because certain low-cost and low-effort strategies (like adding a status bar to their courses and grayscaling incomplete courses) helped them increase certifications per user by 18%.

This proves that “growth hacking” doesn’t have to be a completely new strategy for your small business. Simply monitor how customers use your product (or website), then split-test tiny changes.

Often, the smallest changes make the biggest differences.

5. Prioritize your customer service, like Bonobos.

Menswear retailer Bonobos went from $0 to $1.6 million in sales in their first year.

That’s impressive growth for a start-up, especially when 30% of new businesses fail during the first two years of being open.

Bonobos grew using growth hacking. They offered personalized “try on” services, and a huge focus on customer service. That’s because they identified bad fitting pants as a customer problem, and provided an alternative with tailored designs that solved their target customer’s pain point.

They also incentivised customers to refer friends by offering discounts, which led to the company’s impressive growth.

What does this mean for your business? Prioritize customer service over anything else. Dive into your buyer personas and discover what makes your target customer frustrated. Try to ease that frustration when convincing them to purchase.

When Growth Hacking Goes Wrong

The growth hacking case studies above show that word of mouth referrals are extremely popular, and that they’re a great way to get more customers at a low cost.

But Glide, a messaging app, found out the hard way that it must be done tastefully.

Their referral program was panned for “tricking” users into making downloads by sending spammy or clickbait style messages.

PC: Tech Crunch

Earlier, we mentioned how spammy tactics don’t have a place in growth marketing strategies. This failure proves that annoying (or tricking) potential customers is definitely a no-no when it comes to growth hacking. You should always aim to add value to customers.

Growth Hacking Resources to Continue Learning

Here are four growth hacking resources you can use to learn more about the tactics you can use, and the companies seeing results from them.

1. Growth Hackers’ Forum

Sean Ellis, the person who coined the term, created the Growth Hackers forum.

Whether you’re a beginner or an intermediate growth hacker, the forum is a great place to hang out. Thousands of marketers (including myself!) use it to talk about growth strategies, and share their best content.

If you’re new on the scene, try ordering the posts by “must read.” It’s a quick way to find interesting and helpful threads.

2. 10x Marketing Formula

This book is written by Garrett Moon of CoSchedule, the marketing platform that grew from nothing to:

  • 1.3M+ monthly pageviews
  • 250k+ email subscribers
  • Thousands of customers in 100 countries

And all in the space of four years.

The 10x Marketing Formula follows a similar growth hacking theme. The main concept is based around "thinking like a start-up" (i.e. testing and trying things toget 10x growth). If you don't do this, the book follows, your business will fail.

3. The Reforge Blog

Reforge offers growth platforms and courses for growth practitioners. Enrolment opens intermittently, but one constant resource to check it out is the Reforge blog.

It’s run by Brian Balfour, who knows a thing or two about growth hacking from his previous position of VP of Growth at HubSpot.

This blog is home to helpful case studies, techniques and lessons on growth hacking, including insights and tips from leaders of fast-growing companies.

4. The “Growth Tribe” YouTube Channel

If you prefer to learn by watching and listening, rather than reading, the Growth Tribe YouTube channel is a useful resource to start with.

There are plenty of growth hacking-related videos to work through, as well as additional courses if you want to take your learning to the next level.

Here’s an example of their tutorial on implementing a growth hacking process:

Find your own growth hacking strategies!

If you’re looking to grow your business, it’s worth trying something new.

The growth hacking tactics outlined above are low cost and suitable for any business—whether you’re an established business or just getting your feet off the ground.

Test them, see what works, and run with those that do. It’s the best way to grow your business.

Related: 10 Ways for Small Businesses to Get More New Customers