5 Key Strategies To Optimize Growth Hacking Funnel
What is it to hack growth? Growth hacking has only been around for a few years and is spreading like wildfire. But, while it has become a buzzword in marketing circles, many still don’t understand what it means or why it works.
To understand what growth marketing means, let’s first understand why it is even required.
Well, for starters, the times have changed. With competition rife today, businesses find it tough to rise above market noise and gain the attention of customers. This was compounded by a study where 37% of marketers revealed that prospecting was the toughest job for them of all.
In addition, another study by Salesforce found that 79% of marketing leads never converted to sales.
The case is worse for start-ups. Did you know that almost 20% of start-ups don’t survive the first year? You don’t ever want to be part of that 20% now, do you?
That is why, early on, start-ups need to prove that their idea is profitable, so they can get funding to grow.
This is where growth hacking comes in. Growth hacking is a combination of laser-sharp intuition, analytics, and innovation to get the best possible results in the shortest time. It helps you toss the secondary things aside and focus on achieving that which matters the most; ‘Growth.’
In growth hacking, there are five funnel stages — acquisition, activation, retention, revenue, and referral (or AARRR).
Affectionately nicknamed the pirate metrics (to err is human, to AARRR, pirate, get it? ), one can pick a few metrics and view their performance to get a measure of how well their efforts are faring.
Now, let’s get cracking. Here, we will take a look at a few strategies you can use to optimize your growth hacking funnel to find success early on.
1. Go Viral
Goal: Tapping into bigger or niche user bases to attract more customers.
How to do it:
- Two-sided referral hack (Dropbox).
- Integration with a larger platform (PayPal).
Or specifically, try to spread awareness about your product by leveraging its pull and that of similar products to penetrate the market.
But you don’t target everyone. The aim is to reach out to platforms where the most number of your ideal customers are present. How do you do that? Just look at Dropbox; or PayPal.
Instead of expanding to a platform to find the most interested users, Dropbox created a platform of interested users for them by giving people free storage to recommend Dropbox to their friends.
This move by Dropbox is hailed as the canonical example of marketing genius. It not only encouraged customers to use the product more, but it also introduced ideal customers to the brand.
As a result, Dropbox’s user base increased by 3900% from 100,000 to 4,000,000 users in 15 months!
Another great example is PayPal. After landing a deal and integrating with eBay, they readily got access to millions of customers. This integration was so successful that their payment volume increased by 100% in the last few years. And, as of 2019, the total payment volume was more than 712 billion USD, with a reported 23% growth from 2018.
2. Shape User Flow
Goal: Convert customer to an ‘active’ user.
How to do it:
- Reduce the number of fields from opt-in forms.
- Eliminate the requirement of credit card details during sign up.
What’s ‘activation’ in the AARRR funnel? It is the first interaction the user has with the website that contributes to their first meaningful experience.
That’s why this stage is all about how you acquire leads and nurture them.
Customers are most put-off when there isn’t enough help available to them about your product. They feel frustrated, and as a result, turn away from your product as quickly as they found it. So, how do you ensure this doesn’t happen?
By equipping your service team with support tools like live chat, your customer support team can guide users with a steady hand throughout their journey.
A good live chat software which comes with additional facilities like cobrowsing is a great way to do this.
Now, let’s come to why it’s necessary. According to statistics, as much as 96% of people who visit your website are not ready to buy from you.
Why does this happen?
It’s when you expect conversion from the get-go.
For example — asking for credit card information during the sign-up phase when people don’t know if they want the product still.
Eliminating that requirement makes it easier for the user to sign up, resulting in a 10% higher conversion rate, a Totango study found.
Another really simple way to promote activation is to remove a few form fields from your opt-in forms. A prime example’s InsightSquared. By reducing just one form field, they saw a 112% increase in their conversion rates.
3. Be Kind to Your Customers
Goal: To retain the customer and keep them coming back again and again.
How to do it: Provide free services.
Know what people love? Receiving free stuff.
A vital growth hack can be sending out a free or a lite version of your product to users, to gain the attention of prospective customers.
You should ensure though that you set a limit on your freemiums, thereby leaving the user yearning for more. You can do this by:
- Restricting the number of downloads possible.
- Setting a cap on a specific action.
- Setting a duration between two log-in(s) to limit log-in frequency.
Autopilot, visual software for customer journey automation, used similar hacks to isolate particular actions common to a majority of free users and set a limit on them. Once a free user reached that limit, they received a notification to upgrade to a paid account.
The result? In the space of 24 months, they went from 0 to 2,500 customers, signing up more than 24,500 trialists, all while registering a 21% increase in month-over-month revenue.
4. Leverage the Power of Referral
Goal: Turn your customers into brand advocates.
How to do it: Introduce referral programs.
For a business, referrals are the way to drive growth. Why would you want to spend thousands on advertisements when you can just have your customers do it?
So, how do you plan a great referral program?
Simple. You build a system that creates and encourages them regularly.
Let’s take Dropbox’s example again. After their first referral program’s success, they came up with another viral referral idea after going through a mild patch. When they saw that it worked, they doubled down by giving their customers more space.
This stroke of genius again saw them take off, leading to a 60% increase in subscriptions.
5. Make an Offer They (Users) Can’t Refuse
Goal: To increase revenue.
How to do it:
- Try to find proper users for you.
- Collect feedback and mold content according to it.
- Provide 24×7 omnichannel support.
If you’ve taken care of the previous four AARR metrics, revenue shouldn’t be a problem. But if you want a definitive answer on the best way to increase revenue, then maintaining a ratio of 3:1 between your Customer Lifetime Value (CLV) and Customer Acquisition Cost (CAC) is how you should go about it.
But how do you ensure you achieve this harmony?
You optimize your sales funnel and focus on finding the proper users of your product.
For this, you have to define who your ideal user is and create a buyer persona. Once you have done this, model your services around this persona.
You would think that after re-modeling services according to your ideal user, collecting feedback to know what they thought would be the next natural step, right?
Unfortunately, many businesses don’t understand this.
Did you know, more than 33% of companies don’t ask customers for feedback about their experience, and 77% don’t modify the customer experience quality drivers?
Collecting feedback is important. It helps you understand your customers’ preferences and optimize the facets of your business that drive customer satisfaction and revenue growth.
Post collection of feedback and modification of your offerings comes the need to provide a great customer experience.
If you think this is secondary, think again. According to a study conducted by American Express, as much as 33% of customers switch to a new brand after a single instance of poor customer service.
There’re many ways to ensure great CX. One way is to offer omnichannel support.
In just the USA, almost 98% of people alternate between devices daily.
By being present on more channels, you can reach out to your customers when they need you the most. Look into which channels your users are most active on and make sure your customer service team is primed to respond to them.
Go, Hack Growth
Growth hacking is not magical and doesn’t come naturally to everyone.
Growth hackers only care about strategies that help grow the business. They aren’t interested in little metrics. All they care about is achieving exponential growth as soon as possible.
If you are starting as a growth hacker, use the tips mentioned above to get an early boost. From there on, start outlining and implementing strategies fast. Don’t doubt yourself. Just get cracking.
So, are you ready to call yourself a growth hacker?
With Growth Hackers Experiments you can manage your entire growth operation in different stages of the funnel. Try out for free.
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Sawaram Suthar is CMO at Acquire, and also a founder of TheNextScoop, a digital marketing blog. A digital marketing consultant, he has experience in things including branding, promotions and page optimization, along with research and strategy. He has an MBA from the University of Pune. Anyone can find him on @sawarams.
5 Key Strategies To Optimize Growth Hacking Funnel was originally published in Growth Hackers on Medium, where people are continuing the conversation by highlighting and responding to this story.