In “The Lean Startup”, which could be perfectly called “Today’s entrepreneur survival handbook”, Eric Ries Introduced 3 engines of growth.
A Startup can grow using one of these:
- A Sticky Engine: You created an awesome product and retention is the key. Typical from SaaS models, the focus is to minimize churn and attrition, so they keep paying the monthly subscription. In this engine the key is to deliver the updates expected and keep adding features to the product so it never outdates.
- The Viral Engine: Your product is so amazing that your users can’t help recommending it. As recommending products is something that we don’t tend to do that often, the secret of this growth engine is to encourage this behaviour in a fu, smart way that benefits both recommended and recommender. A tip from FFA: don’t try this if your NPS is not good enough (it can backfire).
- The Paid Engine: This might sound you more familiar. You buy your growth with the expectation that all these new users will become Sticky and Viral. here the key to success is understanding the true CPA and Life Time Value of a customer, and figuring out if it’s sustainable to keep paying for doing business or you are just burning your VC’s money.
In summary: if you have a great product or tones of money, hey, growth will come one way or the other. You just need to fine tune the Growth engine that you choose. But… let’s be realistic: Not all of us have awesome products that users are looking forward to test and recommend, and definitely startups never have the money to find them and make us love us.
For this vast majority of start ups which have good products, but they struggle to be seen, we consider that Growth Hacking is the fourth and ultimate Growth Engine.
What is Growth Hacking?
As we define it in in our Venture Services page: Growth hacking is the art of growing your Startup in the most efficient way by quickly testing and iterating all the phases of customer journey.
Growth Hacking solves many problems.
In first place solves for the Acquisition/Conversion/Retention split that divided the experts in the industry. You had awesome people in acquisition (SEO, PPC, etc), great Conversion Optimisers and bottom of the funnel data miners segmenting your database to run your startup. But none of these owned the full customer journey. Growth Hacking is not about growing in traffic, but growing the customer base of your business, therefore every stage of the cycle matters.
In second place Growth Hacking solves for the Small Startups who can’t afford (for different reasons) using one of the 3 Growth Engines mentioned in the Lean Startup. These Startups require of new tools, new fresh thinking, creative tactics and innovate in their marketing as they go, quickly iterating to find the right track.
Growth hacking is about efficiency. Learning fast, using data to decide and iterating with creativity to reach our target and test our marketing channels in order to grow our customer base in non-conditional ways.
That’s why Growth Hacking will not pass, and that’s why it’s not a Buzz Word. It’s very real. it’s the fourth Growth Engine and here, in FFA, we know how to use it to get you there.
Want to give us a quick call and share some thoughts?
This call might change your business for ever.
written by Xavier Colomes (Associate Partner Growth & CRO)