Growth hacking vs traditional marketing with a limited budget

Growth hacking vs traditional marketing with a limited budget

Read on as we define growth hacking, give a brief history of the practice before diving into a comparison between growth hacking and more traditional marketing methods.

For businesses of all shapes and sizes, deciding between devoting funds and other resources towards growth hacking or a traditional marketing strategy is an important step. As well as impacting the future of the business, deciding which route to go down has the potential to massively change the growth rate of the company.

To help with this decision, we’ve put together a comparison of traditional marketing and growth hacking strategies designed for businesses operating within a limited budget. Maybe your business is a newly founded technology startup, maybe you have been around for a while and are finally ready to take the next step towards your growth.

Read on as we define growth hacking, give a brief history of the practice before diving into a comparison between growth hacking and more traditional marketing methods. We’ll briefly provide a framework for growth hacking before detailing a guide to help you decide whether a growth hacker or marketer is the right fit for your business’ needs.

What is growth hacking?

Growth hacking is a buzzword for a reason. It may be a relatively new concept in the world of business, but growth hacking is quickly growing to become one of the most popular strategies to achieve growth.

In a nutshell, growth hacking is the process of finding shortcuts, hacks and other unconventional ways to help businesses grow. By finding and analyzing data, growth hackers integrate themselves into a business to use the findings from the data to boost customer attraction, retention, earnings and ultimately business growth.

While some businesses shun the concept in favor of a more tried and true approach (slow, steady, organic growth over time) there’s something to be said for successful growth hacking strategies that have delivered almost unbelievable growth rates to new businesses in very short periods of time.

Using the technology sector as an example, you don’t have to look very hard before seeing relatively new startups like Facebook, Airbnb, and Uber that have doubled (or more) their earnings and customer base within the first few years of operation. All of these have something in common: they have growth teams focusing on growth.

With these sorts of examples in the market, it’s easy to see why more and more businesses are adopting the principles of growth hacking in an attempt to scale their businesses as quickly as possible.

Where did growth hacking come from?

While the concept of growth hacking can be found in many industries, dating back many years, the term growth hacking as we know it and the process that it describes is a new phenomenon and only came about in response to the needs of the modern-day technology startup.

Considering the real value of a software startup lies in the company’s ability to generate growth, this burgeoning industry and the needs of their CEO’s resulted in the creation of a whole new type of job.

While traditional marketers focus on a number of different KPIs to track their progress and that of the business they are working for, tech startups needed a new breed of marketers that were focused only on growth.

To fill this gap and help bring a new wave of startups massive growth in as little time as possible, growth hacking was born.

While growth hacking strategies have since grown to be used by many different industries, they were born to suit the requirements of the modern-day technology startup.

Being in the early stages, these businesses typically had limited investment and didn’t have the budget to invest in large scale advertising campaigns.

For this reason, they were forced to look outside the box and use strategies that would yield similar results for less money. In many cases, it turned out to be more tech-savvy staff like developers rather than marketing teams that were able to develop strategies that lead to growth.

Growth hacking vs traditional marketing

There’s no denying there is some overlap between traditional marketing and growth hacking. While growth hackers and traditional marketers share some common strategies, their end goals tend to differ.

While marketers aim to engage and ultimately sell to their customer base, a growth hacker’s only goal is to grow a business as quickly as possible.

1. Growth hackers look at the bigger picture

While traditional marketers don’t tend to look beyond the realms of marketing, the modern-day growth hacker explores every avenue to generate growth for a business. This may include traditional marketing strategies but is just as likely to involve research and development and product testing.

2. The right audience

Typically, marketers working in more established industries and businesses are used to dealing with larger budgets and more traditional types of media like print, TV, and radio. While these can be great at generating awareness on a huge scale, the problem with these mediums is the difficulty tracking ROI. For this reason, marketers operating in these areas tend to judge the effectiveness of a campaign on metrics like reach, or the number of people that have seen the campaign.

Growth hackers, on the other hand, tend to be more digital-savvy, making the most of smaller budgets and other constraints to find hacks and shortcuts wherever they can. Rather than concerning themselves with reaching the highest number of people, growth hackers use the metrics of previous digital activities to judge what has worked and what hasn’t to help them target the people that are most likely to convert which helps their campaigns become more effective moving forward.

3. Data-driven

One of the biggest differences between traditional marketers and growth hackers is their tendency (and ability) to use data to inform their approach.

While some marketers have been known to base their strategies on historical performance data and best-practice tips, growth hackers are continually evaluating each campaign on a daily basis, using their access to essential metrics to ensure their tactics are resulting in the maximum amount of growth in the most cost-effective way possible.

While it’s true that some marketers run campaigns that don’t allow them access to the sort of metrics that can result in rapid, cost-effective growth, it’s likely that others simply don’t know enough about the digital marketing world to look for these metrics.

4. Involvement in the process

While traditional marketers tend to operate separately from a businesses’ design team, growth hackers more holistic perspective means they regularly involve themselves with every facet of the business, ensuring they have a high-level understanding of the businesses, and all-new features that are being developed.

For this reason, traditional marketing teams are often tasked with finding an audience to buy an already developed product — a tactic that we now understand is flawed. Growth hackers, on the other hand, are able to use their access to greater data insights to understand the needs and wants of the market.

From here, they are able to inject these ideas into the development team to ensure the right features are being designed. This process is now seen as a major goal for the modern-day technology company and is so popular that a new term has been coined to describe it — PMF, or Product-Market Fit.

5. Lifetime customer view

One major criticism directed at traditional marketers is that they are only interested in attracting new customers. Some say that once this (admittedly valuable) part of the process is done, marketers move on to their next acquisition and leave the job of retaining those customers to a different department.

Out of necessity from budgetary constraints and an innate need for growth, technology companies have been forced to place a greater focus on customer retention, realizing the value of existing customers and the lower cost of keeping a current customer compared to attracting a new one.

For this reason, growth hackers focus on the complete customer journey. Like for traditional marketers, attracting new customers is important for growth hackers. The main difference is what happens next.

While marketers drop off to focus on the next win, growth hackers aim to optimize the customer journey to ensure that they have a smooth onboarding process, keeping them satisfied to ensure they continue to purchase, and ‘wowing’ them at every touchpoint in their journey to help make them advocates for your business and essentially making existing customers your salesforce.

How are marketers and growth hackers different?

It’s probably easier to ask how marketers and growth hackers are similar. And the answer to that is that they can both be effective at generating demand and attracting customers to your business. That’s where the similarities end.

Let’s look at the background of each role. While marketers are typically more creative and can come from backgrounds like advertising, creative writing and even journalism, growth hackers tend to be more analytical and can come from backgrounds ranging from programmers to data scientists and everywhere in between.

While marketers can bring a creative flair to the table, using their unique approach to bring your brand to life, growth hackers get into the nitty-gritty to find the best ways to help you grow. Here are some essential skills of any growth hacker worth their salt.

1. Data mindset

When we’re talking about growth hacking, it all comes back to data. Everything a growth hacker does is based on quality data. Finding it, analyzing it, understanding it and using it to inform the direction of the business and all decisions moving forward.

While the importance of data has started to seep into the minds of traditional marketers as the industry moves towards a more digital focus where useful data is more readily available, growth hackers use this on another level.

2. Aptitude for marketing

While a developer’s background and the ability to analyze data are great, a growth hacker is never going to make it without a solid understanding of the marketing process.

What separates a good growth hacker from a great one is the ability to think both analytically and creatively, tapping into both mindsets to hit business growth targets while not losing focus on the essential elements that create a great customer experience and make a brand or a service attractive to consumers in the first place.

This includes things like an eye for design, skills in content creation and copywriting.

3. Software savvy

As the name suggests, a large part of the growth hacker role involves coming up with hacks, shortcuts and other workarounds that help a business hit their growth targets.

Since a great deal of the exploration and work involved in discovering these hacks is technical, an in-depth understanding of software is essential.

Some ‘techy’ parts of the role include setting up custom APIs, building landing pages, coding using HTML and CSS and a huge amount of other out of the box hacking.

4. Different tools

While there is some overlap between the roles of a traditional and digital marketer and growth hacker, the differences between the two are most pronounced when looking at the tools each one uses. While marketers place a great deal of focus on relationship building and rely on tools that help them in the day-to-day promotion of the business, growth hackers delve a little deeper and use a number of analytics and development tools to do their job.

Some of these include Google Analytics, Google Tag Manager, Kissmetrics, Outbrain, Sendgrid, Nimble, and Zapier.

Benefits of growth hacking

Let’s take a look at some of the benefits of growth hacking over traditional marketing techniques.

1. It is often quicker than traditional marketing

If your goal is to hit your targets and grow your business as quickly as possible, growth hacking could we the way to go. By pulling and digging into data related to your business, your audience and the market you operate in as a whole, growth hacking can help your business find opportunities that you can exploit to expedite your growth.

While a traditional or digital marketer can be an effective resource to boost a number of metrics across your business, their generalist nature means a marketer will not have the same amount of time to dedicate to growth. By focusing only on growth opportunities, a growth hacker or team of hackers can help your business achieve your growth goals much faster than a marketer.

2. It can help cut costs

Depending on your industry and the needs of your individual business, kicking off a growth hacking strategy can be a cost-effective way of achieving your goals. While everyone in the marketing space should have some concept of data, no one will be as attuned to the possibilities of analyzing and acting on it as a growth hacker.

Using their next level knowledge of data and number crunching, a growth hacker will be able to analyze your business performance, finding better, more cost-effective ways of operating and achieving your goals that can work to save you some serious money in the long term.

Rather than being satisfied with the status quo, a good growth hacker will always be on the lookout for ways to get greater results for less cost.

3. It can lead to big profits

Another benefit of massive, short term growth is the potential for even bigger profits. In the technology sector, home of the growth hacker, the goal of short term growth is to make a business appear valuable to potential investors and to make as much as possible during an IPO.

While not the goal for every business, growth hacking in all its forms can lead to an increase in profitability for any business.

Benefits of traditional marketing

Now let’s have a look at a few benefits of traditional marketing over growth hacking or where a traditional marketer can compete a growth hacker.

1. Brand awareness

While it can be more difficult to target the exact audience of your product or service with more traditional marketing methods (like TV, print or some social media advertising methods) traditional marketing is a fantastic way of driving brand awareness. For a new company or a business launching a new product, this is often a major goal and a well-executed marketing campaign can make a brand.

2. Long term strategy

One of the essential roles of a marketer is to develop a long term strategy for a business. Taking into account the wider business goals, changing landscape and the behavior of the audience, this strategy serves as a framework and helps map out the direction for a businesses’ customer-facing activities for teams to follow.

While a growth hacker may be able to compile a strategy, a traditional marketer is more likely to be a generalist and is typically better able to focus on the big picture when setting out the marketing future of the business.

3. Customer engagement

For all businesses, established and emerging alike, customer engagement is a pretty standard goal. Engagement can come in many forms, from buying behavior and making purchases, to opening emails, watching videos and liking or commenting on social media or leaving reviews… the list goes on.

While growth hacking is great at encouraging some types of engagement (such as customer signups to grow the business), early stage startup growth hackers typically don’t have time to focus on more ‘light and fluffy’, brand building activities that are known to encourage a different type of engagement.

While it’s true that for startups and businesses in the early stages, engagement may not be the number one goal, it is seen as an important metric in measuring customer satisfaction and thereby helping boost customer retention and plan for the future.

Do you need a marketer or growth hacker?

Marketers will help you create your brand story. Marketers are great if you have an existing, developed brand with an existing customer base. If you are looking for someone to build a marketing strategy for you that will help you achieve your long term goals.

Growth hackers will help your business grow fast. They will dive into the data and work to find new hacks and quicker, cheaper, better ways of doing things. Growth hackers are great if you operate in an emerging industry (like technology), have a new or groundbreaking product and a small budget with no room for unknown performance metrics.

Growth hacking strategies

As the popularity of growth hacking grows, so too does the ways to do it. Let’s break down some of the major growth hacking concepts.

1. Growth loops

As the concept of growth hacking is relatively new, the best practice strategies continually evolve. In its infancy, much of growth hacking was based on the concept of a sales funnel. Basically, funnels can be tweaked as necessary and applied to any business model, working to attract and nurture leads by guiding them down a uniform path of more and more sales-y marketing tactics.

While the funnel concept was revolutionary at the time and helped bring many companies large amounts of growth, it has since been criticized for “siloing” certain processes and business areas

as the growth hacking process continues to develop, we have found a better way of doing things. That is the growth loop.

2. Growth system

As the demand for growth hackers increases, so does our knowledge of the process that’s involved. This constant evolution has lead to the creation of a new term aiming to classify the whole ecosystem, the growth system. Using this framework, we can break business growth down into three sections.

2.1 Growth product

This describes the way growth principles have infiltrated product design, changing the roles of product managers in the process. By drilling down into data surrounding customer attraction, retention wants and needs, the growth of the business is now in front of mind for those designing new products and features in a business. By ensuring they adopt a customer-first mentality, the modern-day product manager can contribute to the growth of a business.

2.2 Growth process

The growth process aims to describe the ways that the way we access and analyze data has changed. As the access to information has increased and become simplified, more and more team members across organizations now have access to it. This, coupled with technological advances on the consumer side like the rise of the IoT (Internet of Things) means more information than ever before is flowing freely to businesses from their customers. When you pair the rise of information with increasing access to it, you get never before seen opportunities for growth at a business level.

2.3 Growth team

Looking at the bigger picture, growth teams are specially set up departments within a business designed to facilitate and encourage business-wide growth. While it can be easy for businesses to build these teams based on existing gaps in the corporate structure or where they think growth should come from, industry research tells us businesses should flip this approach, first isolating problem areas within a business that are inhibiting the potential for growth. From here, businesses should work their way backwards, forming a team of people from multiple departments to best fix these issues and facilitate growth. While theories on how to put together the most effective growth team differ, here are some points to get you started:

  • Your growth team should be comprised of a range of departments, including product managers, research and development, marketing and sales
  • Ensure your team sit together and share a clear common goal
  • Use the same processes and procedures. While it is likely to team members from different departments will need to use different tools, ensuring they use the same workflow and communication tools will go a long way to streamlining communication and boosting efficiency
  • Make sure your team are incentivised in the same way. Rather than creating divides and reducing overall productivity, ensuring all members of your growth team share the same incentives will improve the dynamic and ensure the workload is shared evenly.

How to implement a growth hacking strategy

If you are considering kicking off a growth hacking strategy in your business, use this framework as a starting point.

1. Create your product or service

Considering your products or services are your main basis for growth, it’s important for your business to do your research and ensure you get this right. Whether you are just starting out or launching a new product in an existing company, source all relevant data from existing customers, product usage, comparable businesses and do a deep dive. By undertaking this process, you will be better equipped to predict whether your new offering will achieve a good product-market fit.

2. Set goals

While you are perfecting your new product or service, it’s important to set measurable goals not only for the product itself but for the growth it is expected to bring to the business. By making your goals as specific and measurable as possible, there will be less uncertainty down the road as to whether they have been achieved, giving your team more time to focus on other priorities.

3. Test (and re-test)

The trademark of any good growth hacker is testing. Every time you make a change to your offering, test out a new variable, target a new audience segment, be sure to test the results. By testing all variables regularly, and recording the results, you will have a clear framework of what has worked for you and what hasn’t. As well as informing your approach moving forward, you will be able to track your progress and any changes over time.

4. Check your performance

This one goes without saying, but checking in on your performance in relation to your goals is a crucial step in the process. Depending on which analytics tools you use in your business, use these to track key metrics that relate to your goals set at the beginning of the exercise.

5. Optimize and repeat

Like most things in life, you can’t expect your first foray into the world of growth hacking to be a runaway success. Using the data gathered in the step above, adjust and optimize your strategy to move closer to your growth targets. Persistence pays off!

Not all hacks are the same

While it’s good to do your research and get an idea of what strategies have worked for other businesses in the market, it’s important to remember that what worked for a different company isn’t necessarily going to work for you. As in life, there are no guarantees in growth hacking which is why it’s important to do two things:

Trust the data

At the risk of sounding like a broken record, it’s impossible to overstate the importance of accurate data in growth hacking. As well as helping you keep track of your business’ growth, track ROI and secure funding, data is key to the entire growth hacking process. When taking a gamble on a new idea, ensure it an educated decision based on data, then use this data to track your progress and the effectiveness of the hack every step of the way.

Diversify

You know the expression ‘don’t put all your eggs in one basket’? Well, that applies perfectly to growth hacking. While you may feel certain that a hack is going to be well received by your audience and work perfectly for your business, there are a large number of factors outside your control that can affect any strategy you try to implement. The best way forward is to hedge your bets and never overcommit to any one strategy or tactic.

Conclusion

By now you should have a solid understanding of the concept of growth hacking and whether or not it could be a good fit to meet the needs of your business.

While growth hacking strategies definitely aren’t suitable for all businesses and all industries, there are endless examples of companies from right across the world operating in countless industries hitting their targets and achieving unprecedented success with growth hacking.

As the practice grows in popularity, and the concept of growth hacking continues to expand to involve whole teams of people working to improve every part of a business, the sky really is the limit.

EVERY MONDAY

EARLY-STAGE STARTUP GROWTH IN YOUR INBOX

Join 1000+ subscribers for my weekly newsletter of valuable insights about early-stage startups and growth. You'll also get an access to members-only content of in-depth guides and downloadables to work with your startup's growth.

Written by

Mari Luukkainen

Mari Luukkainen

Pre-seed investor, Startup growth advisor, keynote speaker, ex 15% MoM (profitable) growth startup Head of Growth.
Growth hacking vs traditional marketing with a limited budget
00:00:00 00:00:00