Growth hacking is a marketing and business strategy, but it’s not the sort of strategy you’ll learn about in your MBA classroom. Growth hacking is about growing a start up or company fast. Really fast. Growth hacking is not about puttering along at 5% growth per month, every month, for the first few years you’re in business. Instead, growth hackers aim to double, then re-double customer sign ups, revenues, and app downloads not in years, but in months or just weeks.
Growth this fast doesn’t happen naturally and books like Holiday’s lay out strategies by which start-ups and businesses can achieve this sort of growth. We’ve broken down Holiday’s method into four steps and will be presenting one a day each day this week, starting today when we explain the importance of product-market fit.
Step 1: Product-Market Fit
Any marketing plan needs to begin with a clear understanding of two things: the product the company is selling, and the market that will receive the marketing message from the company. Whereas marketers sometimes find they are tasked with selling a product without a specific market in mind or which may be ahead of its time for the market the company has identified. Such products are not attractive targets for growth hackers who instead search for what Holiday calls the product-market fit.
Product-market fit is where a product comes ready to sell with a market that wants it. The product needs to satisfy the needs and desires of a specific group of consumers. The perfect product is one that satisfies the needs of a large market so effectively that they will turn into “evangelists” for the product, spreading their excitement about the product and removing the need for the brand to spend significant amounts in advertising.
Holiday suggests that you determine the product-market fit of a product and, in doing so, determine whether it is a good candidate for a growth hacker marketing approach, by asking three questions:
- How does this product correspond to people’s needs?
- Is it useful?
- Does it add something to people’s lives?
If you can develop positive answers to all three questions, you might just have a candidate for growth hacking on your hands.
An important note: just being able to respond to these questions with a ‘yes’ does not necessarily make you a candidate for growth hacking. For example, what you add to people’s lives might be ‘something’, but it might not be much. The bigger, brasher, and broader the utility you bring to the lives of customers, the more likely you’ll achieve a strong product-market fit and be able to growth hack the product towards success.
Holiday offers the example of Instagram as a growth hacking success story that redefined itself to achieve a better product-market fit.
When it first launched, Instagram was yet another social media platform in an already crowded marketplace. While the product did correspond to the needs of people to connect (Question 1), was useful (Question 2), and added something to people’s lives (Question 3), it was not finding the sort of audience that it needed to grab a large foothold on the market.
What Instagram did offer, however, was an easy way for people to share images and especially to modify those images with predefined filters. These filters proved to be among the most popular elements of the Instagram network and the founders realized that while the company’s chances of quick growth as a social network was limited, there were distinct possibilities available if the company pivoted towards being an image sharing centric social network.
Relaunching Instagram as a image sharing social network provided Instagram with an opportunity to answer the three key questions in a new and more positive fashion. Their new product focused on the features that users liked the most (Question 1), was useful in allowing even amateur cell phone photographers to produce pleasant images (Question 2), and added something fun, friendly, and shareable to the lives of the user base (Question 3). Instagram, then, was primed for fast growth.
By December 2010 Instagram had established a user base of 1 million. Less than six months later in June 2011 it had expanded to 5 million, and had 10 million users by September 2011. By April 2012 the 10 million had turned into 30 million, and by the end of 2014 that 30 million had improved 10 fold to be 300 million. Today users have added more than two billion images to the site and are adding more at the rate of nearly 60 every second.
In short, in just four years Instagram expanded from 1 million users to more than 300 million users. This sort of growth was only possible after the companies pivot towards a more effective product-market fit.
Did it pay off? The answer has to be yes.
Instagram is today one of the 25 most visited web properties in the world and the business was bought by Facebook for $1 billion in 2012.
And all on the back of growth hacking.
Now on to Part Two: Targeting the Right Customer