Back in the day, I worked for a direct response agency that created ads for the Chairman’s side-hustle range of limited edition ‘heirloom quality’ collectibles. They were hideous. They were also very profitable, and for a simple reason. Every aspect of their marketing was tested and refined with obsessive attention to detail and a huge amount of hard work.
A/B copy tests? Check. Offer terms. Check. Headline size, font and colour. Check. Subject matter, price points, deadlines, limited availability and member-get-member incentives. Check, check, checkety-check.
In short, the business applied classic direct response advertising techniques to maximise return on investment. Or, in other words, it was built on constant marketing experimentation with an absolute focus on sales growth.
The year is 2010 - Enter the growth hacker
“Growth hacking is a process of rapid experimentation across marketing channels and product development to identify the most effective, efficient ways to grow a business.”
What Ellis did, quite brilliantly, was to take the analysis-based test-and-learn methodology of classical direct marketing and transpose it to ‘as a service’ online startups.
Compared to the world of off-the-page ads, direct mail and DRTV, growth hackers and digital marketers live in a golden age. There’s so much more freedom to test, learn and refine at every step in the sales journey.
You can – and should – test ideas at a rate that would be inconceivable to DM founding fathers like John Caples and Howard Luck Gossage. But customers are still customers, and many of their old techniques still deliver.
For example, the famous Dropbox ‘free space’ hack looks awfully similar to a classic member-get-member strategy.
That’s not to diminish the achievement of a massively smart refinement that reportedly grew Dropbox’s business by 3900%. Whether you call it a growth hack or old school direct response, tests that deliver alpha on this scale are vanishingly rare.
So how do you replicate this kind of success? (And for the sake of argument, we’ll take it as read that you’ve got a great product.)
Don't hack, build sustainable growth - Growth starts with customers.
The first thing to consider is that no matter how different, most businesses face similar marketing challenges.
- How do we connect with potential customers?
- How do we get potential customers to try our product?
- How do we maximise numbers who go on to become paying customers?
- How do we keep customers engaged?
- How do we get customers to tell their friends?
- How do we stop customers from churning away?
The list goes on, but the essential point is that all these issues center on customers. Because – spoiler alert --- customers are where growth comes from.
The more you understand your customer interactions, the better you can drive growth. Just listen to the stories your data is telling you.
For example, do people drop off when they first see a price? Do they sign up then not use the product? Are they doing something that looks weird, irrational or completely counter-intuitive?
When you find these kinds of things, you need to understand them, so the next thing to do is discover the human impulses driving the statistical patterns. Talk to customers. Find out why they’re doing what they do.
You’ll probably see that they have surprisingly different perspectives on things you thought were absolutely cut and dried. And if you do, rejoice!
These are the areas where magic happens. Because once you’ve figured out what’s happening and why, constructing robust test hypotheses gets a whole lot easier.
Want to know more about where to focus? - Watch this space
There’s still a long way to go from working out where you should be testing to making your first billion.
The next hurdle is – in the broadest sense – a creative one. Put simply, how can you refine your sales funnel so that it feels completely natural and comfortable to customers?
That’s where creative testing, a good working knowledge of direct marketing strategies and a smattering of behavioural economics techniques can deliver dramatic growth.
I’ll look at these areas in more detail next time. In the meantime, whether you call it growth hacking or digital direct response, the team at Luxus are here to help make it happen.