Growth hacking, the disruptive expansion strategy

Posted by TODO1 on Sep 25, 2019 9:55:42 PM

If you have ever run out of space to save photos, videos or documents in your electronic devices, you probably have an account in cloud storage service Dropbox. It is also likely that you were referred to it by a friend or acquaintance through an invitation.

In the world of marketing and accelerated growth, the case of Dropbox is legendary. The company, created in 2007, went from having 100,000 registered users in September 2008 to 4 million in January 2010. Only in April of that same year, Dropbox users sent 2.8 million invitations for other people to register to the storage service on the incentive of getting additional free space with each referral. It was a completely disruptive growth or, as Sean Ellis, the brains behind the strategy calls it, it was "growth hacking".

The term has since been used to denote growth within an organization that relies primarily on data analysis to formulate an aggressive marketing strategy.

Today, Dropbox, which went public in March 2018, has a market capitalization of $8.3 billion and over 500 million users, with more than 13 million of them paying for the service.

Other companies that have benefited from growth hacking strategies have been Airbnb, the vacation rental platform which took advantage of an integration with the popular classified ads portal Craigslist; Hotmail, which captured users with a p.s. at the end of each message; and YouTube, which quickly amassed clicks and viewers by allowing users embed videos on any website.

"Any idea generated from any position in any organization that helps a company achieve its growth goals in a disruptive way is automatically growth hacking," says Héctor García, growth hacking director at TODO1, a Miami-based digital services company focused on the financial sector.

García, a mechanical engineer by training, has devoted a good part of his career to study data. At TODO1, he is in charge of making sure customers of the banks that use the digital platforms developed by his company, use the web and mobile applications more and more to perform banking operations, such as paying bills, transferring money or applying for a loan.

"Analytics provides us information about the behavior of the customers and we can detect which are the opportunities we can use to induce those clients to adopt, in the best possible way, the digital banking products their banks are offering them," he says.

Digital banking in Latin America, García says, faces enormous opportunities with the proliferation of mobile platforms and the arrival of the millennial and Z generations, who are “impressively convertible” to mobile banking.

The forms of disruptive growth that García implements vary depending on the client and the bank, but they share four common pillars: linking (converting analogue clients to digital); deepening (making current customers expand the use of digital banking); recovery (reactivating customers who have left the digital platforms); and retention (preventing customers who are thinking of leaving to quit using the services).

The main goal of growth hacking is to stop the waste of resources in marketing, advertising and public relations campaigns that offer only tangential results or that simply do not work. At some point during the first couple of years and before growth hacking, Dropbox spent between $233 and $388 to acquire a new user for a product worth only $99, according to its CEO and founder.

One of the keys that has made Dropbox’s success possible is the way the entire company focuses on growth. "Everyone, from business, product, customer success, everyone deals with different parts of growth in an almost coordinated way," says Kady Srinivasan, current global digital marketing director at Dropbox.

It was no accident. According to Ellis —who as interim vice president of marketing at Dropbox developed the company's referral strategy and now runs an advisory platform for this type of growth— the company’s leadership decided from the outset to create a culture of growth and experimentation throughout all its divisions.

But before instilling this kind of culture in other companies, Ellis wrote in a blog post, certain requirements must be met: create a product that people feel they "must have", define an overall success metric (number of users? Revenue? Popularity?), building a team that can effectively execute the expansion process through constant testing, maximizing impact and, yes, using the successes to promote a broader participation in growth inside the company.

In other words, mobilizing the entire company to accelerate growth will always be better than relying on the performance of an individual growth hacker or even a growth team.

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