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Ninety-two percent of SaaS startups fail within three years.

Ouch.

This puts a premium on finding sustainable growth. But many SaaS startups fall into a trap when it comes to how they approach growth.

They’ve heard of growth hacking, and it seems like the right play with their current team and financial resources. So they Google “growth hacking tactics,” read a few listicles and blog posts about what’s working for others (there are many), and create a list of awareness and acquisition-focused tactics to try.

Time goes on, and a founder or CMO finds a few tactics that temporarily increase customer acquisition, but they always have to dip into their marketing budget to fund the next bump.

Everything is so piecemeal and fractured that scaling up requires more financial resources. They want to scale up, but their growth engine is broken.

Growth hacking is a popular tactic for SaaS startups but is also misunderstood. Why some companies grow, and others don’t isn’t a matter of finding the right hack.

They don’t just have “something” others don’t. It’s a matter of intentionally building a company deserving of growth. 

In this blog post, we’ll dive into the definitions of growth hacking and growth strategy, the pros and cons of each, and why “Should I pursue growth hacking vs. growth strategy?” may not be the right question to ask.

As we compare growth hacking and growth marketing, let’s look at it through the lenses of startup founders and team members' unique challenges.

Founders and their teams must identify their market and where the real opportunities lie, evaluate the competitive landscape, and position their product or service to ensure it stands out. 

They also have to create a viable business model and pricing that fits the market, keeps them competitive, and helps keep their doors open.

Related: Go-To-Market Strategy for Startups: 10 Key Steps (+ Examples)

Once they have customers, they must focus on building loyalty and limiting customer churn. They have to do all this and more with limited funding, a short timeframe to grow, and the pressure to scale on top of it all.  

In short, startup teams have a lot on their plate.

What is Growth Hacking?

Sean Ellis coined the term “growth hacking” to describe the growth methodology used by hyper-growth companies like Facebook, Airbnb, and Amazon.

Growth hacking focuses on finding creative, low-cost ideas that spur growth. 

It’s about figuring out why you grow and then trying to make that happen on purpose again and again.

Growth hacking is linked to Dave McClure’s “Pirate Metrics” marketing framework: Awareness, Acquisition, Activation, Revenue, Retention, and Referral (AAARRR; we refer to these as the six levers of growth).

Growth hacking targets a specific lever to optimize in the pursuit of growth. 

Content marketing, product marketing, and advertising are common growth hacking strategies, each with its own set of tactics, such as:

  • Content marketing - guest posting on other blogs; inviting influencers to guest post on your blog; asking customers or audiences where you should post content, then creating content for those platforms.
  • Product marketing - gamifying the onboarding process; invite-only acquisition methods; referral incentives for the referrer and new user. 
  • Advertising - paid social media campaigns; pay-per-click advertising on Google; sponsored content.

Pros and Cons of Growth Hacking for Startups

Growth hacking is popular because of its nature as a low-budget and quick strategy. However, the lack of overall strategy one would get from slowing down makes it easy to commit the cardinal sin of startups: rushing to scale when the foundation to do so doesn’t exist.

Pros of Growth Hacking:

  • You can implement growth hacks quickly across multiple tactics and platforms.
  • Growth hacking generates a lot of data for measurement/comparison.
  • Easy to implement in bits and pieces.
  • Generally cost-effective and provides solid ROI.

Cons of Growth Hacking:

  • Can easily lead to quick hacks and shortcuts instead of developing a robust strategy
  • Tactical nature means successes can be hard to sustain and scale
  • Trying to copy what others have done ignores your (and their) unique advantages and opportunities
  • Leans on one-off tactics to drive growth.

What is a Growth Marketing?

Growth marketing focuses on leveraging and optimizing all parts of a business to set it up to scale successfully. The AAARRR framework is one part of a growth strategy, and in contrast to a growth hacking approach, all six levers of growth must be in operation at once.

A growth marketing strategy zooms out and focuses on building an organization that deserves to grow and scale. It’s a more holistic view of the business and generally includes processes for:

In short, growth marketing is a deliberate process for creating a strong foundation to engage your market, convert leads, and grow a startup.

Pros and Cons of Growth Marketing for Startups

The main drawback of growth marketing is that it takes time to build your strategy. However, by building a solid foundation for growth, you decrease the risk of your startup crumbling.

Pros of a Growth Marketing Strategy:

  • Focuses on optimizing the entire business
  • Meant to be scalable and sustainable
  • Optimizes the performance of marketing dollars for better ROI
  • It helps identify unique advantages of your startup to use to your advantage
  • The outcome is building a company that is prepared to scale

Cons of a Growth Marketing Strategy:

  • It can take time to flesh out all the pieces of a growth strategy
  • There may be a lot of unknowns that will increase the time needed to create your growth strategy
  • You may not have the knowledge inside the company to build out a growth strategy

What are the Similarities Between Growth Hacking and Growth Marketing?

It’s in the name, growth. Both of these strategies look to drive growth. It’s just one is more complete than the other.

  • Focus on Growth: The goal of both growth hacking and growth marketing is to maximize the effectiveness of marketing efforts to drive growth for your business.
  • Data-driven: In both approaches, data and analytics play a key role in informing decision-making and measuring campaign success.
  • Experimentation: Both involve experimenting with new and creative approaches to see what works.
  • Interdisciplinary: Both approaches involve collaboration among product, engineering, marketing, and design teams.
  • Customer-centric: Both put the customer at the center of their efforts, focusing on understanding their needs and delivering massive value.
  • Agility: Growth hacking and growth marketing are flexible and adaptable, allowing quick changes and pivots.

Related: Data-driven Growth Marketing: The Path to Success [With Examples]

What are the Differences Between Growth Hacking and Growth Marketing?

There are some key differences, mostly concerning philosophy.

  • Philosophy: Growth hacking has a more aggressive, start-up culture mentality and focuses on finding quick and unconventional solutions to growth challenges. In contrast, growth marketing emphasizes a longer-term vision for growth, taking a more strategic and sustainable approach.
  • Tactics: Growth hacking involves using unconventional and untested tactics to drive growth, while growth marketing relies on proven and data-driven approaches.
  • Focus: Growth hacking focuses on short-term wins, while growth marketing focuses on building a solid foundation for long-term success.
  • Experimentation: Growth hacking experiments tend to be high-risk and high-reward, while growth marketing experiments are more carefully planned and managed.
  • Budget: Growth hacking often relies on low-cost or no-cost solutions, whereas growth marketing may require significant investments in proven tactics and technologies.

The Two Questions Startups Should be Asking Instead

Let’s go back to looking at the growth hacking vs. growth marketing comparison through the lens of all the things startups have on their plate.

Growth hacking vs. Growth Marketing isn’t really the question startup founders, CMOs, or marketing VPs should be asking. Both have their merits and drawbacks. 

The real question in this debate is not which approach works best, but “How can I set my startup up for sustainable growth while reducing the chance of failing?” 

Sustainable growth requires a foundation focused on leveling up your entire company. Growth doesn’t happen randomly based on reading through a list of articles from a Google search. If it were that easy, everyone would already be doing it. 

As Morgan Brown, co-author of Hacking Growth with Sean Ellis, said of growth hacking listicles: 

“They look like they’re silver bullets, right? They’re full of unicorns and pixie dust and promises of like, ‘Hey, do these nine things and you’ll get remarkable growth.’ No great company was ever built on the back of a listicle.”

If you accept that growth stems from intentionality and a comprehensive growth strategy, the second vital question is, “Can I build this growth strategy myself, or do I need help?

Growth Hacking vs. Growth Marketing: Which Should You Choose?

We've seen growth hacking work, but we've seen the greatest results stem from developing a comprehensive growth strategy unique to each client we work with. With this approach, we’ve helped clients grow 10X over 36 months, as well as helped them raise over $90 million in funding. 

How do we 10x clients’ growth over 36 months? 

The starting point is our Growth Grader. You can use it to measure and track your company's six levers of growth.

This free tool will help you identify what’s working, what’s causing friction in your buyer journey, and show how you improve month over month, quarter over quarter, and year over year. 

But hurry! The Growth Grader tool won’t always be free to access.

Post by Admin
July 12, 2023

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