Growth marketing aims to reduce customer acquisition cost and increase customer lifetime value.
Growth marketing is a buzzword you’ve probably heard many times. It’s the strategy used by some of the most successful companies and has proved to show hockey stick growth.
But isn’t all marketing about growth?
The answer to that question is yes. Marketing has always been about standing out from the crowd and attracting new customers to the company in an effort to grow. The difference is that growth marketing isn’t just about more customers.
What is Growth Marketing?
Growth marketing is a long-term, sustainable approach to building a customer base as efficiently as possible, while maximizing the value brought by each customer. Growth marketing is experimental and data-driven with a focus on disrupting the traditional customer journey and shaping it into a modern customer journey growth machine.
The crazy thing? Growth marketing is a relatively new concept in the world of marketing.
Traditional marketing doesn’t cover all of the bases. The key focus is on customer acquisition and customer experience with whatever tactics feel right or worked before. What’s more, traditional marketing views the customer journey as something like this:
It’s a pretty simple model and conversion seems to mark the end of the journey. Once they buy, there’s nothing left to worry about.
Growth marketing strategies, on the other hand, build this journey out to show that there is so much more to consider. In today’s consumer environment, there are an unbelievable amount of options and limitless sources of information at the consumer’s disposal. Let’s be real, the consumer journey is complex now a’ days.
This is a better way to look at the modern customer journey and the foundation of growth marketing. For more information, definitely check out our video explaining the modern customer journey. Growth marketing builds on traditional marketing and follows through with what it started, but after they buy, there is still work to do!
So… what exactly does growth marketing entail? Growth marketing has two parts. The first being creative, scrappy, and inexpensive customer acquisition. It’s data-focused to identify sustainable strategies and success in experimentation. The second is existing customer growth. Increasing the lifetime value of a customer and their loyalty to your company.
One of the greatest agency growth tactics for customer acquisition is growth marketing. Growth marketing is all about decreasing customer acquisition cost (CAC). You want more leads for less? Growth marketing better be on your radar.
I know I’ve already mentioned how data-focused growth marketing is. But I’m going to say it again here. Data is everything when it comes to growth marketing. You need to know exactly what is working and what isn’t.
A growth hacker is someone who has thrown out the playbook of traditional marketing and replaced it with only what is testable, trackable, and scalable. Their tools are e-mails, pay-per-click ads, blogs,. and platform API’s instead of commercials, publicity and money
Using tactics like A-B testing, SEO keyword tools, or different content styles are all examples of agency growth tactics that growth marketing can employ. Guerilla marketing is another great idea that many companies have used and seen incredible success with (so long as it’s trackable, of course).
Growth marketing aims to answer some of the following questions using experiments and the data collected from those experiments:
- How do you increase organic traffic and virality?
- How do you generate more leads?
- How do you increase the number of free trials and use product-led growth?
- How can you use content to get leads through the funnel?
- How do you increase conversions without spending a fortune?
The most important thing to note about using growth marketing as an agency growth tactic is that it will be different for every company. There is no specific growth marketing formula that will make customer acquisition effortless. You have to try new ideas, think up creative and scrappy experiments, and collect and analyze data to develop your personalized formula.
Experimenting changes the way decisions are made, letting the data speak for itself. Experiments will help you understand your customers' behavior and give you insights on how to provide more value to them, which in turn impacts company growth.
Customer Retention and Growth
Let’s talk about the biggest agency growth secret out there. Ready for it? It’s customer retention.
“Growth without retention isn’t growth after all”. If your company is struggling to retain customers, any new customer acquisition is actually customer replenishment. And that’s just sad.
Customer retention is a key ingredient for a healthy business. Ready for the jaw-dropping proof? Bain & Company published a study with the Harvard Business School revealing a mere 5% increase in customer retention rates showed an increase in profits by 25% to 95%.
Let that sink in. Up to 95% increase in profits.
Growth marketing puts a microscope on customer retention. Why do customers leave and what tactics can you implement to change that pattern? Growth marketing tactics work to find an answer by implementing measurable experiments using existing customers.
Starbucks Rewards is a perfect example of retention-focused growth marketing. I have fallen right into this. As a Starbucks Gold member, I regularly refill my Starbucks card to earn points and order online when I’m in a rush. Plus, the app remembers my favorite drinks AND celebrates my birthday. What else could I ask for?
This growth marketing retention strategy is personalized to the customer and makes the customer feel appreciated, which, in turn, strengthens loyalty. This is especially important for a company operating in such a saturated market.
The goal of growth marketing retention strategies has to be focused on increasing the customer lifetime value.
That brings us to another key agency growth secret: increasing basket size helps to increase retention.
In our recent churn study, it was found that companies who sold multiple products to customers became stickier. It is much harder to replace a company that provides 4 services rather than 1.
Growth marketing looks to find the next steps in the customer journey for existing customers. What else can your agency offer them that will provide value?
Growth Marketing Goals
In the simplest form, growth marketing aims to reduce customer acquisition cost (CAC) and increase customer lifetime value (LTV).
Using those goals as a base, you can expand into other goals such as:
- Increase conversion rate
- Increase blog/email subscribers
- Increase number of free trials (improved use of product-led growth)
- Increase average order value
- Increase NPS (net promoter score)
Once the goals are set, growth marketers have to create a map to get there.
The Growth Marketing Framework
- Set a growth marketing goal
- Brainstorm experiment ideas
- Establish 1-3 key metrics to determine how successful the experiment is
- Implement the experiments with as much control as possible
- Analyze tracked data to decide if the experiment was successful. Check in with goals.
How to Succeed at Growth Marketing
Growth marketing is an agency growth tactic that every agency should be using. Here’s the thing, growth marketing is not going to be a step-by-step prescription. Instead, these are top ways to succeed at growth marketing your way.
Growth hacking is more of a mindset than a tool kit.
1. Be Data-Driven
Data is everything these days. It will tell you point-blank if you’re successful or not. Growth marketing isn’t about gut feelings or past success. It’s all about the present and the future.
Clearly outline what you will measure and how you will measure it. What does success look like? How will you know when you’re there? Ask the hard questions to be sure the data means something.
One of the best examples of a successful growth marketer that comes to mind when talking about data-focused growth marketing is Noah Kagan. He grew Mint.com to 100,000 users in just 6 months by reverse engineering growth. He focused on a quant-based marketing strategy and buried targets that were set with him. Cool right?
2. Be Product-Focused and Tell Your Story
Know your product and tell people about it in a way they will understand and find valuable. It sounds simple, but sometimes it can be hard to see the forest through the trees when you’re on the inside.
One of the best examples of this idea comes from HubSpot with inbound marketing. They’ve made it so that customers come to them. They generate leads through the engineered valuable experiences their online audience has. Inbound marketing has since become a customer acquisition must—especially in the digital world.
Brian Balfour is the growth hacker responsible for the successful inbound marketing concept being widely adopted by agencies and SaaS companies alike. It’s all about generating demand through organic traffic. Your audience reads, watches, or listens to your content, you earn their trust, and they want your help. An agency growth tactic that has you waking up to an inbox full of leads? Heck yes.
3. Be Creative and Fearless
Growth marketing is all about implementing tactics that may not have been used before.
Creativity is a must regardless of how big or small the experiment is. The best way to think outside of the box is to think of the craziest ideas you possibly can and work with them until they become viable growth strategies.
Airbnb is a great example of a company that has used some pretty awesome and creative growth marketing strategies. The shining creative example is their offer to provide free photography services for every listing in NYC to increase the attractiveness of the listings. What?!?
Not only did this add value for users who put up listings, but it actually increased bookings. Overall, engagement grew like crazy.
I love the idea - partly because it worked. I can’t promise you I would have been into the idea in the brainstorming stages. It seems expensive and there isn’t a clear-cut ROI.
That’s why growth marketers have to be fearless—ake risks, try new things, and think outside of the box. The most important agency growth secret is to stand out from the crowd and one of the best ways to do that is to go for the crazy ideas you are confident in.
Growth marketing is all about experimenting, testing, and tracking data to reduce CAC and increase LTV. It is a long-term growth strategy that can help your agency stand out from the competition and maybe even transform the industry.
Want to get going with growth marketing? Start with the customer journey. Figure out how your audience becomes customers and how you might make that more efficient. Find new ways to generate demand. For existing customers, find out how you might provide more value to them and in turn, earn more revenue over and over again.