Some of the world’s most successful tech startups got where they are thanks to growth hacking—an approach to scaling up a business that builds growth into the product itself.

Sean Ellis, who operates the popular website GrowthHackers.com, came up with the term a few years ago. Ellis used to work at Dropbox, where he figured out innovative ways to grow the company’s customer base. His crowning growth hack? When you create an account, Dropbox automatically offers to give you additional storage if you invite your friends to the service and they become Dropbox users.

In the formative stages of Dropbox, the cost of acquiring a new customer was almost $400 in traditional advertising. Sean’s idea cost almost nothing and is a key reason why Dropbox is now one of the leading cloud
storage providers.

Airbnb is another great example. In its early days, the startup had trouble getting people to use its service. A clever programmer at Airbnb figured out a way to cross-post the company’s listings on Craigslist. This allowed users to list their space once on Airbnb, which then could be automatically added to Craigslist. Leveraging the popularity of Craigslist, the hack allowed tremendous growth for the business without the expense of traditional marketing methods.

By now you may be getting the idea that growth hacking is something more than marketing and something less than computer programming. Pure coders might just be concerned with making the software better, and pure marketers may be focused on just brand or image or selling. The growth hacker, meanwhile, is constantly thinking about customer growth and how it can be built into the product itself.

Using Data to Find the ‘Wow!’ Moment

The most important idea in growth hacking is the concept of the “Aha!” or “Wow!” moment. This is the instant when your customer realizes that your product or service makes sense for them, and it’s when they decide to buy. Every business that has customers acquired them because the customer experienced an “Aha!” moment.

What’s surprising is how many businesses bury that moment behind lots of process. Or don’t even know what that “Wow!” moment is for their customers.

In the case of Twitter, there was no “Wow!” moment until people began to follow several other Twitter feeds—and then they got what the service was all about. With LinkedIn, the problem was always getting people to invite others to be contacts. Without that connected network, LinkedIn just didn’t make sense to people and they wouldn’t engage. In the beginning, Facebook had to figure out how to get an individual to seven friends in 10 days.

Each of these companies was able to find its own “Wow!” moment because it incorporated analytics into its services and platforms. They knew the exact point when someone would stick with their service … and when they would fall away.

Using Data to Fix Leaks

Growth hackers study the customer acquisition funnel and track each step along the way. And they work on two improvements: reducing the amount of leakage at each point in the process and moving the “Wow!” moment closer to initial customer contact.

Using the examples above, that’s why—as soon as someone creates a new account on Facebook, Twitter or LinkedIn—those platforms quickly suggest people that users might want to follow or add to their personal network.

Or let’s say a software company attracts 1,000 visitors to its website. Of those, 200 complete a sign-up process. In that group, 30 actually take the next step and download a demo of the company’s software.

Of the 1,000 visitors, only five end up paying for the product.

The growth hacker looks at this funnel and immediately changes the process to allow downloads without making people sign up. Instead, the company puts a demo video and a big “DOWNLOAD” button above the fold on the first page of the site. Then they go about fixing the leaks between “DOWNLOAD” and “PURCHASE” by actually interviewing people who bought (“What made you buy our software?”) and people who didn’t (“What was wrong?”). These interviews, conducted by email or phone, inform changes in the software that improve conversions.

The first step in becoming a growth hacker is discovering your customer’s “Aha!” moment and working to get them there as quickly as possible.