Photo Courtesy of Rob Potter

Why Growth Hacking Doesn’t Work

For companies struggling to get to the next level, growth hacking may seem like the cure-all that’s worth doubling down on. But before you sign a retainer with the shiny new agency promising massive lead generation and unbelievable growth, take a closer look at their methods.

Growth hackers who focus more on driving traffic and less on understanding your target audience and how to speak to them, might give you impressive early results that are only skin deep. Unqualified traffic doesn’t deliver ROI and in the end, may be more of a distraction than a marketing growth strategy that delivers long-term.

Which agency would you choose, the firm that promises a million new leads in a week, or the firm that advocates for a segmented strategy to target a few test channels with a smaller budget until a few winners emerge to justify higher spend? If you’re scaling a business to deliver value long-term and want to build a cost-effective marketing organization, the latter approach may actually save you time and money.

Let’s Do the Math

Bringing in 100,000 new leads that convert 2% at $60 avg order value will deliver $120,000. If the campaign cost $20,000 you’ve got an ROI of 6x. Terrific!

But what if the 1,000,000 new leads cost $130,000 and convert at .5% at $20 average order value. That’s $100,000 in revenue, which does not cover the cost of the campaign. Plus you might spend a lot of staff time and money (software charges by the # contacts and sends) nurturing, emailing and reaching out to your large 1 million contact database and never get close to 2% conversion rate. Being able to find your customers efficiently and building a quality contact database is important to building an efficient marketing engine.

In the second scenario, the cost per lead was lower (13 cents compared with 20 cents in the first campaign). But the quality of contact was higher in the first campaign, which made all of the difference in getting to an attractive ROI that justifies broadening and scaling your efforts.

Here are 5 reasons why growth hacking will cost you precious money and time:

  1. Unqualified leads clutter your funnel. Costs precious time and resources to qualify and nurture. Distracting. Time consuming. Significant opportunity costs.
  2. Dilutes your conversion rates. Makes it harder to see your true persona, delays your ability to hone in on your ideal customer profile.
  3. Takes time & money to convert. Stretches out average “days to conversion” or your “lookback window” calculation. Expensive to convert (may require deep discounts).
  4. Risky. You may spend a lot and get nothing. Lots of unqualified customers (paying for traffic that does not yield much).
  5. Hard to build an efficient, cost effective marketing mix. Haphazard acquisition does not provide a foundation for a marketing engine that will deliver sustained growth in the long-term.

The worst part about having a database of mixed, largely low-quality contacts is that you may not easily be able to tell which of the one million leads is more likely to convert, making it difficult to strategically allocate follow-up resources and segment your efforts appropriately. The lead scoring and qualification efforts to figure this out will cost money and precious time and there is opportunity cost to these efforts as well.

How do I avoid low-quality contacts?

It comes down to audience and channel targeting, focused messaging and a call to action that’s appropriate to your product or service. Extend your focus beyond the vanity metrics (click thrus, likes and follows). Avoid “bait and switch” — a compelling hook might get the click (that you pay for) and never convert. Vanity metrics (without a clear idea of what converts are meaningless.

Avoid “spray and pray”. Be mindful of who will pay attention to your message, and who will respond. Starting with highly competitive, expensive channels that primarily support branding (Super Bowl ads) vs direct response (social media) could eat up your budget without providing any actionable next steps for your marketing mix. In addition, impression based advertising (Facebook) vs performance based advertising (CPC) may be a risky way to spend ad dollars until you have a tighter definition of your audience profile.

If you are a niche business, try to go to where the customers are as opposed to starting with mass market media. Platforms that provide CPM-based advertising, although targeted, may not be cost-targeted enough to deliver a positive ROI at first. And most of all, avoid channels and firms that use Fivrr and other methods to ratchet up the vanity metrics that do not yield meaningful leads and business results.

You can avoid growth hacking and still obtain impressive results. You just need to harness key customer insights to define smart messaging, channel and campaign strategies, then iterate to grow and build your marketing engine.

Tips for Smart Marketing Plans

A superb communications strategist armed with customer insights that can translate a targeted marketing strategy into ad copy and creative that works. Selecting channels to test should also reflect customer insights and the known targeting capabilities within these channels. Articulating the campaign objectives and aligning these expectations to the channels and selected advertising vehicles (reach, impressions, engagement, signups, sales) will ensure everyone is on the same page with the right creative, channels and metrics.

To craft a smart marketing plan, here are the questions to answer:

  1. Who is my target, where can I reach them efficiently and what messages will build awareness, trial and conversion?
  2. What channels are available to me, how well can I target my ideal customer?
  3. What are the measures of success, and what are the directional results that I expect before scaling up or pivoting to a new tactic?
  4. How will I nurture leads to increase my likelihood of conversion?

It all starts with customer insights. Customer insights research can help dial in on who your customer is, help define and identify them quicker as you map out your campaigns. Conduct interviews or surveys to develop some initial hypotheses (you can do this inexpensively). If you don’t know all of these answers up front, no worries. That’s what iterative testing is for. Just start off with your best definition of “customer persona” that will help you avoid target audiences with low incidence rate of ideal customers.

Here is a step-by-step outline to follow, to evolve your marketing efforts into a cost-effective, results-driven marketing mix.

  1. Articulate customer insights, funnel messaging strategy, and creative approach.
  2. Select channels to start with. Be clear about who your target is and how they buy.
  3. Set a minimum testing budget and list out the metrics that you will watch (daily).
  4. Launch a few campaigns and measure results. Tweak if needed.
  5. As you identify “winners” (campaigns delivering ROI positive results), scale up the spend and make sure that results scale as well (and if not, decide whether results remain in an acceptable range).

As you expand your marketing reach, ROI may become diluted as you start to bring in customers that are ancillary to your core target and take longer to convert, or target customers higher in the funnel (lower intent) vs lower in the funnel (higher intent). However, an iterative marketing approach gives you a baseline to start with that ensures you are making prudent marketing decisions as you go.

Key Takeaways

The results of growth hacking might be initially impressive. However, as the marketing leader, too many “spray and pray” campaigns might make your entire marketing mix less effective.

Avoid a growth hacking approach to marketing because it will cost you time, money and credibility in the long run. There are smarter ways to a growth marketing plan that can get you results fast, as long as you harness key customer insights to craft your strategy from the beginning.



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Jennifer Apy

Jennifer Apy

Chief Growth Officer, Team Leader & Corporate Strategist | Passionate about helping SMB companies succeed | Lifelong learner, champion of innovative technology