Late-stage startups should part ways with their growth hacker

Before I even get into the details of what I want to write about, let me set the record straight: growth hackers can often be instrumental in the success of an early-stage startup, and their skill set is undeniably valuable. Finding a great growth hacker for your new business could be the key to make it to Round A.

Also, marketing is not advertising. Advertising is placing a paid message on a media channel, marketing is the discipline of making your product, service, or company something that your target audience cannot live without. Marketing nowadays lives in the center of the Venn-diagram intersection between art and science, data and creativity.

Now that that’s out of the way, we can focus on what I want to talk about: although “growth hacker” is the hottest title in the startup world nowadays, it’s important to understand why this role is only relevant during the early life of a business, and late-stage startups need a Growth Team made of subject matter experts, that include a seasoned Marketing professional.

Growth Hacking Inbound Marketing Stack by Joan Lokwood

While the growth hacker is someone that can fuel a startup’s triple-digit growth, over-attachment to such a role and its tactics may cause the company’s undoing at a later stage. At some point after the Round B (even Round A or C, every company is different), you need to find a way to scale your user base beyond the core audience, and that is why you need more specialized talent.

One of the reasons for this needed change is that early adopters have a fundamentally different behavior than the mass market, and while you were able to to get from 0 to 10 with only owned social and PR releases, going from 10 to 100, it’s an entirely different ballgame.

Another reason is that a “growth hacker” is often a community manager, product manager, or even an engineer not formally trained in marketing, and for this reason, lacks some critical education and experience. Although many may think that new platforms and technologies have made an “academic approach to marketing” obsolete, I am sure that many could put forward a similar argument for developers: the majority of people that learned how to code on their own and never studied computer science, can be great developers, but not necessarily well-round engineers capable of leading a larger organization.

Early startups focus more on tactics, which is the right thing to do: in a constant state of people and budget starvation, a startup can survive if it can get things done fast, be flexible, and pivot when needed. They try ten things, see what sticks and drop what doesn’t. These are also low-funnel marketing tactics aimed at finding pockets of early adopters to prove the business and keep the VC investors happy. But these tactics don’t scale linearly, and that’s the point where early stage companies need to replace their ‘communication hacks’ with a structured marketing strategy.

But these tactics don’t scale linearly, and that’s the point where early stage companies need to replace their ‘communication hacks’ with a structured marketing strategy.

Here’s where you should start to think to hire experienced professionals and a more senior marketing team. What an experienced marketer will bring you are 3 things: the skill set to consistently guide a strategy development process, the experience to work with the agency (or internal team) to translate it into a coherent and effective media plan, and the ability to establish interdepartmental processes that will guarantee that the user experience systematically lives up to the brand promise.

Developing a marketing strategy

To use the words of Richard Rumelt, “Strategy is like a lever that magnifies force.” As I wrote in the past, you need to start with a clearly identified marketing objective and leverage an insight to drive your target audience to action. A lot of companies think they have a marketing strategy, but what they truly have is a group of tactics aimed ad given visibility to their offering. A marketing strategy sets your company from all the other players in the market and convinces your target audience that they can’t live without your product. 

One example of how an insight-driven strategy changes your marketing approach can be given by looking at how to get more people into the home brewing hobby. Once you have depleted your beer geeks and DIY fans, you need to figure out ways to make it appealing to your non-core audience. Two insights can be leveraged: home brewing is an intergenerational hobby, and different generations have more trouble connecting due to the high-tech environment around us (read: even when we are together as a family, we are always on our phone). With this, you can approach your next campaign introducing a father-son homebrewing day: at that point, you are not selling a home brewing kit anymore, you are selling a bonding experience and an everlasting memory.

At this point, you may be thinking that this is nothing new, you have been focusing on moments and feelings since the beginning. But having the ability to emphasize the right emotion for your non-core audience, without losing your brand identity for your fan base, requires a very methodical approach to developing your communication strategy.

Moreover, reframing the conversation about your product for a non-core audience for a limited period takes a significant amount of “media fire-power,” which brings me to my second point.

Building a coherent and effective media plan

Once you defined the marketing strategy, you need to build your media plan, which can be best summarized in putting “the right creative, in front of the right user, at the right time.” People think it is as easy as targeting a particular demographic on Facebook, but having a consistent message across mediums and devices, with the right sequentiality and appropriate frequency, is everything but easy. It’s not about pushing the same message everywhere you can or trying a different tactic in each channel, but telling a coherent story across an increasing amount of channels.

Digital Advertising issues 2017 – Lumascape

At the same time, you need someone capable of identifying the right subject matter experts in AdTech and MarTech and guiding them through a complicated media buying processes to achieve the desired outcome for your company. Agencies can help you get you there, but even there you need someone that can understand if you are working with the right team, and deal with misaligned incentives.

As your startup grows, you don’t need someone who can kind of play all instruments, you need someone who can conduct an orchestra.

Aligning with other teams

Another thing to take into consideration when planning a large marketing investment is the readiness of the rest of the company to grow at a significant rate. If your logistics, sourcing, or customer support departments are not able to keep up with the increased demand, growing will do you more harm than good. If your products stock out all the time or take forever to get delivered, the NPS will drop, the customer acquisition and retention cost will skyrocket, and you’ll see a failure in your marketing activity and brand reputation. The larger is the company, the harder is to keep all these things under control.

At some point, you need someone that can align with other departments’ leadership on targets and organizational structure in a way that can help achieve the desired goal as teams expand. It’s undoubtedly easier when you have a small company and a small team, but when your operations increase in complexity, do you have a leadership team that can still keep teams aligned? For example, if your site/product team has the target of increasing conversion rate, and your marketing team to drive more sales from new customers, is likely that while the former will try to optimize the experience for your existing user base, while the latter will drive a large amount of traffic behaving very differently. Obviously, you need to have a different landing page or customer flow, but how are targets and team set up so that the site development backlog is managed in the right way.

And so it ends…

When the company becomes a certain size, this trial-and-error mentality will not scale anymore. But we don’t want to throw away the baby with the bathwater. Some key traits that growth hackers use to describe themselves (such as a data-driven approach, validation through testing, creativity, and innovative thinking), should also be true for traditional marketers (and vice versa).

Example of randomized controlled trial experiment from Northwestern University (click for full credits)

I would argue the opposite: the growth marketer scrappiness manifested in his/her ability to do a bit of everything, also translates in the inability of having in-depth knowledge critical things. For example, while many can run a basic A/B test on a landing page, only a few will be able to correctly design a randomized controlled trial to measure incremental lift of a media channel, or more simply, develop a learning agenda.

Obviously, I’m generalizing. It is possible to find self-defined growth hackers that are capable of flex from early-stage start-ups to well-established businesses, as well as to find traditionally trained marketers that can be game-changers for start-ups. As mentioned before, key traits of one group should also be found in the other.

When a start-up becomes a certain size, it will be more important to establish procedures than finding hacks, and the growth hacker will become less relevant. It is tough for companies to part ways with what fueled their growth until that point. The biggest fear to any founder is to lose the “startup mentality” that made their business, and a growth-hacker embodies that early-days mentality. But at a certain point, to keep growing, it’s important to create a Growth team, made of cross-functional experts and seasoned marketers (not hackers!), to allow what was once a start-up to become an established business.

Author: Paolo

Economist by education, digital marketer by profession, coffee roaster by hobby.

Leave a Reply

Your email address will not be published. Required fields are marked *

*