Face it, as an aspiring entrepreneur the odds are against you. But that doesn’t mean you have to fall into the same trap that countless others have. Understanding the mistakes of others will help you avoid them yourself. Adopting growth hacking principles from the beginning can help to even the odds.
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So, you have an idea for an amazing product or service and you are thinking of going into business. Maybe your mom doesn’t get it, but we do!
Go break a leg!
You’ve heard the daunting statistics… that 75% of startups fail within a year, and another 66% the year after that. But you’re not discouraged.
You have put countless hours of thought into perfecting your product, and you know that once people see it, they’re going to love it like you do. The sales are going to roll in and you’re going to be the next Omar Hamoui.
It’s OK, we haven’t heard of him either.
Sadly, it rarely works this way. While 68% of aspiring entrepreneurs think their chance of success is better than average, only 18% of entrepreneurs actually succeed in their first venture. On top of that, 90% of all products fail. Ninety percent.
The good news is that you are reading this post. You’re about to learn some tips for avoiding the biggest pitfalls and setting up your business for success and growth.
Face it, the odds are against you. But that doesn’t mean you have to fall into the same trap that countless others have. Understanding the mistakes of others will help you avoid them yourself.
Do you know the #1 reason why startups fail? According to CBInsights, the most common reason is that they try to sell something for which there is no market. They try to push a product that nobody really wants.
The reality you need to face is that just because you think you have an amazing product or service, doesn’t mean your potential customers will share your enthusiasm. Accept this early on and you might just save yourself a whole lot of time, energy, money and frustration.
But why is this so common?
Simple. It is typical for entrepreneurs and product developers to fall in love with their creations. When sales fall short it can be extremely difficult to let go. They then fruitlessly spend their time and all of their money continuing to push something for which there is just no demand. Don’t let this be you.
The other reason has to do with assumptions. We all tend to assume that we have the best tastes. We rely on our intuition and think that we know what will sell. We assume that we understand what consumers want and what they will pay for.
And more often than not, we are wrong.
In the world of growth hacking, assumption is considered a bad word. We don’t have time for it, we can’t afford it--and so we just don’t do it. Instead, growth hackers are obsessed with data.
If growth is our holy grail, data is our mighty steed. (I admit that is the worst analogy I’ve written... lately.)
Every business decision we make, including decisions related to product development, is based on solid data. We form hypotheses and design experiments. We spend a great deal of time doing extensive testing, market analysis, data mining and whatever else it takes to know and understand our potential customers.
Only then do we move forward.
Many people think that growth hackers are merely marketers with technical skills. But growth hacking is actually a much more holistic function. The most effective growth hackers are deeply involved in product management as well, using the data they collect and feeding it back into the design process.
The goal is to develop products that customers can’t live without. And the only way to achieve this is by listening carefully to your market. When you really know your customer, you can design something perfectly tailored to them; something that they are already asking for.
When this happens, we call it product market fit (PMF). It means that your product and your target customers are perfectly in sync.
How do you know when you have it?
The rule of thumb is this: When at least 40% of your customers report that they would be very disappointed could they no longer use your product, you probably have PMF.
Sean Ellis discovered this after working with more than 100 startups. Those that had more than 40% PMF managed to gain traction and achieve exponential growth. Those that had less than 40% constantly struggled to stay afloat.
Product market fit is the foundation for a growing business. Without it, your business efforts (not to mention your budget) will probably be wasted.
It starts with a mindset. If you’re serious about achieving PMF and realizing exponential growth, you need to be willing to start digging deep and getting to know your potential customers. You need to become a data fanatic and learn to listen to your market.
On top of that (and for many this may be hard) you need to be willing to take your product back to the drawing board and make (repeated) adjustments based on the data you collect.
Growth hackers like to start with a minimum viable product (MVP). This a product with just enough features that it will allow you to test the market, begin collecting data and continue its development.
Having an MVP gives your market research a clear direction. It allows you to take what you have and make continual improvements based on data and feedback.
One useful framework to help you obtain useful insights about your customers is the customer desire map. Try to answer the following questions:
Once you really know your customers; once you understand what makes their hearts sing (or tremble), you can begin iterating and making constant adjustments to your product offering until it is perfectly tailored to what they want.
You can use traditional market research techniques like focus groups and surveys to collect this data. But there are other ways as well.
Web scraping and forum mining are particularly useful. Try checking out some of the bestselling books related to your business topic, and read the reviews. You will often a wealth of information about what your potential customers think and feel about the subject.
Use this information to customize your value proposition and remove all doubts and hesitations. Offer them a product that you know--based not on intuition, but on solid data--they won’t be able to live without.
Once you have PMF and customers that are satisfied, guess what? They will want to share it. The goal is to make your customers your sales force. We call this building growth into the product.
Once you have PMF and your foundation is solid, it is time to transition to growth. This involves lots of experimentation with marketing channels. Things like A/B testing, landing pages, data analytics and retargeting are going to become your best friend as you work to discover the most effective and efficient ways to gain and retain high-value customers.
Some of these concepts can be somewhat technical, and you might start thinking about getting a growth hacker on your team. But if you’re willing to put in the effort, much of it can be learned without too much difficulty.
The most important thing in this stage is that everything you do to promote your product or grow your business must be measured and tracked.
Through which channels are you customers finding you? What is causing them to “drop off” the sales funnel? Where are they clicking? What is your cost of acquisition? How well is your website communicating your value proposition?
You need to know all of these things.
Many entrepreneurs simply hand over stacks of cash, aimlessly paying for Adwords or Facebook ads without any real idea of what is working or who to target. They fail when it comes to measuring the cost of acquisition for each channel and whether the math ads up.
One reason measurement is so important is that if you succeed in something but failed to measure what you did, you cannot be certain what exactly led to your success. Conversely, if you fail in something, without measurement you will not be able to avoid the same mistakes next time.
Luckily, technology has made it possible to track almost everything you do. Here are just a few amazing online measurement tools growth hackers use to help businesses track and improve their performance:
- Google Analytics
- Google Tag Manager
These tools will give you rich data and help you understand your customer’s journey. And once you understand that, you can begin formulating hypotheses, testing, iterating and optimizing based on what you learn.
Entrepreneurs are busy people, often working ridiculously long hours. Many of them spend most of their time putting out fires, running from one thing to the next and dealing with subprime outcomes. The always feel one step behind events.
If you’re always busy playing catch up, you won’t have the time necessary to implement a solid strategy for growth.
The answer to avoiding this unending game of cat and mouse--and regaining the time you need--is to set up systems and processes that work in your favor.
This involves automating, standardizing, delegating, systemizing and developing standard operating procedures (SOPs) for all your operations.
Every business can be viewed as a combination of many subsystems working (or not working) together. Realizing this is important because it allows you to see that every outcome--whether negative or positive--can be attributed to one or more underlying systems that gave rise to it.
Every event is part of a sequence. Successes and failures don’t happen in isolation; they are the outworkings of the systems that are either well managed, or not so well managed.
Good outcomes are the natural outworking of well managed systems!
When you have a less-than-optimal outcome, rather than attributing it to chance or bad luck, you must dig deeper. It is almost always the result of a deficient or poorly functioning subsystem or process somewhere. Being able to see these systems, analyze them and optimize them is one of the greatest keys to success--not just in business, but in life as well.
Fact: By managing or neglecting the systems that govern our lives and businesses, we set ourselves up for failure or success.
At RockBoost we take lots of inspiration from Navy SEALS. One principle we borrow from them is standard operating procedures (SOPs). We use them to standardize common processes for our entire team, allowing things to get done more quickly, consistently and with less energy. They help to remove the thought process behind common activities.
This discipline can help to free up your team’s time and mental energy. It allows for greater creativity by allowing you to focus your cognitive energy away from mundane tasks and onto things that matter for achieving your growth goals.
The power of developing solid systems from the beginning is that things will continue to run even if you, the boss, are not there.
The truth is, if you are indispensable when it comes to the daily operations of your business, that also means that you are the bottleneck.
If you are interested in learning more about the systems mindset and how to harness its power, check out the book Work The System by Sam Carpenter.
Many entrepreneurs think that the biggest key to gaining awareness and acquiring customers is by running ads on social media. After all, Facebook has like a gazillion users. All you have to do is get something on their timeline, and they will start buying… right?
Wrong. You need to be way more strategic about it.
Believe it or not, there are many more channels you can and should try. It’s not that social media is not useful, but it might not be the most effective channel for your business at this point in time.
At RockBoost we have actually identified 19 different channels that you should experiment with to gain traction--and not all of them are even online. Have a look. They key is to not use all 19 simultaneously, but to identify the most promising channels and start optimizing them.
In order to find the right channels for you to pursue, spend some time thinking with your team. Divide the list into three categories: 1) Promising, 2) Potential and 3) Long-shots. Find the top 3 options, and start optimizing these. And go through this process regularly because they are likely to change over time.
The biggest pitfall is that people tend to use only what they are familiar with. If you do this, you may likely be missing out on big opportunities for gaining customers.
Probably the most important thing to remember when you start looking at traction channels is that it is not about the size of your reach, it is about its effectiveness.
In the end, it doesn’t matter how many people have heard about you. What matters is that the right people know about you--those with the biggest potential for becoming high-value customers.
Lots of people are calling growth hacking lean marketing. It emerged out of the Silicon Valley startup scene where creative entrepreneurs with limited budgets were forced to find new, innovative, cost effective ways to grow their businesses fast.
Its targeted, data driven approach is a product of the technological advancements of the last decade. These have made it possible to measure, track and optimize virtually everything one does.
When combined with the right mindset, technology has made it possible to grow a business with a fraction of the cost than when more traditional marketing techniques were the only options.
If you want your startup to succeed, you cannot afford to rely on intuition and assumption. You most likely can’t afford spending big on “shotgun” marketing campaigns that are difficult to track.
Success can never be guaranteed. But if you are clever and start using growth hacking principles from the very beginning, it will help to even the odds.
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