Customer Growth Hacking (CGH): The First Thing You Need to Know

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The late Peter Drucker once said, "The purpose of business is to create and keep a customer." How wise!

And what a customer-centric presentation of a business's main goal especially for startups: create and keep customersBut, how can entrepreneurs as well as startups rapidly and inexpensively acquire, retain, and grow customers?

To answer the above question, this article introduces the concept of "Customer Growth Hacking" while visually defining it. Phases of the three-stage cycle of Customer Growth Hacking are:  1) Customer Hacking (Problem-Solution Fit); 2) Customer Growth (Product-Market Fit); 3) Growth Hacking (Business Model Fit and Scaling)

As can be seen in the above diagram, Sean Ellis's concept of "Growth Hacking" is a subset of "Customer Growth Hacking." The most important set of performance indicators in Growth Hacking is Dave McCLure's "Pirate Metrics:" AARRR, that is, Acquisition; Activation; Retention; Referral; Revenue. In Wikipedia, "Growth Hacking" is defined as follows:

"Growth hacking is a marketing technique developed by technology startups which uses creativity, analytical thinking and social metrics to sell products and gain exposure."

The formal definition of "Customer Growth Hacking (CGH)" is as follows:

Customer Growth Hacking (CGH) involves an experiment to rapidly and inexpensively discover as well as solve Big Urgent Market Problems (BUMPs)

While Growth Hacking focuses on technology, social media platforms, traditional marketing channels and tactics as well as PR to accelerate customer growth, Customer Growth Hacking deals with a more holistic perspective. In particular, Customer Growth Hacking involves deliberate and emergent strategies as well as tactics for rapidly and inexpensively discovering as well as solving Big Urgent Market Problems (BUMPs); a BUMP can be external or internal. Customer Growth Hacking, which is strongly customer behavior-and-analytics-driven, goes beyond deploying user acquisition tactics as well as radically improving the virality or viral coefficient of a product/service. Customer Growth Hacking also uses the Delight/Pain ratio as a metric for managing customer experience and in particular, Customer Happiness.

The focus of Customer Growth Hacking is Leaner Problem Solving of customer (market) problems, which in turn define business problems and processes. In Customer Growth Hacking, the main purpose of a Minimum Viable Product (MVP) is to rapidly and inexpensively discover as well as solve a BUMP (Big Urgent Market Problem) especially in a community or platform on the Internet. It's important to note that a BUMP consists of myriad LUMPs (Little Urgent Market Problems). A BUMP is regarded as a large obstacle that critically constrains, restricts, or prevents a customer segment from delightfully getting a desired job done.

Unlike in traditional marketing and Growth Hacking, Customer Growth Hacking assumes that the customer segment and product are unknown factors to be discovered and validated. In other words, Customer Growth Hacking assumes that neither problem-solution fit nor product-market fit has occurred. Customer Growth Hacking therefore begins with "Customer Hacking" which involves the iterative activities of customer discovery, segmentation, and problem finding in order to obtain problem-solution fit. Customer Hacking covers Steve Blank's approach of Customer Development. Nevertheless, unlike in Customer Development, Customer Growth Hacking includes tools such as questionnaire surveys for scalable and asynchronous customer discovery, segmentation, and problem finding. The mantra for Customer Growth Hacking is "G.O.O.D.": Get Out Of DomainThe ultimate Job-To-Get-Done of a Customer Growth Hacker is to rapidly and inexpensively acquire, retain, and grow customers.

Customer Growth Hacking uses an experimental (scientific/Lean Startup) approach while continuously applying the O.T.H.E.R. Loop to discover and solve customer problems. O.T.H.E.R. is an acronym for Observe different; Think different; Hypothesize different; Experiment different; Reflect different. Each phase or "habit" of the O.T.H.E.R. Loop can be applied to the five spaces of problem solving:

  • Problem Space
  • Method Space
  • (Conceptual) Solution Space
  • Implementation (Experimentation/Prototyping/Execution) Space
  • Environment (Networking) Space

Below, the O.T.H.E.R. Loop is presented with a focus on questions. 

 

The O.T.H.E.R. Loop can be regarded as a heuristic for universal problem finding and solving. Meanwhile, I'd like to note that Dr. Ali Anani is writing a series of articles on the O.T.H.E.R. Loop. I highly recommend that you take a look at the articles as Dr. Anani shares his ideas and insights regarding the O.T.H.E.R. Loop. We can simply and greatly enhance personal/team creativity by daily and ubiquitously applying the O.T.H.E.R. Loop.

Over the years, I've developed many, many tools for holistically discovering and solving problems in any domain. All these tools are now brought together and tightly integrated under the umbrella of Customer Growth Hacking. Please note that Customer Growth Hacking is synonymous with what I sometimes call "Leaner Problem Solving." The unit of analysis and performance management in Customer Growth Hacking is a "business model engine" which is illustrated below. It's important to note that a business model engine consists of a stack of three engines or "strips" for discovering and solving a BUMP: customer growth engine, enterprise engine, and value engine. The customer growth engine directly relates to strategies and tactics of Customer Growth Hacking and in particular, Growth Hacking.

On the platform of the Internet, a customer growth engine may be indistinguishable from or seamlessly integrated with the product/service being offered so that a viral loop is set in motion with collaborative uses of the product as was in the case of email software, Hotmail. Alternatively, a given product/service may be seamlessly integrated to solve the BUMP of a community on an external platform such as on Facebook, Craigslist, or Apple's App market. AirBnB successfully achieved this integration using the channel and platform of Craigslist.

The best of luck as you apply Customer Growth Hacking to rapidly and inexpensively discover as well as solve BUMPs. As the cases of Facebook, Twitter, Groupon, Pinterest, Zynga, Instagram, Dropbox, AirBnB, and LinkedIn show, there can only be one impact when a startup continuously, rapidly, and inexpensively discovers as well as solves BUMPs. And that impact is exponential (aka hockey stick) customer growth.

What do you think?

P.S.: You can freely download a PDF document that contains all of the above diagrams from here:

http://www.slideshare.net/RodKing/customer-growth-hacking-a-visual-...

Oh, ... and one more thing ...

The paradigm of Customer Growth Hacking draws heavily from the domain of medicine and the medical sciences. Below are some metaphors and analogies that facilitate "out-of-the-box" application of Customer Growth Hacking as well as analogical problem solving.

CUSTOMER GROWTH HACKING                   MEDICINE/MEDICAL SCIENCES

Customer                                                  =       Patient

Problem                                                    =       Pain

Analysis                                                    =       Diagnosis

Solution                                                    =      Remedy or Cure

Minimum Viable Product (MVP)               =      Minimum Viable Pill

Customer Value or Happiness                 =      Patient's Wellness

                                                                 =      Delight/Pain Ratio

Business (Enterprise)                               =       Wellness Service (Hospital/Clinic)

                                                                 =       Happiness Provider (Deliverer)

If you can think of more analogies and metaphorical equivalence between terms in Customer Growth Hacking and Medicine, just let me know in your comments below. And I'll certainly update the above list.

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