While your startup business grows, the costs to operate it grow as well – equipment, office space, marketing, licensing, payroll, taxes… after paying for all of these costs, it’s unavoidable, money will be tight. Because most startups are cash-strapped, it can be difficult to decide where remaining funds should be directed in order to support the rapid growth of your company.
Allow me to introduce you to the concept of growth hacking – the strategy of acquiring as many customers as possible while spending as little as possible. Sounds ideal, right? Growth hackers use cheap, innovative methods and tests to determine why their startup is growing, then purposely aim to make that growth happen faster.
The essence of growth hacking is testing, tweaking, and monitoring changes you make in your business model to see what brings people to your product and keeps them returning. To become an effective growth hacker, you’ll first have to determine and closely study your target audience.
Targeting your Audience
The product you’re selling and the market need for your product are critical to keeping your doors open, but you shouldn’t try to market to every demographic at once. Begin by analyzing the makeup of your current customer base, and the makeup of customers you eventually plan to have.
Are they younger or older? Do they have children or are they child-free? Are they professionals, college students, or teenagers? The more specific you are with your analysis, the better prepared you’ll be to grow your startup.
The chart to the right describes a theory known as the diffusion of innovation.
When you’re targeting your audience, it’s necessary that you focus on marketing your product to the innovators and early adopters – this small 16% of consumers are trendsetters and opinion leaders, and without their approval of your product, it won’t break through to reach the majority of the market.
Once you captivate these segments, their praise and recommendations will be heard by the following majority, and your product will be exposed to a much greater share of the market.
Let’s move on to learn how you can identify the innovators and early adopters while examining the differences between the groups.
If you’re wondering why innovators make up such a small segment of the market, consider how often you purchase products without checking the reviews first. Few are willing to take the risk of paying for a product or service without first hearing other’s opinions, but not innovators. They’re influencers – they take pride in knowing all about the next big thing, and are quick to support any company that sounds unique or game-changing.
As you can imagine, this group is extremely wealthy – they’re also the youngest in age, incredibly social, educated, risk tolerant, and surrounded by other innovators.
Their willingness to give feedback makes them an invaluable population to study, and they’re much more accepting of bugs and shortcomings with your service than other segments. However, their fondness for quick adoption has a downside – quick abandonment. If your product isn’t keeping their interest, something else will.
This market segment is defined by their willingness to adopt a new product or service after conducting their own detailed research. They’re cautious – they won’t buy in without gathering information from multiple sources, but once they’re convinced, they’ll support you quickly.
This segment is composed of opinion leaders – the people other consumers “check in with” before buying a new product themselves, due to their ability to reduce uncertainty surrounding new technologies.
Similar to innovators, they’re a very wealthy, educated, and socially-connected group, but with two key differences – their risk tolerance and loyalty as customers.
Early adopters are much more selective about which products they choose to adopt relative to innovators, but this selectivity is what makes them even more valuable and loyal as customers. They’ve done their research, and they believe in the future of your company and product. If you continue providing your promised service, they’ll continue giving you feedback, which is exactly what you’ll need to continue growing your startup.
In the next article we’ll take a closer look at how you can use that feedback to fine-tune your business model using Pirate Metrics. If you’re looking to learn more about startups, recruiting, and talent consulting, look no further than our blog – it’s updated weekly!
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