What is Market Hacking?
The entrepreneurial types are eating your lunch, and here’s how you can fight back!
It’s time to chart a course for new horizons? You see start-ups all around you threatening your business model. The entrepreneurial culture is taking over the traditional business landscape. What can you do? You can’t stop it. Now is the time to step out of fear, disbelief and denial. In your case, the best defense is a good offense; it’s time to employ market hacking. Market Hacking is both a creative and technical process that can get you where you want to go. It uses a combination of creative thinking, digital marketing tools, and analysis to develop or expand new markets for your established business.
We can not entertain the idea of market hacking without a quick nod to the concept of Growth Hacking; the process of quickly growing a customer base on a lean budget. Entrepreneur Sean Ellis developed the process, and coined the term, out of the necessity to point start-ups in the right direction. Growth Hacking is a movement supporting start-up companies, young digital businesses, and software as a service (SaaS) ventures. It helps young companies innovate, develop, test and analyze their marketing on a budget. This is how the entrepreneurial types are eating your lunch.
Let’s be honest, both Growth Hacking and Market Hacking are first a state-of-mind. The concepts that evolve from these marketing methods allow practitioners to focus on innovation and data to achieve their goal(s). A growth hacker, for example, may be assigned to grow a subscription base for a new digital service. Often growth hackers must meet their goals quickly, otherwise the company will fail or run out of money. A market hacker takes an established company and expands their business with a start-up mindset; venturing into new territory using creativity, digital technology and testing.
Who should use market hacking? Established independent professionals, creative professionals, and owners of small and medium businesses.
How to use Market Hacking
Market Hacking requires the right state-of-mind, and a readiness on the part of the business owner. A market hacker, or team of hackers, needs latitude from the organization they support. The team must work like a startup. Committees, long waits for approvals, bureaucracy, and unnecessary delays will dilute the effectiveness, or kill an active market hacking program.
The first step in a market hacking program is to identify a market opportunity. This may take a little time, research, and an open mind to new ideas. If a mature company is to increase revenue, it needs to establish new markets. Dying companies hold tight to dying products, services, and markets. To stay afloat, they focus on decreasing prices, budgets, infrastructure, quality and service. This is the path to extinction.
For larger corporations, the option to purchase other companies is a sound method to break into new markets. Unfortunately, this is not an option for most businesses. However, market hacking is an excellent option for mature companies that may not have the resources to expand via acquisition. It’s common for established companies to have an idea of the market directions they wish to pursue. If you are unsure of your direction, below is a list of ideas that will help you think about new market opportunities.
- What do people complain most about in your industry? Find a solution.
- Interview your current customers about how they use your product or service. Are some people using it in new and creative ways?
- Consider new geo-locations for expansion.
- Examine different cultures and how they might relate to your product. A little tweak could open new opportunities.
- Research trends in your industry.
- Research trends in other industries.
- What can you combine with your product to offer more value or interest?
- Create an up-sell opportunity.
- Consider how people can use your service in other industries.
- Ask employees to come up with crazy, “wrong,” and unreasonable ways to use your product or service. You might be surprised at the actionable ideas that come out of this exercise.
- Ask, “What if?” What if my product could do (this)?
- Create an invention that makes your product obsolete.
- Think Bigger!
- Think Smaller!
- Improve your brand (reputation).
- Create the “impossible.”
I like to use what I refer to as the Combination Code to develop new product and service ideas. I work as a creative professional, and anyone can Google my professions to learn how to what I do. So, to stay in business, and ahead of the competition, I must innovate. I combine elements from new technology, old technology, other industries, nature, art and creative people who inspire me, to come up with new ideas. Below is a video I created about the concept.
Everything is a combination of other things. Each invention or idea stands on the shoulders of innovative thinking, genius and work of the people who proceed us. When it comes to market hacking, creating something new is a powerful (and recommended) option to help create a new market.
Creating something new doesn’t guarantee it will become a success. It’s important to test your concept first. I can’t tell you how many times I’ve been asked to market a product or service where there is no market. One person thought it was a good idea, invested a lot of money and, unfortunately, few see enough value to hand over their hard-earned cash. Survey people, review the competition, open small test markets, and listen.
Three Parts to a Market Hacking Campaign
There are three parts to opening new markets using the Market Hacking model. It’s all about developing awareness, traffic and conversions. Sometimes we address one at a time. However, most full-scale market hacking plans need action on all three fronts. Often, marketers apply the results of market hacking-style campaigns to larger traditional media campaigns. The reason why is that it’s a lot less expensive to test unique new ideas using market hacking concepts with digital media, than with traditional media.
The first step is to create awareness. In most circles, this is known as branding. Your brand is your reputation. A good brand invokes a trust reaction from your target market. When you build awareness using the market hacking model your goal is to soften the soil for your more focused traffic generation and conversion activities.
Digital marketing offers many options for branding and gathering data. I like to run what I call domination campaigns. I target a location such as a region or ZIP code, depending on the available budget. For many campaigns, it is important to target specific demographics or people with particular interests within the defined location. The idea is to saturate a small target area with test messages and concepts, often testing multiple platforms. I like to believe if someone in a specific zip code doesn’t see my message, they’re not online. Yes, this tactic has a taste of old school mass marketing. However, the lower cost and flexibility to adjust, change and test new ideas on the fly is a huge advantage.
You must be all in and examine the data. More than a few business owners have dabbled with digital marketing and declared it a failure. They jump in with little guidance or experience, a tight budget, short time frame and give up. It’s the digital version of advertising once in a magazine to see what happens. It’s a waste of money. Experimenting, testing, reviewing the results and trying again with more information under your belt is the path to success.
Although market hacking is more of a digital endeavor, applying the concepts and results to traditional marketing avenues is beneficial. Public and media relations are good branding strategy tactics. The hack here is coming up with an angle that earns the attention of traditional media, bloggers and social media to help spread your message. Using a small domination campaign first to test ideas is highly recommended.
Speaking to groups is another way to test your idea and message on a small scale, in the real world. If you go the speaking route, I recommend you offer something valuable to your audience, in return for names and emails for future marketing.
As with any good marketing campaign, we send our prospects who react to our message to A/B testing landing pages. With A/B testing, more than one landing page is created. This technique divides website visitors between the various page options, usually 2-3 pages, for most campaigns. The winner is the page that earns the most conversions. The winner is then tested against another challenger page. Although we test landing pages during the awareness campaigns, not all awareness campaigns are set up to encourage high click-through rates and conversions.
Early awareness campaigns are a good time to take risks. Review these classic videos — will it blend, Orabrush and Old Spice. Although these videos also belong under the heading of social media, I urge Market Hackers to adopt this type of creative thinking. Will it blend is about a commercial blender by Blendtec. Due to the success of their videos, the company was able to open residential markets. Orabrush’s simple yet effective video has earned more than 23 million views, and it only cost the company around $500 to create. Old Spice opened new markets to their old brand with absurdly creative videos. It’s important to note all the videos give you a reason why you want their product.
Fortunately, we have more tools than ever to create quality content. Sites like Canva support you in the creative process. Platforms like YouTube can deliver your message to thousands (or millions) of people. Tools such as Google Analytics are easy to set up, and help measure your results.
It’s important that you have enough data to make good choices. 10,000 people seeing your message will often produce a different data result, compared to 2,000,000 views. The rule is: the larger the sample, the better.
Once you have tested your messages, it’s time to scale. Scaling isn’t always a straight line up. Different locations, cultures, and demographics will differently to your message, so be ready to make adjustments. Branding involves many areas of your business. Remember, your brand is your reputation. It is how people feel when they hear your name, see your logo, or hear your jingle. I recommend taking a hard look at your company, culture, and policies. Try to buy or return something through your customer service; call the front desk and ask for assistances. Will a new market accept the status quo?
Once you soften the ground with your branding campaign, it’s time to draw more traffic to your website, and through the door (if you have a physical location). Market hacking traffic development is similar to the branding process. The biggest difference is the focus is on quality traffic, rather than the number of eyeballs. It is common for marketers to skip the awareness step and go right for the jugular with a traffic campaign. I’ve found the work involved in an awareness campaign worth the effort.
A traffic development program might include SEM (search engine marketing) over display advertising. Search marketing are the ads you see in search engine results. I continue to using display as part of my ongoing awareness campaign. You can place your message in front of millions of people at a reasonable cost with display advertising. Unfortunately, your click-through and conversion rates are much lower than SEM. SEM captures the attention of people who are actively searching for your solution.
Delivering traffic to your website and through your door requires creativity. Creative content marketing is an excellent way to capture the attention of people who are interested in your product. Your content should be humorous, educational, entertaining or controversial. Controversy doesn’t mean that it is hurtful to other people or organizations. It simply can offer a new point-of-view, method or perspective. The goal is that your creative content spreads through digital sharing.
Guerilla Marketing is another option to consider as part of your market hacking plan. Inexpensive, creative and high-profile displays, and stunts can get attention, and encourage people to look for you online.
Finding new ways to earn referrals is important part of both growth hacking and market Hacking. Dropbox is famous for its strategy of offering more space with every referral. This tactic took the company to the top of the cloud storage industry. What can you do to encourage people to refer your product or service?
I like using risk reversal solutions when possible. No, this is not the high-finance options trading tactic. When someone is purchasing your product or service, they are taking a risk. The idea behind risk reversal is to place most of the risk on your company, and not the customer. An example of risk reversal is a no-questions-asked return policy, or a free test-drive. You know your business best. so develop a creative risk reversal strategy that drives new opportunities and referrals. Plus, when you lower the risk, you increase conversions.
A conversion is the completion of whatever action you want your visitor to take. It could be an email sign up, the downloading of an ebook, or a purchase. Conversions are what keep us in business, and make your campaign successful. This is where we get serious about the data. The skill to analyze the information generated from a market hacking campaigns helps you to discover new opportunities, and make better decisions moving forward.
The following is a list of basic metrics you need to know, and measure, to run a successful campaign. Analytics can certainly get as deep and complex as you wish to make them. It’s also important to understand that there is a point of diminishing returns. If you have a thousand people visiting your website each month, you don’t need to dig very deep. You need to spend more time on earning more traffic. A team reviewing website analytics with millions of visitors requires a deeper approach. In this case little tweaks can produce big opportunities. A small movement of a half-percent can represent a lot of money.
- Bounce rate: This is a good metric for understanding traffic quality. If someone visits your website or landing page and presses one button, their visit is considered to have a 0% bounce rate. If a visitor lands and returns to where they came from, then that is a 100% bounce rate. Between the two visitors you have a fifty-percent (50%) bounce rate average. Your goal is to aim for a bounce rate of less than 50%. Of course, the lower the number, the better.
- Time on site: The longer people stay on your website, the better. If your landing page has little text and a 45-second video, it is reasonable to think the average time on site will be less than a 5,000-word essay, or an hour-long podcast. However, when you compare data between websites and pages, consider using a combination of bounce rates and time on site to gain insight on visitor engagement.
- Click-Through-Rate: This measures the percentage of people who see your ad, and click on it. If two people out of one-hundred click your ad, then you have a 2% click-through rate. Higher is, indeed, better.
- Conversion rate: This metric measures the percentage of people who convert (buy, sign-up or download) when they visit your website.
- Referral source: Where did your visitors come from? This is important to know. If you receive a high volume of traffic from a source, yet no conversions, the traffic is doing you little good. It is wise to focus on developing the referral sources that provide more conversions, even if their overall traffic is lower.
These few metrics are just the tip of the iceberg. My best advice is to decide what information you need to know, and then find the metric or series of measurements that answers your questions.
I’ve found the most effect way to successfully address building awareness, driving traffic and improving conversions is to use what I call Combination Marketing. This, like many labels, reminds us why or how to use the tool or concept. It gives you focus. In this case, the term combination marketing implies that it’s more effective to combine complementary tactics than only using one. For example, SEO (search engine optimization) combined with remarketing is a powerful combination. SEO attracts new visitors to your site, and remarketing continues the branding campaign after people leave your website – often earning a high conversion rate.
Other combination tactics to consider for market hacking campaigns is to deliver an email campaign to a targeted audience. Then upload the email list to Facebook audiences. Facebook will serve the campaign ads only to the people on your email list, in turn, reinforcing your message to your target audience.
Combining tactics is not new. Old-school direct mail followed up with a phone call is an effective combination tactic. Often, tactics directly support each other, such as SEM ads giving support to organic SEO results, or display ads helping to improve SEM click-through rates.
You should have at least one combination marketing tactic for the three parts (awareness, traffic and conversions) of your market hacking campaign. Creative combinations and analyzing your data will improve your chances of successfully opening a new market.
Market hacking is a powerful marketing process wherein creativity and innovation are King and Queen. It’s a practice that offers established business owners an opportunity take part in, and benefit from, the entrepreneurial culture that disrupts a market place. Market Hacking engages the start-up state-of-mind. It focuses on developing awareness, traffic and conversions (more sales) by combining digital marketing tools, concepts and analysis. To grow my businesses, I’ve used various elements of market hacking for more than 15 years. These days, I’m in the process of launching a market hacking campaign for my newest company, Image 3. I’ll share the results of our market hacking adventure on our blog. I’ll place a link —- > here, when it’s live.
It’s time to develop new markets and grow your business, get to it.
If you have any thoughts about market hacking, please share them in the comments.