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Entrepreneur, investor and startup advisor Sean Ellis coined the term “growth hacker” in one of his 2010 blogs. Since then, growth hacking has turned into a buzzword in the digital marketing world.

In essence, growth hacking is a type of guerilla marketing in the digital world. The term is more popular among digital startups than large, established companies.

Know the Difference

A growth hacker is a marketer in the digital world, but someone with creative approaches to tackling challenges. The difference between growth hacking and traditional marketing can be well understood by knowing where these marketing approaches are applied.

Remember, traditional marketing uses mass media to reach out to consumers, and big and established companies mostly use traditional marketing. But, when it comes to startups, they don’t have the budget to go for traditional marketing, so they have to look for unique, power points that can toss their brands to success.

Environment

Startups operate in a very uncertain environment. They may not necessarily identify their potential customers, and they may not know why consumers would buy their product or service. So they settle down for growth hacking. That is the best approach they can use, and the good news is that a successful growth hacking plan can bring them quick scaling. Dropbox is a good example of a startup that used growth hacking. Today it boasts 400 million users.

On the other hand, large companies have their groundwork done, and they know who their customers are, what they need and why they would buy their brand. So, they use traditional marketing methods because they are well established and have allocated huge budgets for marketing.

Rate of Growth

When it comes to the rate at which a business can grow, startups use growth hacking because it can bring them quick success. Startups mostly aim to grow at the rate of 20 percent per month. For example, Paypal aimed for a big leap, so it used the friend referral bounty as a growth hack. The result: tens of millions of users.

On the contrary, established companies use traditional marketing because they know the market and have already captured a large market share. Big companies normally aim for 5 percent growth per year. They are absolutely fine with slow and steady growth.

Resources

Startups lack the resources required to use traditional marketing approaches. On the other hand, large companies have established brand equity, and they have all the resource to use traditional marketing.

Because startups are lesser known, they need a strategy that can make them go viral and quickly establish their brand identity. Therefore, they use growth hacking. It helps them achieve their goals quickly by using out-of-the-box ideas. In other words, they have to face the challenge of educating their potential consumers in addition to acquiring them without spending much money. Look at the case of Airbnb’s craigslist integration that brought the startup millions of users.

Growth hacking requires critical, creative and analytical approaches. It requires you to make use of product engineering and inventiveness to scale up. Big companies, however, use traditional, established, and tested marketing approaches to grow.