Growth hacking funnel structure and its application

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• March 22, 2023
• digital marketing
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Many new startups are looking for a way to establish themselves in the industry they are working in as quickly as possible and at the lowest cost and to be most productive. A growth Hacking Funnel is one of the best methods in this field. To use this strategy, there is a need to know the growth hack funnel and its steps, which you will learn about in the rest of this article.

What is a growth hacking funnel?

We all know the funnel and are familiar with its shape and structure. A funnel is a practical tool to pour material from a larger cross-sectional area to a smaller one. As a result, this tool is used to guide something challenging to control. The growth hacking funnel is one of the new marketing concepts, and in its definition, the goal is to lead unpredictable people in the direction we want.

For example, your brand is developing a specific product and therefore needs people’s opinions in the development of the product. For this, you have to direct people in the direction you want in different ways, such as signing up for a newsletter or participating in a survey, and in this way, get their help for product development.

But the main problem is that people are unpredictable. You can use a growth hacking funnel to get people to do what you want and navigate the user’s mind. The growth hacking funnel is one of the most widely used tools for dividing growth hacking strategies into different stages, which include attraction, activation, retention, revenue, and referral.

In the growth hacking strategy, the goal is to convert visitors into customers and ultimately make money. Every business has ever faced the fact that many people only visit their products and only a certain number buy them.

Only a part of the visitors are interested in buying, and some become buyers again. For this reason, it has been compared to a funnel; There are always a large number of visitors at the entrance of this funnel, but at the exit, the number of those who have become customers is less.

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Different levels of the growth hack funnel

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Level 1: Attract visitors

The first goal of the growth hack funnel is to attract visitors. Initially, people are only visitors to your products and have yet to show a desire to buy products. In the case of an online store, the people who visit your site or app are the first-level visitors of the growth hack funnel. To increase these visitors, there were three ways: Pull, Push, and Product, which is also called 3P.

Pull: somehow pull visitors to your website or online store app. For example, give people a discount code and use this method to attract them to your online store.

Push: Push visitors to your online store website or app somehow. For example, a person is looking to watch a video on an online movie-watching website, and at the beginning of the video, he comes across your business advertisement. After that, he changed his mind and visited your website.

Product: Take the online store website or application to the visitors. In this method, the product itself is used to attract the user. For example, some applications have a section for an introduction to friends; in this way, they attract new users by using the application itself.

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Second level: member activation

Some growth hackers think attracting visitors is the last step they must take. If this is just the beginning, then converting these visitors into active members is necessary. When the visitor takes action, big or small, and creates a relationship between himself and you, he has become an active member.

This action can be creating an account, subscribing to the newsletter, or buying a product. After that, these people are no longer visitors but part of your membership.

The third level: retaining users

After the visitor has become a member, it is time for the member to become a user. A user is a person who remains loyal to your brand and buys from you regularly. In the third level of the growth hacking funnel, it is necessary to retain users so the brand maintains its loyal customers.

To retain the user, you need to maintain your relationship with him. This communication can be through sending marketing emails or promotional SMS. You can also start a community of loyal customers and help retain your users by offering them special VIP customer discounts.

What is the optimal conversion rate for the growth funnel?

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The conversion rate in the growth hack funnel shows you how successful you are along the way. At each funnel stage, the conversion rate is calculated separately because the visitor-to-member conversion rate differs from the member-to-user conversion rate. For this reason, it is necessary to calculate each step’s conversion rate precisely, so everything runs smoothly in the analysis and related reviews.

For example, if your online store has 100 visitors during a specific period, and only 20 become members on your website, the conversion rate for visitors to members will be 20%. In the same way, you can calculate the conversion rate of the growth hacking funnel at each stage.

Since the optimal conversion rate for your business growth hacking funnel depends on many factors and variables, calculating this rate is unpredictable. Therefore, to understand whether your funnel conversion rate is successful or unsuccessful, you can use the following tips:

The most crucial point is that your conversion rate should constantly improve and show a higher number every month than the previous month. You are on the wrong path if you do not encounter such a thing.

During growth hacking, some of your strategies may fail and cause fluctuations in your conversion rate. Such issues are typical in this process, but you should increase your efforts to register a higher rate in the next period and always have this improvement on your way.

You may be able to find another growth hacker who has a similar product to yours and get a better understanding of how you’re doing by sharing statistics from both sides. It should be noted that this similar product should be different from your product.

Some companies publish their growth hack funnel conversion rates. If you get enough of these reports in your industry, you can compare your performance against the averages they report and measure your success or failure.

What are Dave McKellar’s five criteria?

Several years ago, Dave McKellar, one of the largest investors in early-stage startups in the United States, introduced five criteria, also called the “AARRR” framework for short. These five criteria of Dave McClure are as follows.

Acquisition Criteria

It refers to all marketing channels through which brands and products can be introduced. This criterion tells you which channels are best to use to attract customers.

Activation criteria

It would be best to direct the visitors to do whatever they want. This can be buying products, subscribing to the website’s newsletter, etc.

Retention criteria

Once you have converted visitors into active members, you need to find ways to retain them and turn them into loyal customers of your brand. It should be noted that the customer retention rate should be evaluated with the standard criteria in the industry in which you are working.

Referral criteria

This stage belongs to those customers who are satisfied with your products and have introduced them to their friends and acquaintances. The referral stage is the degree to which customers are willing to promote your products.

The better you do at this stage, the more users you’ll get who will be your advocates and, in a way, your cheapest sales leads. It should be noted that the last test of a product’s success is loyal customers who like to promote your product.

Income criterion (Revenue)

After the number of visitors who become loyal customers reaches a significant amount, you have reached monetization. Because loyal customers introduce your products and services to their friends and acquaintances, and somehow, without you doing anything special, new people will enter the initial stages of your funnel.

Of course, the income criterion can be placed in different stages according to your type of income generation. The income generation model can be different according to the kind of business.

For example, companies that provide services to their users through the sale of subscriptions experience other revenue generation compared to platforms, which makes the revenue generation criterion different according to your business.

Conclusion

The Growth Hack Funnel helps your business stay on the path to growth and development. This strategy has three levels of visitor attraction, member activation, and user retention, with the help of which you can convert an ordinary person into a potential customer and then into a loyal customer, thus boosting your business.

It should be noted that the progress in this process depends a lot on your intelligence, and you should use the best methods to perform each step according to the type of your business. It is also important to note that finding the optimal conversion rate for the growth funnel is difficult. Therefore, you should use the points mentioned in this article to check the success or failure of your conversion rate.