The world of entrepreneurship is one of the most tempting. Most people have ever felt the urge to leave everything and start their own business. If you are one of those who dared, you have come to the right place. We will explore the world of startups and how to make them scalable.
2021 was a year of economic reactivation on a global scale, which contributed to the entrepreneurship train running at full speed. In 2022, the outlook promises to be even brighter. For example, according to the annual report of the State of European Tech, in 2021, Europe reached the largest portfolio of startups in its history. On the other side of the world, in India, the startup ecosystem achieved a record investment of almost 36,000 million dollars in private companies, tripling what was completed in 2020.
Some figures speak for themselves. One of them is the one published by the Startup Genome. They indicate that the global economy of startups has a value of more than 3.8 trillion dollars, which is more than the individual GDP of most of the G7 economies. Proof of this is that in 2021, the term “unicorn” used to refer to those companies that reach a valuation of 1,000 million dollars without having a presence on the Stock Exchange ceased to be an indicator of extreme rarity, to become the news of constant frequency.
So, it is clear that it is a great time for startups now. The topic is how to become one of those success figures; it is not just about starting a business, and the real question is how to make it scalable.
What Does It Mean To Be a Scalable Startup, And Why Is It So Important?
Scalability is nothing more than a company’s capacity for easy growth. However, to achieve this, some factors are needed, such as:
- Innovative value proposition
- Repeatable business model (deliver the same product on a potentially unlimited scale)
- high margin
- Wide distribution potential
- High risk-return
Its scaling consists of offering more without this, meaning an increase in production costs. In this sense, only a group of startups that arise annually achieves this quality.
The challenge for a startup is to achieve that innovative business model that allows it to take its company to the next level: going from a startup to a scale-up. Although today it may be difficult to imagine, companies like Instagram, or Facebook itself, began as startups, which had such a powerful value proposition that they soon became scale-ups and are currently the benchmark giants everyone they know.
Technology companies are the ones that have best adopted this philosophy and are considered the easiest to scale. For this reason, they usually get risk capital that gives them the necessary financing to grow their businesses.
In addition to generating greater profitability and making the business more attractive to investors, scalability also has other important advantages, such as internationalizing and entering new business lines.
Now that the definition of scalability and the elements that make a startup scalable are clear, it is necessary to understand what can be done to achieve it.
Growth Hacking As a Tool For Scalability
Although it may sound a bit evangelizing, many businesses want to grow but don’t know how to do it. Growth hacking has been the answer for them. Why? It’s simple, and growth hacking is an agile methodology based on experiments to achieve rapid growth.
To do so, the entire customer journey is analyzed to identify critical points that can lead to growth opportunities. All possible aspects are evaluated, from the marketing strategy to optimizing the product if necessary.
In short, it is a methodology that has a focus on growth and is based on a process driven by data and experimentation. In this way, it has become one of the favorite methods of startups to achieve scalability.
As has been said before, growth hacking consists of evaluating the entire customer journey to find aspects that can help the accelerated growth of the business. This makes growth hacking experiments personalized for each company, and there can be as many as there are customer journeys. For this reason, it isn’t easy to establish a single formula that can be applied to any startup. However, some general ones can serve as inspiration or a starting point.
Let The Numbers Chart The Course.
Among the most positive things about technology is that it puts an impressive amount of data at your fingertips, especially about consumer behavior. The first step towards scalability is the ability to dig deep into the data and analyze the available information to define patterns and draw conclusions that help define an effective strategy.
The data will make it possible to formulate hypotheses that give rise to experiments that contribute to clearing up variables until the ideal formula for accelerated growth is found. Likewise, information analysis allows us to know the consumer so well that it provides the necessary tools to make them the center of the strategy and create solutions that respond to their real needs. This has become the key to success for most startups that have achieved scalability.
As growth hacking puts it, it is important to analyze all the available information throughout the conversion funnel. It is only in this way that it will be possible to decipher how the consumer thinks and feels in each of the stages of the purchase process and identify the potential factors that are holding back the growth of the business.
Personalize The Experience
The key to achieving scalability is having an innovative value proposition. To achieve this, understanding the audience and determining how to add value to them is essential. One of the most successful ways to generate value is to create a personalized proposal. Experiences that seem custom-built and fit the consumer almost perfectly are often the most successful. Using analytics to incorporate messages, offers, or even customized products can be a way to generate a differentiating product or service, which makes people feel special, spread the word and grow the business at an accelerated rate.
Not Everything Is About The Product. Distribution Also Matters
It is common to see that when a business seems stagnant or does not have the expected growth, eyes turn to the product or service. One of the most important lessons of growth hacking is to evaluate all the steps of the customer journey, and, there, one of the most forgotten is the distribution channel. It is the least obvious, but it can become a success factor if it is adjusted properly. Having a great product is as important as knowing where to distribute it to arrive at the right time.
Although it seems that it is an element that belongs exclusively to the physical world, the truth is that the online world also has infinite possibilities for the distribution of products, and understanding them provides a very broad growth advantage.
Fear of Missing Out
FOMO is the acronym for fear of missing out, which translates to fear of missing something in Spanish. This term refers to the anxiety generated by being disconnected and missing something important. This fear points to a very basic and primal instinct: exclusion. Therefore, a growth hacking trick to scale a startup is to aim for it and generate products or services with a sense of urgency or exclusivity. Google used this trick during its email service Gmail, which was initially only accessible by invitation. A similar strategy was recently successfully replicated by the Clubhouse platform.
Free Sample For The Down Payment
Contrary to popular belief, a free sample is not synonymous with low quality. The truth is that all people love to receive gifts; Giving a free trial of the product or service that is offered guarantees the confidence and security that you have in the product. Additionally, this trick allows you to collect first-hand and reliable information about what people think about the product or service after using it, which opens an excellent window of opportunity.
Large companies such as Netflix or Spotify use this strategy to grow rapidly. Companies that offer software as a service and allow a free sample without leaving payment details generate twice as many customers from that free trial as those who request payment details.
Invite A Friend
For many years, the same clients who bring other clients have been a widely used strategy. In marketing, it is known as Member get a member, and its success lies in the fact that it offers a high return and is an “easy” way to get leads or clients since people trust the recommendations of their friends or acquaintances.
To implement it successfully, it is recommended that both the client and the referred friend receive a reward. This also creates a sense of belonging and permanence in people. Also, when the same client invites someone else, it is usually someone who looks like him, so the chances of success are greater.
The Power of Influence
Brand ambassadors are a great way to influence a specific segment of interest to achieve accelerated growth. Getting real brand ambassadors, who genuinely believe in the product, is the best way to influence people and attract them to a brand, product or service.
Brand ambassadors do not necessarily have to be famous people, and what is required is that they have credibility and influence others.
As has already been seen, the relevance of growth hacking lies in the fact that it can be applied in any phase of the business, from product development customer acquisition to customer retention and loyalty. These techniques are essential for a startup that wants to grow its business, thanks to their agile and flexible nature, allowing them to stay in the game and achieve that accelerated growth or scalability.
Although, on many occasions, growth hacking was thought of as opposed to traditional marketing, the truth is that both can and should coexist to generate a comprehensive strategy, where elements such as customer service, sales service and after-sales, among others. Shortcuts or growth tricks are not sustainable over time, nor are they substitutes for a solid global strategy.
However, if growth hacking is considered a way for business scalability, it is important to believe that it is not enough to know about traditional marketing. It is also necessary to incorporate concepts and practices from other fields such as usability and user experience. User, artificial intelligence, analytics, and many other areas allow us to articulate a real growth hacking strategy from startup to scale-up.
There are countless tricks and strategies to make a company scalable. However, it is important to keep in mind that the success of any growth hack depends on the individual situation, the startup, current trends and social circumstances. For this reason, experimenting, A/B testing, measuring and making adjustments on the fly is the only way to discover what works for the business.