What Is Growth Hacking for the Chinese Market?

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In China, things work differently compared to other parts of the world. There are different ecosystems, customer journeys, etc., so learning and understanding what works and what doesn’t work in China is the most important thing to succeed. 

So why is growth hacking important? It has to do with a lot of things changing nowadays. One of the things is the life expectancy of companies. When we look at the fortune 500 brands with a life expectancy of 60 years earlier in the 90s, they are now more likely only to have around 20 years. 

A company’s path to success is also becoming increasingly reliant on how quickly it can adapt to changes in the market. Some brands that haven’t done so correctly have suffered detrimental consequences. 

Nokia is a well-known example of this. In the past, everyone had a Nokia. But nowadays, no one’s ever heard of it. Another example is Kodak. They were very successful and popular with their traditional cameras. However, when digital cameras became the new normal, Kodak lagged, and competitors quickly caught up with them.

Looking at the top five most valuable brands only 13 years later, we see that three out of five brands have been replaced. Google and Microsoft are still in the top 5, but three new companies have taken the top spots: Tencent, Apple, and Amazon. 

This trend reflects how fast the economies and brands are changing in today’s world. Therefore, change is the only constant, and companies have to adapt quickly with a growth hacking mindset.

So what is growth hacking specifically? It is conducting data-driven mini experiments to see whether things work or not. Failures are great learning lessons, and the sooner you fail at a small scale, the higher your chance will be to find success on a large scale.

So, growth hacking is all about doing micro experiments on your digital channels, products, and services, or any other business area where you can find growth opportunities. Lean is an important concept, and you ideally want to involve everyone in your teams or the organization. Be smart about your budgets because you want to realize a high return on investments. It’s all about surviving the age of disruptive innovations. 

Traditionally, a company’s divided into several departments, such as marketing or product development and innovation. These departments have vastly differing mindsets, where the marketing people are very campaign-oriented and focus a lot on the awareness and acquisition of customers. In contrast, the product development team is much more involved in product features and understanding how to utilize innovation to satisfy ever-changing consumer needs.

These two departments typically don’t collaborate. However, with a growth team and a growth hacking mindset, everyone is involved and goes along all the funnel stages together. Everyone collaborates on brand awareness, customer acquisition, customer satisfaction, retention, and customer loyalty. It is more about digital experimentation, a different approach with a better outcome so far. 

The growth hacking mindset also helps solve some challenges that companies face regarding traditional marketing, which has become highly saturated, more expensive, and less effective. We all know the high cost of a TV ad or that we see hundreds of advertisements on a busy street like East Nanjing road. It simply doesn’t get the attention of the customer and doesn’t find the right target audience. 

This is where growth hacking can help. Instead of spending one large budget, it’s about dividing your budgets into smaller pieces, running the mini digital experiments, and scaling the activities that have proven to be successful. Jeff Bezos is a firm believer in this mindset. He tells all his employees at Amazon that the success at Amazon is a function of how many experiments they do per year, per month, per week, per day even. Being wrong might hurt a bit, but being slow is what will ultimately kill them.

Closely integrated with the growth hacking mindset is a framework called AARRR. In other words, the ‘AARRR!’ framework (it’s also called the pirate method). What do these letters stand for, and how does it apply to eCommerce in China? 

The first A relates to acquisition or awareness, and it means where do your customers first find out about you. Didi, the popular ride hailing app in China, is an example where much of their new acquisition comes from discount referrals from existing users.

The second A relates to activation. How can you quickly get customers onboard or excited about your products? As we often know, with eCommerce, when people first put something in their shopping basket, they want to consider it before coming back for a genuine purchase. Pinduoduo, the eCommerce app, takes activation a step further through methods like gamification (mini-games to win prizes) or by creating urgency (limited time offers). 

The first R focuses on revenue. How can you convert the potential sales into revenue, and how do you retain these customers for repeat purchases? (the second ‘R,’ Retention). 

For example, Alibaba will regularly remind its users of the products they have added to their shopping cart or offer digital red packets that offer special discounts to get their users coming back and buying more.

The last R relates to referral – how do you turn your customers into loyal advocates promoting your products across their social media reach?

The essence of growth hacking is conducting ongoing small-scale and fast experiments to test your hypotheses in five steps. It’s all about testing, validating, and scaling up your activities. We’ll show an example of how this can specifically work. In your online store, we use a framework called the build, measure, learn, loop framework. 

It consists of five different steps, and we’ll show them one by one. 

Step 1. Setting your objectives. 

This is the phase where you and your Tmall partner or your eCommerce team will brainstorm different ideas. It’s the step to set your assumptions and formulate a clear objective that will serve as the potential output. For example, we wanted to test whether including the campaign banner’s unique selling points would increase click-through rates. 

Step 2. – Building your hypotheses

This is to formulate a testable hypothesis with an appropriate experimentation method. How will you test whether the theory is true and state when success or a failure has been achieved? In this case, it would be something like changing the copy on our banner, including the unique selling points will significantly increase the click-through rate. We test this by an A/B test using different banner campaigns on Tmall. Based on the CTR results, we will be able to see which campaign is more effective.

Step 3. – Experiment and measure

This is where you will execute the experiment and see the results. It’s about clearly formulating the measurement scheme and measurement planning. In this case, the experiment setup would be having the original banner and the newly designed banner, each clearly stating the unique selling point. Everything else has to stay constant. You want to have the exact keywords, the same target audience and run the experiments for a few days or potentially two weeks. When the results are in, you can be confident that the banner with the higher CTR is the more effective one. 

Step 4. – Data analysis

In this step, you decide how to analyze the data and measure the success. You can use different tools like Excel or Tableau to do so. The data report is always essential to share your lessons learned with the rest of the team. We would create a PPT file using some graphs in Excel for our experiments, which we can then share with our team and the TP. 

Step 5. – Learning and scaling. 

Now that you have your results in, you can see how you would like to move forward – always think about tomorrow. If the experiment was a failure, you could decide to discontinue this activity. However, in our case, the experiment turned out to be a success. When we stated the USP clearly on the banner, that increased the CTR significantly. Therefore, our designers are now working on changing the other campaigns’ visuals, scaling up the experiment, and seeing what results would bring in. 

Let us conclude with the growth hacker cheat sheet. What are the steps, and what are the things to watch for? Check out the table below:

At Chaoly, our team of growth hackers and data analysts live and breathe the growth hacking mindset. So if you want to know how you can apply growth hacking to improve your results in China, feel free to reach out to us at info@chaoly.com

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