If you're in tune with what's going on in the world of tech startups, you've likely heard the phrase "growth hacking." The phrase, coined in 2012 by Silicon Valley veteran Sean Ellis, refers to a way of marketing a business or product that attracts a massive following of fans and customers without spending a fortune on traditional marketing strategies.
When the phrase first started gaining traction among tech marketers, growth hacking was generally seen as something that software or e-commerce companies did. As we'll see, growth hackers are very scientific in the way they approach marketing. They only care about growth that is measurable and provides useful data.
Today, luxury fashion companies like Balmain and Spring are adopting some core growth hacking strategies to give them an edge. Seasoned investors know the luxury market can be fickle, but looking for companies that are on the cutting edge of digital marketing could be a great way to separate the winners from the rest of the pack.
The keys to growth hacking
Before we get into specific examples, it's useful to know some of the core concepts of growth hacking. Naturally, each company's product/service is different, so specific tactics that work for one business may be useless to another. Regardless, growth hacking has brought some key points into focus for marketers in all industries today. Here are a few of the most important:
- Product/market fit. The traditional means of product development is to spend months or years developing an offering behind closed doors, then launching it with one big push. The problem is these launches end up losing the company money because, while the product was spending a year or so in development, the market may have moved on. Growth hackers, on the other hand, start with a minimum viable product and get it out to potential customers as soon as possible. This allows them to see if there is a market for it, and early adopters can provide useful feedback about features that can be included with future iterations.
- Eschew traditional marketing. Growth hackers don't go for TV commercials, billboards and other mass marketing channels because they are extremely expensive and they don't allow for precise measurement of results. Growth hackers widen the definition of marketing to include things like PR stunts, shows and anything else that gets a lot of attention on social and legacy media without costing a fortune.
- Data is king. To that end, these low-cost campaigns must stand the test of social graphs, SEO rankings, A/B testing and other data-based metrics – these are the tools of the growth hacker.
Now we'll look at how two well-known luxury fashion companies are applying these principles.
According to a profile in GQ, Balmain's creative director Olivier Rousteing knew that the products he helped design for Balmain had a unique look that would catch on with luxury-seeking consumers. But he was also keenly aware that in the world of fashion, if you don't have a relationship with your fans that gives you prime visibility, people will move on to the next thing.
Rousteing made a gamble in 2012 that Instagram would become a key social channel, and that bet paid off. He started taking ridiculous pictures of himself while wearing the clothes he designed, and his gregariousness boosted his profile significantly, with Balmain's rising in step.
His following on Instagram is impressive, but what made Rousteing's social strategy even more potent was his own "army" of personal friends that happens to include Justin Bieber, Kanye West and Rihanna. According to the Guardian, his army has over 170 million collective followers, all captive audiences for his marketing campaigns, which cost almost nothing.
As GQ reported, Rousteing also opened the doors on his creative process, posting pictures of his designs on Instagram before they ever hit the shelves. This allowed Balmain to gauge customer sentiment before the product was finalized, and it improved engagement and sales by generating excitement for what the company was working on.
Spring makes data-driven CRM into an art form
Spring is a luxury shopping app that some believe to be a big nail in the shopping mall's coffin. A profile of the company in Wired referred to Spring as "a shoppable Instagram," one that makes shopping for luxury goods easy.
Spring gives luxury brands a platform to reach customers through the app. They take care of the shipping, inventory, and warehousing, and Spring adds value by being the easiest mobile shopping app in the market. There's no shopping cart – you simply choose the size of the item you want and swipe right.
By analyzing the browsing and buying habits of its customers, Spring is constantly using the data to improve its relationship with its customers by ensuring they only receive the promotions they want to receive and can find the items they want without a hassle.
"Winners today are defined by their CRM," Maud Pasturaud, CEO of Spring, told The Guardian in an interview. "Next-generation CRM is looking at coordinating the three key communication channels on mobile: email, push notifications and in-app messaging. There are two important things here: knowing what to offer and who to target with what messaging."
Both Spring and Balmain have adopted the mantle of the growth hacker, using social networks and data to improve their offerings and maintain the strong relationships they have with existing customers. Luxury fashion is all about visibility and perception, and as an investor, you should be on the lookout for those companies that can capture and keep the public's attention.
