Ethical Growth Marketing 101: Combining Growth hacking With Social Impact Posted on March 22, 2022 by dwinnbrown Within this article, we will go through the 6 principles of ethical growth marketing, and explain how social impact startups that are building the new, purpose-driven economy, need to create sustainable growth (with a limit) to make this movement the norm of our economy. Want to get straight to the 6 principles? Click here and skip the background info! Or are you in a more curious mood and want to deep dive into what growth marketing is all about? Just keep reading on. Entering the purpose economy Socially focused startups and business models are the future of business. According to The Entrepreneur, social impact businesses are on the rise and are attracting the top talent as well as more investment appetite. We are moving away from the “get rich, to donate” model – also known as CSR, and are moving into an economy that places positive social and environmental change at the core of business and entrepreneurship. *Finally* you’re probably thinking. According to Aaron Hurst, the foremost expert on the science of purpose and fulfilment at work, the purpose economy is “an economy that is driven and organised around the creation of purpose for people, not just information, goods and services.” But startups that are focusing on purpose often struggle to survive, yet alone reach their ambitious, life-changing and often systemic goals. The constant internal battle between social impact and revenue generation is something that often feels uncomfortable. Yet relying on donations and grants would just take us back to the charity model – one that has been facing massive criticism about its efficiency for decades. Taken from Silicon Valley’s greatest minds, social impact firms are now incorporating lean, high-growth, and data-driven based innovation to their mix, taking lessons from Dropbox, Twitter, Netflix, and a slew of other “successful” digital titans. The three basic pillars of a lean company, according to Fast Company, are to “think large, start small, and persistently pursue impact.” However, it looks as though the wave hasn’t quite caught up when it comes to marketing one’s business. And so, we introduce you to an adaptation of the lean impact which can be applied to a company’s marketing function; Ethical Growth Marketing. I’m sure you’re probably now starting to think ‘wait, how can growth be ethical?’ or ‘we need de-growth, not more growth’. And you aren’t completely incorrect. Emphasis on “completely”. The fact is that for a social impact business, and especially a startup, to create the positive change it is relentlessly seeking, brand, revenue and impact growth is a must-have for its survival. We aren’t talking about growth with no limits or at all costs. We aren’t talking about growth for the massively disproportionately few who own the company. We aren’t talking about using manipulation to grow. We also aren’t talking about making the biggest corporations of this world grow even more, so that they can ensure that their shareholders keep getting their hefty payouts at the end of each quarter. We are talking about the widely tabooed topic of revenue generating and impact focused growth that impact startups rely on to survive and make a positive change. Okay so let’s get into it, what actually is growth marketing? Traditional marketing meant you needed to plan ahead. You needed to predict. You needed to assume. Whilst most marketers have been applying this long-term planning approach, the most innovative businesses out there noticed that it wasn’t the most effective way they could adapt to their market. ‘How can you grow as your market grows, and the environment changes?’ is a question you’re undoubtedly thinking about right now. When Sean Ellis became VP of Growth at Dropbox in 2008/2009, he focused on this question. According to Houston, he helped the SAAS firm go from a situation where their cost per acquisition was costing them money to one where Dropbox’s customer acquisition soared by more than 60%. So, what did Sean Ellis bring to the table that was so different to traditional marketing? It was all in the approach. He adopted theories from the Lean Startup by Eric Reis, a methodology that allows today’s startups to launch and grow their organisation in a lean, iterative manner. You might think – argh. Growth marketing sounds cool, but it’s not something we have the budget for. One day, we might. That’s where most early stage startups miss the point. Growth marketing primarily focuses on applying the Pareto law throughout all activity and decisions.This means that growth marketers should constantly be thinking “what is the 20% input that will give me 80% of the output?” They also run varying tactics, campaigns, messaging, channels and product iterations, as a set of experiments. This primarily means one thing – marketing activity in the long run becomes a lot more cost effective. “With growth marketing, brands have a blueprint to test frequently, learn quickly and adapt effectively. Growth marketing takes the traditional aspects of marketing, like print, TV, radio and billboards, and shifts the conversation from “how can we attract our customer?” to “how can we keep our customers longer?” With this new conversation comes the ability to reach your target audience through data-backed decisions. The result of this? Long-term, sustainable growth“ – Forbes, 2021 We will dive deeper into what frameworks are used by growth marketers that you can start using this week, but first, let us explain what a Zebra is. What is a Zebra? What does a business actually serve in today’s society? Is getting rich as an entrepreneur or investor really going to give you that fulfilment you’re seeking? Has overconsumption and growth at all costs been the destined outcome of capitalism? These are all questions we know are weighing on your mind everyday. We know the feeling too well… A new wave of conscious system changers, entrepreneurs and early pioneering businesses all around the world see things differently though. *Shout out to all you inspiring Zebras out there! We are in the midst of a Zebra movement, where founders all over the world are wanting to make the world a fairer, cleaner and more enjoyable place to live in and with, rather than aiming to become the next unicorn and becoming a billionaire. In 2017, a movement sprang up online that quickly manifested in cities around the world. It’s now a growing community of business founders who reject the venture capital investment model and support the creation and discovery of alternative funding methods. This ‘Zebra movement’, as it’s called, was started by four inspiring women: Astrid Scholz, Mara Zepeda, Jennifer Brandel, and Aniyia Williams, who want to encourage fellow startup founders to build zebras rather than unicorns. But, if a unicorn is defined as a startup that is valued at a billion dollars (really, only a handful of startups make this stamp and usually have to neglect society or the environment to get there), then how can we define a Zebra? This is nicely defined by the founders of the Zebra Movement, one we at Zebra Growth are proud to be a founding member of. The Zebra Movement To state the obvious: unlike unicorns, zebras are real.Zebra companies are both black and white: they are profitable and improve society. They won’t sacrifice one for the other.Zebras are also mutualistic: by banding together in groups, they protect and preserve one another. Their individual input results in stronger collective output.Zebra companies are built with peerless stamina and capital efficiency, as long as conditions allow them to survive. Wanting to find out what the Zebra Movement is all about? Make sure to read our Manifesto here. Growth Marketing can create sustainable revenue-generating growth for your startup So now you know what growth marketing is, and what it means to be a Zebra, but what are the advantages of using this approach we’re raving about? The benefits of growth marketing include a faster time to market, a higher return on investment, and the capacity to scale marketing activity that is yielding positive results quickly. It will also enable you to form an emotional bond with your target audience, depending on where they are in the funnel, giving them a comprehensive offering that is tailored to their needs. Companies can use a variety of tools to improve their processes using this data-driven growth marketing method. Not to mention that having access to data makes demonstrating the return on investment of all growth marketing operations much easier. No more stressing and struggling to show stakeholders return on investment. Having a full-funnel, scalable growth marketing approach offers value at every stage of the marketing funnel, attracting, engaging, keeping, and eventually converting customers into brand ambassadors. We’re back again to that intriguing little term we call Ethical growth marketing Let’s get straight to it; The 6 core pillars of Ethical Growth Marketing: 1) Growth mindset Carol Dweck studies human motivation. She spends most of her time analysing how humans are wired, why some tend to progress in life at a faster rate whilst others don’t. Her theory of the two mindsets and the difference they make in outcomes is incredibly powerful – not just for business growth and startup culture, but in life in general. She states that we often adopt two types of mindsets. These mindsets can shift, and are in no way permanent. Yet, as the early childhood psychologist Dweck pointed out within her mindset theory – we often adopt either a fixed or a growth mindset. And these are in no way permanent. You and I have both been in both those states of the mind. Yet becoming aware of them and actively aiming for the growth mindset can be life-altering. When being faced with a fixed mindset, your sense of ability comes to the surface. One automatically shifts focus to prove, to show off and to become defensive. This (fixed) mindset often leads to a lack of ability to learn, as mistakes are seen as failures. Failures to one identity. The reason? Primarily due to the fact that you, when in a fixed mindset, think that skills, personality traits and characteristics are things you were born with. Not things that are under your influence. And with that, comes your inner voice that is constantly telling you that you are not worthy, and that this is the way ‘it has always been done’. Who cares if this is the way it has always been done? This is the ultimate innovation and growth blocker. We’re here to say this is the way it has to be done now! Carol Dweck, on the other hand, optimistically highlights that there’s another mindset. ‘A mindset in which these characteristics aren’t just a hand you’re dealt and have to live with, where you’re always trying to persuade yourself and others that you have a royal flush when you’re secretly terrified it’s a pair of tens. In this perspective, the hand you’re dealt is only the beginning of your journey. This growth mentality is founded on the idea that you may improve your basic attributes by putting in effort.’ A growth mindset encourages continuous learning. It encourages risk taking. It encourages being comfortable in the uncomfortable. And you guessed it. That’s a massive shift in perspective to traditional marketing approaches. What’s the most effective campaign we should launch early next year? No clue. Who does, really? We can have some ideas that feel right at the moment, but the ability to drop your assumptions, starting with your ego, can unlock new opportunities your team would have never been able to encounter before. Instead, this mindset forces the team to become more data and learning focused. 2) Experiment led and “Lean” – The G.R.O.W.S. process It’s okay to assume. It’s not okay to believe these assumptions are right before testing them. In order to make sure you are utilising the best growth levers out there, a growth marketer sets hypotheses, to then test them out. Putting one’s ego aside, a growth marketer goes to the market with a curious mindset, gathering initial data that can validate the best hypothesis to support the company’s growth. At the heart of growth marketing lies the continuous, iterative and data-gathering process. The key is to trust the process. This means that at times of wanting to launch this next big campaign idea, you have to take a step back, focus on where you are within the growth process (aka G.R.O.W.S. process) and add it to the backlog of ideas you are needing to weigh up when the time comes. The process consists of 5 steps, these are as follows: G – Gather Ideas: Brainstorm as many experiment-ideas as possible with your team. R – Rank Ideas: Use the ICE-framework (impact + confidence + ease) to prioritise which ideas have the highest ROI (=potential x effort). This is basically an easy and systemic way of sticking to the 20/80 rule. O – Outline Experiments: Choose your next steps and design your experiment as quick and small as possible. The main question here is: what is the one metric that matters the most within this experiment, and what is the minimum amount of data required to validate it? W – Work work work: Execute your experiment in a 2-4 week window. (The time period of running your experiment may vary based on your business size, industry and model). S – Study (and Implement) outcome: Analyse the data from your experiment and decide on the next steps to take: learn or implement! *The G.R.O.W.S. process was adopted from GrowthTribe. 3) The Ethical Growth Funnel (AAARRR(I)) The marketing funnel is what defines your customer journey. In the marketing world, especially when it comes to data-driven marketing, the funnel is the basis of your whole strategy. However, most marketers have so far only been concentrating on “making noise”. Meaning getting the attention of people might sometimes lead to them becoming interested in making a purchase. When it comes to growth marketing, however, the marketing funnel must be viewed through a much more holistic lens. Aside from having the full funnel in sight, it’s also very important to note that the growth marketing funnel is somewhat different to your typical ToFu, MoFu, Bofu. It’s also somewhat different to your business-school “AIDA” model. This model is adopted by the growth funnel, aka the ‘pirate funnel’. To ensure that this can also fit the Zebra Startup approach, for startups with a business model that is focused on creating a positive social and/or environmental impact, the funnel should end with a measurable impact. Ideally, an impact that can be optimised towards. This changes the whole paradigm and mindset of your growth team, and company as a whole. Instead of having to constantly battle between social impact and revenue generation, this ensures that the both are in one funnel. One journey. Where impact is the ultimate goal. The funnel consists of 6 key stages: 1. Awareness This first step is often left out within the growth marketing world. However, especially in the social impact space where behaviour change is often so crucial, we always recommend our clients to start measuring the first touchpoint any user would have outside any referral schemes. How many users are you reaching for the very first time, and how effective are they moving to the next stage? Think all the TikTok traffic is great? Look at how much of that traffic is converting to stage two, and then judge the effectiveness of it! 2. Acquisition This is where you first have a user spend some time with you as a brand. Usually, traffic is the main metric one would measure here. Some startups might be even more specific and only count traffic in certain pages or for a certain session duration. In any case, the user has not only seen your ad on social media or on that press release, but they have actually shown a bit of interest and have ended up on your brand asset. 2. Activation This is where a relationship starts to flourish. This is where the user clearly indicates that they are interested in what you do. This is where you should WOW your users. Where they should be most impressed. Here, a user should be willing to give something up, often their data like an email address or an app signup, in exchange for starting a conversation with you. Receiving more content. Or getting access to a service or product that can fill a pain-gap. Important: this is not to be confused with the purchase of your product. 4. Retention Within the retention stage, you should ask yourself “how can I ensure that the activated users come back and gain from the content?”. Whether you want to measure the number of emails they’ve opened since signing up to your mailing list, the number of free webinars or training they’ve attended, or the number of days it took them to re-open the app again. Here the focus is on tracking how many users actually care about the content you are offering them vs. those who entered their email address and regretted it the next second. 5. Referral The main question within this stage is: “How do I ensure that my users are sharing my brand or solution with their friends, families and colleagues?”. If you have a solid product, newsletter and/or brand, then they surely will anyway, right?! Surely not. You don’t get what you don’t ask for. Ensuring a strong value proposition that connects with your users, to incentivise and guides them by referring people is most likely the most important stage of the whole growth funnel. It is what creates virality, and what could potentially 5X your ROI for your marketing activity, if not more. We all know how Word of Mouth is the most effective channel. This just ensures that it is part of your marketing strategy. 6. Revenue This is where the business hat comes in. Here you should ask yourself, “how can I turn potential customers into paying customers?” This is where you count how much money your business model can actually bring on, as without it, any social impact startup or scaleup would be relying on outside funders which would make it less lean, less flexible and less financially sustainable. The main three metrics one should keep in mind are: Number of paying usersAverage order value per userCustomer lifetime value 7. Impact Finally, impact is the stage where you should ask yourself “how many people am I positively effecting”? This is the most flexible one to measure, and we would highly recommend you first having a look at the Theory of Change social impact measurement tool to understand how you can start measuring your social and/or environmental impact. Do you witness revenue going up, yet your impact is suffering? Then you are not optimising your marketing and growth activity appropriately! This doesn’t have to measure the full impact you are making in the long run, especially if the impact you are making will take years and years to measure. It should however give your growth function an indication if you are positively aiding your social impact, or not. 4) Growth with a limit – The S-shaped growth curve You would have probably heard of the hockey stick growth curve. A curve indicating your growth will only increase over time – for EVER. Doesn’t sound sustainable, ey? However, when we look at how plants grow (and thrive) in nature, we realise that they follow “a pattern of growth in which, in a new environment, the population density of an organism increases slowly initially, in a positive acceleration phase; then increases rapidly approaching an exponential growth rate as in the J-shaped curve; but then declines in a negative acceleration phase until at zero growth rate the population stabilises.” The encyclopaedia states that this is because the plant eventually gains resilience. How can we adopt this pattern to our businesses? Do businesses really need to focus on fast paced growth once they become resilient? We don’t believe so. Instead, it becomes their duty to help other smaller organisations with aligning purposes to thrive faster! Competition you must fearlingly say? We call them allies. 5) Transparency & Honesty Running growth focused marketing campaigns can become a risky game to play whilst looking at one’s ethical radar. Manipulation, unconsented data gathering, targeting the most vulnerable, have all become common practices within growth marketers and startups wanting to grow quickly. Yet it doesn’t have to be this way. And let me tell you one thing, the last thing a potential paying customer will want to find out is that an impact focused brand isn’t honest or transparent with their communications. Are you adding someone to your CRM? Let them know straight away. Are you sourcing materials that aren’t yet 100% regenerative? Let them know about it, and show how you are wanting to change that. 100% transparency and honesty is the only way forward. Being transparent and fully honest within marketing campaigns and communications in general requires vulnerability. And with vulnerability comes trust and a more loyal customer base. 6) Above all: Balance I’m sure we’re all starting to see how business has lost its balance. Entrepreneurs and teams have been leaning on extremes, and that rarely creates long-term, sustainable growth. The business world rewards quantity over quality, consumption over creation, quick exits over sustainable growth, and shareholder profit over shared prosperity. It is built on ego and the power of the individual. On top of that, building and running a high growth startup that wants to do the world justice and potentially help people in serious issues such as mental health, brings a lot of stress with it. To truly grow ethically and sustainably, balance has to be at the core of your team’s culture. Your team has to start balancing; Between financial stability and social impact.Between form and function.Between quality and speed of execution.Between creativity and performance. In order to excel your company’s growth whilst still being able to stay authentic and true to your purpose, a strong sense of balance will allow your team to flourish. It will allow you and your team to flow within this experiment-led approach of growth. It will allow your team to constantly come up with innovative ideas, and it will give you the space to be reflective and critical from an ethical lens, whilst still seizing opportunities for your company to grow and scale its impact in the long run. ————————— Okay so let’s go over what we’ve covered. We know that because of capitalism’s main principles, society is living in a profit-driven culture that values overconsumption and an endless pursuit of growth at all costs. We know a new economy, one that values social and environmental well-being, as well as economic advantages, is needed. This is why socially focused startups and business models are the future of business. However, the reality is that many purpose-driven startups are battling just to stay afloat, nevermind attain these lofty, systemic aspirations of making positive change. The fact is that social impact entrepreneurs who are developing this new, purpose-driven economy must achieve sustained growth (within reason) in order to make purpose-driven movements the standard in our economy. The real lingering question therefore is ‘How can these start-ups strike a balance between their financial stability and their social effect?’ And the answer is Ethical Growth Marketing. Revenue generating, impact focused, data-driven growth. Having a growth mindset, using an experiment-led, lean strategy, utilising the Ethical Growth Funnel (AAAAARR(I), realising growth has a limit, valuing transparency and honesty, and above all, reaching a state of balance, are the 6 basic pillars of Ethical Growth Marketing. Faster time to market, a stronger return on investment, and the capacity to scale marketing activity that is yielding positive results quickly will all be benefits of adopting this lean, experiment-driven approach. This scalable, full funnel growth marketing strategy offers value at every stage of the marketing funnel, attracting, engaging, retaining, and ultimately converting customers into brand advocates. You’ve come this far, want to learn more about how you can grow your brand, revenue and impact with a lean approach? Join our mailing list and be the first to receive exclusive event invites, new blog posts like these and a bunch of free resources you can start using with your team straight away.