In doing some research, I see now there are grounding "systems" you can set using a post hole digger. But to do it correctly, you cannot just dump back in the dirt and tamp it down - for the reasons I noted above. Instead, you need to backfill the hole with a special chemical filler "enhancement" material. There are several types - depending on soil and environmental conditions for the area. That said, having fenced in my backyard, IMO, a big hammer is easier than a post hole digger.
At any rate, apologies to CAPSLOCKSTUCK for saying you were doing it wrong. If you backfilled with proper materials, your way is just fine.
(Edit comment: Fixed typos)