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After starting a business, you need to work on this to get on the growth curve [Starting a business 5]
Previous Post｜Starting a business 4: Staircase of Consumption
1.Customers don't respond with words
A customer ate a meal at a restaurant. It was terrible. So what does the customer say? Nothing. They just don't go back.
Even if you ask them nicely how it tasted, they'll say, "Yeah, it was okay."
Would anyone be excited to hear, "The customer said it was good!"?
But major corporations make similar mistakes.
McDonald's developed the McLean, a low-fat burger, after consumer research concluded that many people wanted a burger with less grease. It ran in the red for five years and then disappeared.
Coca-Cola taste-tested 190,000 consumers and developed a new name, "New Coke." It failed after 79 days and was relaunched as Coca-Cola Classic.
In 1936, Literary Digest magazine predicted that Landon would become president based on 2.4 million poll responses. The results showed that Roosevelt was elected and the magazine was closed in 1938.
In Korea, there is also a famous joke about customer research.
'When asked to raise their hand if they were watching porn in the middle of Seoul Station, it was less than 1%.'
Don't bother collecting crappy data. Real data is out there, and you can find it.
2. How to uncover real data
The data floating around the internet is rarely the actual data for your business. You can't count on the results of surveys, either. Customers say "I'll buy it if you have it," but they don't follow through.
'Saying' is enough to be taken with a grain of salt.
So how do you collect real data?
We need to see the 'real reaction' of the customer.
In the third post, for example, IBM tried to collect customer reactions through a stenographer, and the actual people involved said things like "my neck hurts," "it's hard," and "I don't want to sit in one place for a long time". IBM was able to save money on technology that could have been spent on other projects.
IBM's customers didn't know the stenographer existed, so they experienced a real service. When people experience the real thing, they react to it in a real way.
Once you're ready to show your customers the real thing, it's time to do what IBM did: collect their real responses and learn from them what's meaningful for growth.
3. Infinite iteration
Once you've got real customers, real products, and real reactions, all that's left is iteration. Make and test hypotheses, meet and talk to customers, create new offers, watch for new reactions, get your products and services out into the world, and so on.
Keep iterating, and at some point you'll have 1,000 ideal customers huddled around you. Until then, keep an eye on their reactions because they can easily scatter.
4. What mature companies never miss
We set out lightly to grow rapidly, meeting our ideal customers and collecting real data. If you've made it this far, a glimmer of light in a dark tunnel is on to you.
Maybe you've hired employees out of hope, or built internal systems. Even if you're working hard to reach that light, sometimes it feels like you're stagnating.
Still, what we're doing is the same thing we've always done, and the good news is that we're able to operate faster based on our experience.
Think back to the beginning, when we didn't have a clue. We have 1,000 ideal customers and an idea.
Every company starts out differently, but those that have grown share a few things in common.
1) They keep refining to make it easier to ascend the staircase of consumption - of course, they don't lose sight of customer response.
2) Actively invest in avenues of access so that people can easily discover them.
SEO, social media, viral content, paid advertising, etc. If we already have 1,000 customers, it's pretty easy to climb the stairs for the first time.
3) Make suggestions to keep the 1,000 ideal customers who came to them.
-When customers cancel their Coupang Wow membership, the team offers them 2 months of free service to delay their decision.
-Department store VIPs have access to a lounge, but regular customers don't.
-Banks offer better products and gifts to VIPs.
-Louis Vuitton burns all of its inventory to preserve the value of its brand and products.
-Gaming offers overwhelmingly better opportunities for paying users.
-Socar and Green Car provide exclusive coupons and maximum discounts for loyalty members.
4) Work on creative ways to find new customers for the idea.
-The benefits are different when you switch mobile providers and when new customers sign up.
-You can get a reward if you move your tutoring website to another place.
-A manual hair remover costs 3,000 won, but a cat hair remover costs 15,000 won.
-If a mine is found, jeans will sell well.
-Bottled water is priced at 1,500 won at a convenience store, but 5,000 won at the top of Mt. Jirisan.
5. When you're feeling the growth curve
If you're a fast-growing business, you may need a strategy to scale up and take on the market in one fell swoop. Or even a huge development budget is required. This is when you'll usually look for a partner or consider investment.
Partners are often sought to save money, but they're also often acquired for their name or credentials. If your customers and product are valuable enough and you have a clear growth strategy, it's okay to seek investment. If you have enough money, it's also possible to ignore them all and go it alone.
Big money always has its own purpose, so be careful what you wish for.
*For partners
-Merchant Recruitment
-Technology agreement, technology transfer
-Business agreement, infrastructure license
-Government agencies, university labs
-Mergers and acquisitions
*Investment attraction
-Angel investment
-Accelerator
-Government-funded projects
-Private funding
-VC (Venture Capital)
-Financial firms
-CVC (Corporate Venture Capital)
Starting a business is a matter of "do" versus "don't."
Anyone can do it. It's just a lot scarier before you start. I hope these five articles will help you feel a little less intimidated and lost at the end of the dark tunnel.
Written by SaaSCatch (Link)
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*Read the <Starting a Business> series to find out practical insights for your startup
1 : What kind of misconception startup founders often got trapped into? [Starting a business 1]
2 : As a startup, you must know who your customers are and where they are now [Starting a business 2]
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