by Stirling Cox
The idea of a product that would enable commuters in a given city to access information on the location of their buses, has been occupying my thoughts since the summer of last year. With a background in Banking and Consulting, what had been bashed into my head through various training programs and countless deals and projects is that you need to be 100% sure of your facts before opening your mouth. As such I was convinced that it was only through significant primary research and presentation that I would ever be able to prove the viability of my idea and start a business.
I spent much time during the end of the summer and fall term of EC year researching number of commuters, their habits, Smartphone proliferation, looking at different markets that product could be applied to, producing possible revenue models in Excel, preparing financial statements and fancy PowerPoint slides explaining the business. Years of “bad” entrepreneurial practice had me convinced that I needed to have all research completely covered before even approaching possible users or potential funders.
By Christmas time, whilst I had actually spent hours on this idea, I still actually had nothing to show for it. Everytime I discussed the idea with someone and showed them my swanky PowerPoint deck, they loved it, but this was no different from 5 months prior when I voiced over the idea in 30 seconds.
Getting to grasps with the concepts of “just get it out there” or “just get on and do it” was new to me. It seemed irrational that I should start off with a half baked product, a product that wasn’t perfect, a product that may not work in its first version. But countless tales and case examples of Millionaire entrepreneurs taking this approach made me think there was a faint chance that I may be round. After much internal kicking and screaming to stick to what I knew how to do, I decided to give it a go, and developed what I viewed as a first iteration of the product.
Not having any development skills, I built with some assistance (and a tool called SWiSH) a flash live video demonstration of the product. Whilst this was not a formal website or application, nor was it plugged in to any data, this demo now allowed me to showcase to whoever I was discussing the concept with, really what the product would look like, what it would feel like, and demonstrate various capabilities through playing with the video.
Whilst this first step was definitely a step in the right direction, I now realize this was barely a prototype. People saw this and said: “Awesome, can I use it?” This was not a product, merely an enhanced graphical representation of what I was imagining.
My next step is to actually build the first real live version of the prototype. Having learned that I actually really needed to have something usable, I scraped the initial inclination to get a developer to build an application that was not plugged in to any real time data. Whilst this would be a real product, it would not be something that users could use and give feedback on. I also scraped my next idea which was endless discussions with London to open up their data so that I could build the product on their systems.
Instead, after what is now seeming like a no brainer, and a 1 year after the initial idea, I have finally found what may be a useful direction to take the business forward: leverage what is already available. As it turns out, the MBTA in Boston opened up at the start of 2011 all their data on bus positioning to the development community. This provides the perfect testing ground for the product. I am presently in talks with a developer, who has built similar geopositioning applications, about finally getting the first real prototype up and running for Boston. Whilst there are other players out there in the market, Boston provides a perfect testing ground for the first prototype. We are hoping within the next month or so to have an application out there that customers can really play with, try, and critique; an application upon which we can iterate and draw conclusions as to the viability of the idea.
Talking with people who have not taking the course, I realize that most people face this same problem. Lots of people have business ideas, and 90% of them don’t do anything at all with them; they just horde the idea. Of the remaining 10%, the most ambitious 9% spend time researching a market, preparing fancy documents and excel models, but never really get the business launched. The 1% that launch a product are not afraid of it failing, are not afraid of getting it wrong, are not afraid of criticism. They have realized that their business will never get off the ground sat in front of their computer researching the internet or pulling together fancy presentations. Ex-Consultants and Bankers who want to be entrepreneurs… you are going to have to undo a lot of bad practices.
Showing posts with label "How To". Show all posts
Showing posts with label "How To". Show all posts
Beware of the Word "Interesting"
by Evan Shore (republished from his personal blog)
Towards the end of our conversation, Jeff Immelt patted me on the back and said, “Interesting.” After I probed further, he continued, “It’s a good idea, and I think I can see the benefit. I just need to think more about it.” I wondered, as I did during the past several conversations with potential customers, how I could advance from hearing “interesting” to “interested.”
CONTEXT: CUSTOMER DISCOVERY INTERVIEWS
Several months ago, I set out on a quest to understand the specific pain-points that corporations face when it comes to Innovation. I interviewed the CEOs and C-Suite executives of over 40 companies. Most executives identified the same problem: “The single greatest challenge for us is identifying and executing innovations outside the boundaries of our business models.”
I had a vision for a new type of open innovation intermediary that stemmed from my exposure to IDEO, Innocentive, Gen3 Partners, contests like GE’s Ecomagination Challenge, and other platforms that enable corporations to externally-source ideas and IP/technology. I hypothesized that implementation, not ideas, was the main hurdle that corporations faced. I envisioned an intermediary that would enable corporations to use open innovation techniques to effectively crowd-source the execution of new businesses (not just ideas) that fall outside the scope of their capabilities and focus. This is the idea that Jeff Immelt thought was so “interesting.”
WHAT DOES THE WORD “INTERESTING” MEAN?
Interesting means you have not yet found product-market fit. Someone on the GE team commented, “Interesting means it just passed the laugh test.” It means “intellectually stimulating, but I don’t feel in my gut exactly how this applies to me.” If you hear the word, your idea resonates logically with your audience and is likely a novel idea, but they are still processing the information in their heads. You are not speaking with a “mission-critical” customer desperate for your solution, and the value proposition of your offering is not yet specific, tangible, and easy to blend into the audience’s current way of doing things.
WHEN POTENTIAL CUSTOMERS SAY INTERESTING…
1) Check to see if you are speaking with the right person.
In some cases, I was not speaking with the people directly responsible for innovation or growth strategy. Therefore, they did not feel pain points directly, and our conversations occurred just on an intellectual level.
2) Pivot using the Innovator’s Cube.
Three things must be aligned to achieve product-market fit:
- A firm understanding of the problem-to-solve (pain points)
- Specific selection of customers (ranked on degree of problem severity)
- Products/services with a clear value proposition specifically addressing these problems
The word “interesting” indicates that you have not yet found the right box on the Innovator’s Cube:
3) Target different customers or segment your customers more specifically, looking for indications of “must-have” rather than “nice-to-have.”
At first, I did not know who my initial customers would be. I actually started to characterize firms based on whether the word “interesting” was said in the interview.
I discovered that the degree to which customers 1) have a problem, 2) realize they have the problem, 3) are actively looking for a solution, or 4) have access to a solution depends largely on both their size and stage in the lifecycle of their product(s). Fast-growing entrepreneurial firms were so focused on growing their core that they did not recognize any problems. Larger firms generally had the capabilities to manage multiple business units and therefore execute out-of-the-box businesses through Clayton Christensen’s “Innovator’s Solution” (create a separate business unit to explore new territories). The only potential customers who did not say “Interesting,” but rather “Got it. I need this” were those who managed mid-sized firms with declining growth. I hypothesized that because these firms did not have the experience or bandwidth to set up their own “separate group,” these firms would be the “earlyvangelists” for whom Crowd-Sourcing the Innovator’s Solution would be “mission critical.”
4) Probe deeper for customers’ pain points.
“Interesting” means the person does not see how your product fits with their needs. I found that asking CEOs to tell stories about their experiences with out-of-the-box innovation was a helpful way to initially define pain points, and later to qualify potential customers. I usually heard “interesting” when customer needs did not match up with my product vision. After hearing “interesting,” I knew I could gain valuable information that could be useful not only in selling to them later on, but also in determining if they had any “must have” pain points that I could address with a different product.
5) Ask for their concerns.
Even if the product does address their specific pain points, potential customers might say the word “interesting” if they perceive that the proposed solution may create secondary, undesirable consequences.
Some sources of resistance that I encountered involved: IP protection, cultural and organizational barriers to open innovation (e.g., not-invented-here syndrome), the potential to reveal strategically-sensitive information to competitors, an unwillingness to allocate time or resources on initiatives outside the core businesses, an insular sense that “we are already innovative,” a value-claiming mindset resistant to sharing some value with other players in order to grow the pie, and whether corporations have the vision to tightly define out-of-the-box problems for others to solve. All of these issues were usually resolved after additional discussion but may have accounted for the high frequency of the word “interesting.”
6) Refine your product vision, and build a prototype.
Eric Ries said, “You should sell your product before you build it.” However, simply describing my product verbally resulted in a number of “interesting” responses, as people had difficulty envisioning the product. I built prototypes to communicate the vision more tangibly. As I learned more about potential customers’ pain points and probed into their objections (i.e., why my product does not solve their problems), I pivoted around different product permutations.
Three of the four iterations of my product vision included:
- An incubator for corporate innovations,
- A website that aggregates corporate contests (such as GE’s Ecomagination Challenge and Avery Dennison’s website for idea submissions), and
- A consulting firm that facilitates Collaborative Innovation among corporate clients, entrepreneurs, and other institutions (discussed below).
Presenting these ideas using websites and PowerPoint decks provided valuable conversation pieces for my interviews.
Each product iteration had its own set of hypotheses about how to solve problems for particular customers. For example, the contest aggregator solves the problem that smaller corporations may face of not garnering enough participation/awareness for their innovation challenges (in addition to the overarching Innovator’s Dilemma problem). GE does not feel this pain point acutely because it has the prestige and size to garner enough submissions for its Ecomagination Challenge. Therefore, Jeff Immelt’s reaction to this particular idea was that it is “interesting.” By contrast, some of the smaller firms I spoke with said, “My firm is facing this exact issue. I like this a lot.”
WHEN POTENTIAL CORPORATE PARTNERS SAY INTERESTING…
The hurdle to overcome “interesting” when pursuing partnerships is much higher than attracting initial customers, because it is not their problem that you are trying to solve. Instead, potential partners view the partnership as a potential opportunity, rather than the resolution of a pain point.
1) The proposed business model must fit snugly into the operations of the potential partner.
I pitched one of the large consulting companies to start its Collaborative Innovation Practice based on this concept. The business model I had initially envisioned conflicted with its fee-for-service consulting model, and I heard the word “interesting” in my initial meeting. It was tempting to remain firm with my product vision, but I felt it was important to leverage the firm’s client base and saw alternative models for implementation. I pivoted the product concept to still deliver on the desired customer value proposition, but in line with the consulting firm’s business model. I did not hear the word “interesting” in my next meeting and the idea is now gaining internal momentum.
2) There is a higher hurdle for minimum viable product quality. The final presentation to senior management of the consulting firm included a fully-baked plan for implementation, including exact service offerings, points of accountability within the firm, and expected client pricing structures. This hurdle could potentially limit the ability to pivot once approved internally but was necessary in order to have a chance of implementation.
3) Involve a champion at the partner firm whose role and personal motivations are aligned with your business.
I involved someone very early on in the process who had credibility with senior management, knew how to navigate the politics of the firm, and whose interests were fully aligned.
I would appreciate your feedback on this blog post, as long as you do not tell me it is “interesting.”
Inbound Marketing Lessons Learned
by Chris Tam & Kathy Wang
Our blog was by far our most effective tool of inbound marketing and during the initial phase of growth was the top landing page for our site, versus the actual website itself.
Our blog was by far our most effective tool of inbound marketing and during the initial phase of growth was the top landing page for our site, versus the actual website itself.
What was great about blogging as an inbound marketing tool:
Blog posts are easily shared. All we needed was a few “influencers” on the web to find our content interesting, pass it along, and we got huge spikes in traffic. Though our traffic figures eventually stabilized after these “spikes,” each time our content was shared, some of the new readers to our site stayed, explored, and checked out our main landing page.
You can also use blogs to help “exchange” traffic. It was difficult for us to convince a successful blogger or content producer to plug heroiQ or include a link to us on their site - after all, our main landing page isn’t going to be a muddled list of a bunch of links. But a blog is perfect for that - we would link our blog posts to other blogs we liked, and some of them in turn did the same for us - “sharing traffic.”
Blogs are continually updated. If someone were to just go to www.theheroiq.com every day, they would see the same content, over and over again. There’s nothing dynamic about a landing page like that. Conversely, our blog was updated on average five times a week, so readers knew that they could come back and always see new content (and then perhaps wander back over to our main landing page). It’s also a great way to get yourself bookmarked - we currently have 450 subscribers on Google Reader alone.
What wasn’t so great about blogging as an inbound marketing tool:
Content, especially original content, is hard. It isn’t an easy task to continually entertain your audience with unique and original content, and anonymous readers on the internet are some of the most picky. They aren’t like your friends, who may stick around out of politeness - bore them a few times, and you’ll find yourself un-bookmarked.
It can be difficult to commercialize your main product: Successful inbound marketing blogs - such as OK Cupid’s for example - offer interesting content that’s easily shared. But it can be difficult to lead readers from your blog directly back to your site. Blogs can and will increase general traffic to your site. But to do anything above and beyond that through your blog is difficult. Readers hate “gimmicks” or feeling that they’re being used or pushed too hard to try out your product. OK Cupid usually never includes links to sign up for its dating site on its enormously successful blog posts for this reason. We encountered the same difficulty.
Blogging is far from dead. In our experience, Twitter and Facebook were also useful tools - we utilized both and generated a following on both platforms. But the end goal was to lead these users back to the heroiQ site - and our draw ended up being our blog posts! It’s hard to keep putting up the same link (www.theheroiq.com) and expect your Twitter/Facebook followers to keep clicking. You need to continuous, new, fresh content - blogs are perfect for that.
See all these spikes? They were from blog posts!
Five Tips to Boost User Conversion Through Valuable Content
What kind of content will drive clicks and convert visitors into users or customers? I posed this question to marketing directors at five different consumer Internet companies, including Brett Below at Rent the Runway, Andrew Sinkov of Evernote, Liz Wald of Etsy, and Shawna Strayhorn of Refinery29. I overlaid these practical findings with research from Brian Halligan at Hubspot.
Content can be anywhere on the website, and is viewed by search engines and humans alike. Content on the homepage gets the most views, but it has to be useful to people and peak interest immediately. Here are 5 strategic tips to maximize the value of content on your site and outbound communication:
1) Write Content for All Sides of the Platform. At Etsy, the marketplace for handmade goods, the marketing team creates content for both buyers and sellers. Use these two types of content to engage a small but active buyer community, and to attract sellers with the benefits and best practices of your platform. Writing for sellers will help frame your business as an opportunity to the seller rather than a margin muncher or competitive threat.
2) Integrate User-Generated Content into Your Site. The most effective Web 2.0 sites engage users in a framed environment. Get users to write about their success stories or uses of your product and include that content on your site. For Rent the Runway, that content might include wedding coverage detailing the bridesmaids’ dresses or crowdsourcing a look for this year’s prom.
3) A Picture is Worth a Thousand Words. Graphics-heavy emails, websites, and conversion pages are substantially more likely to get user conversions. If you’re website is about handmade crafts, for example, include plenty of pictures of those crafts to get higher conversion. In the world of instant gratification and massive media consumption, pictures peak interest a lot more than craftily assembled words.
4) Tell, Don’t Sell. Endless selling of the website’s merchandise won’t drive traffic. For email communication, focus on industry tips and picks rather than on individual merchandise. Click-through rates can double when the messaging is about advice rather than specific items. For email communication, focus on items that everyone buys often. This will keep interest high and allow for future upselling.
5) Find a Partner and Exchange Mailing Lists. Partnerships with well-known bloggers and industry experts are an excellent way to boost your credibility and mailing list. Find an industry blogger, and pay him/her to write an article on your behalf and send to both of your mailing lists. Ask for a reciprocal link, and chances are you will get a boost to your subscriber base, while mutually benefiting both parties’ brand images.
Creating Culture Through Prototype Development
by Aunim Hossain
Baller. You’ve spent months running around, talking to everyone you know (or don’t know), attending conferences, scouring the online job resources…all with the goal of building your dream team that will take this from a great idea to a company that will change the world. And you rocked it. You have the team you need: one product manager (you), three developers with front-end and back-end skills, and one artist/UI guru.
You feel like you’ve arrived. You say to yourself, “now, it’s all about getting it done, but that should be pretty simple with the team of ninjas I assembled, right?” But this is where many promising founders stumble. Even with the right team in place, success is not guaranteed. While there are many variables that determine success, one of the most important variables that founders can control (and often don’t) is building the right culture.
Culture is created through the processes that founders and the team members put in place to complete tasks. As those tasks are completed, the team figures out which processes work and which should be revised. When a particular process becomes second nature for the team to complete a certain task, it has effectively become culture. As founders, it is our job to guide the creation of the best processes and make sure that the processes that become culture are the right ones for the team.
In this post, I hope to start a list of the best processes that have come to define the culture of our team. In this first try, I’ll talk about our experiences with communication and time management.
So tell me what you want, what you really really want…
Oh those Spice Girls were sages. And it makes sense that they knew what they were talking about when it comes to communication: they were a startup had to manage a team of five divas. In our startup, with my own team of seven divas, we thought that putting everyone in a room together would ensure strong levels of communication. But several major problems from spec misunderstandings, to code deployment issues, to artist delays continued to creep into our work hours. In the end, we figured out that the fundamental issue was a lack of communication. Although we’re still working a lot of these issues out, here are a few processes that we’ve put in place that will hopefully create a culture of over-communication within our team:Create a Backlog of Detailed Specs: As the product person, my ultimate goal is to take the idea that is trapped in my head and make it real. But because I need help from other people to make this happen, my first task is to take the idea that is in my head and put it in the heads of everyone on the team. Now before we figure out how to really do mind-melds, we have to rely on specs. So make your specs as detailed as possible. Don’t assume that your team will fill in the details, because where there is uncertainty, there is room for miscommunication. Also, if there is a feature that is important in the future, don’t wait to write the spec. It is critical to build a long backlog of specs so that the team knows where the product is going and they can build functionality to be flexible and accommodate what’s coming next.
Daily Scrums: Although we started this practice on our first day and most teams use this process, I know that it has been instrumental to our team’s cohesiveness. Functionally, a Scrum for us is a daily team meeting that lasts only 30 minutes (everyone is standing up so that it’s clear that the meeting will be short). One by one, each person has the floor and talks about what they worked on yesterday, what they are working on today, and any questions that they have for other people. After setting it up, our team started using it for functions that I had not thought about before I saw it happening. For example, we use it as our daily deliverable when I am able to see where we are at on the code and art. Other team members use it as a way to make sure they are on the right track when solving a problem. Other team members use it as a way to look at the big picture of what we’re doing and get pumped up about our progress.
Other Practices: We set up skype chat for each of the team members so that communication lasts all day. Often, there is a tremendous amount of collaboration that happens in a seemingly silent office. We also set up a wiki that documents, in a central place, the components of each of our Sprints, and what everyone is responsible for. It is a constantly evolving document that is primarily updated by me, but it is very helpful in understanding what people are working on in the long term and where there may be gaps.
In the end, as we set up all of these processes, the most important lesson that I have learned is that great communication starts at the top. Unless you demonstrate that you are communicating yourself, your team members will likely not communicate either. For example, if you say that everyone on the team should email whenever they have questions, it will probably take several emails from you before the team buys in and takes it from there.
Time is on my side, yes it is…
In this section, we learn from the Rolling Stones. It’s an ageless, optimistic message that runs in contrast to the typical entrepreneur’s mindset, that stresses impatience (and the cornerstone of lean methodology). Now, I definitely agree with this mindset: we can’t just sit on our ideas while someone is out there hustling with a similar one; we can’t just keep working on prototypes without getting them out to users who can teach us; we can’t go back and spend days cleaning up code when there is so much to be done with our existing code base. I agree with all of that. What I don’t agree with, however, is the mentality that time is the enemy. As a founder, it is important to frame time as our friend.
This is an important lesson for me because I was always under the impression that, by setting stretch deadlines, I could get more out of me and more out of the team. By framing our work as a race against time, we could encourage hard work and higher performance. However, this view has only served to make us look at the short-term goals and lose track of the long-term needs of the company. With time as the enemy, we introduced all-nighters, hardcoding, a lack of flexibility, low morale, and stress into our processes. By doing so, we ended up being more behind in reaching our goals. Thus, these processes below ensure that we all look at time as our friend in product development:
Balance Speed vs. Scalability of the Code: When your team is “costing out” features (determining how much development time, cost, and art is needed for a feature), it is important to tease out the real tradeoffs between getting done on time and the corners that will need to be cut. For the product person, it makes sense to include the entire wish list in the spec, but you should be aware of what tasks are vital and which can be pushed. As an engineer, it is vital that you understand which shortcuts can be used now to meet this deadline, and which shortcuts don’t make sense because it’ll take more time to revisit three deadlines down the line. It’s very hard for everyone to understand these tradeoffs, especially early on in the development cycle.
Therefore, I believe that it is important to set easy deadlines with several days of cushion for the first few sprints. This will give the team the flexibility to focus on building scalable code early and establish understandings of the tradeoffs that they will have to make later. Technical debt is inevitable, but it should be avoided early because it compounds. As the team learns more about how they work together and about where the product is going, the deadlines can become tighter. But early on, focus on the scalability vs. speed.
Establish Best Practices…before you need them: When you believe that time is on your side, you can spend some time thinking about what processes you will likely need in the future and build to them now. By doing so, the team can learn how to use them before they are really in a jam. On our team, we set up bug tracking through Bugzilla, subversion hosting and deployment through Beanstalk, and other systems before we had bugs and multiple developers in the code. By doing so, we were able to create a plan for scaling so that when we hired people, they could get ramped up quickly. Indeed, if you can take the time to look ahead and plan for the future, you can save a lot of time today.
Now, there are only a few lessons that I have learned as we tried to create a culture through the prototype development process. In your comments, please feel free to comment on these processes, but also feel free add your own best practices. I’m looking forward to reading them.
Launching a Tech Venture, One Iteration at a Time
by Rosemary Kendrick & Aleem Mawani
It’s been, well, a very rewarding semester working on Rewardly. As we reflect on the main tools we employed this semester—merchant interviews, business model generation, generating mockups, and developing a prototype—we have a few takeaways we’d like to share.
First off, when it comes to interviewing local businesses, be prepared to throw enough darts. Local business managers are tough to pin down with understandably ever-shifting schedules, so we found ourselves juggling a bunch of cancellations and rescheduling. It’s helpful to remember that the customer discovery process is a sales process: you start with a lot of cold leads, eventually secure enough interviews, and then ultimately score a few letters of intent. A corollary to the throw-enough-darts mantra is the realization that you don’t know what you don’t know. It’s hard to predict which local businesses will be the most helpful to talk to, and it’s even harder to anticipate what insights will emerge. This is particularly true in the diverse landscape of locally-run shops. So don’t spend too much time calibrating who to target: just get out there, get in front of business owners, and listen.
With experience, we learned what made the best pitches and meetings. Often, having a letter of intent signed was a particularly big barrier for local businesses. Managers varied in their familiarity and comfort with signing what seemed like an official contract. We tweaked our strategy accordingly and approached the letter of intent as the end goal of a long sales funnel. Some of the most useful questions we asked were incremental, along the lines of ‘what would you need to see next in order to sign this letter of intent?’ Additionally, with our meetings—and likely any sales process—a product demo speaks louder than an idea. This is certainly true when you’re a startup trying to tackle the initial customer acquisition hurdle (we imagine it might be different for algorithm-based tech startups). Our initial concept-based interviews were extremely useful in generating feedback, but our most promising conversations started when we were able to put a product in front of businesses. The prototype was very rough, with many features and mechanics ‘faked,’ but it was nonetheless an extraordinarily powerful communication and sales device.
This leads to an even larger takeaway about the entrepreneurial process. Throughout HBS, we often hear that cash is king, but we propose that in some tech startups product is king. For a startup at Rewardly’s stage, pitching to investors (at least to non-seed investors) was not the best use of time. Most meetings became coffee chats and yielded few concrete next steps -- the time would have been better spent just building and refining the product. This is especially true for a startup with first-time founders. It may be that entrepreneurs with deep domain expertise, an all-star team, or a strong track record can gain much more traction with investors early on in the concept stage.
As we learned more from our customers and our product, we spent a lot of time refining the business model. Like so many other steps in the startup process, we found that business model generation was an exercise in prototyping: expect a lot of iterations. But perhaps more interestingly, we realized that we first needed to reframe our goal. Given our wide range of potential customers, one size didn’t fit all. Providing a suite of different payment options was key to meeting the wide array of small business needs. More established businesses often preferred the regularity of a budgeted monthly flat-fee, whereas newer and scrappier business wanted a pay-as-you-go, performance-based plan. All local businesses, given their relatively small size and budgets, insisted on a risk-free introductory option.
Building the product is the next step for Rewardly. We were able, though, to complete wireframing and product prototyping this semester, and we learned a lot in the process. Our wireframe evolved from a low-fidelity product (paper sketch) to a higher-fidelity rendering (a professionally designed mockup). When it came to our first interaction with the designer, we discovered that it was important to be specific about the goals and agnostic about the exact details. The professional designer had a toolset of specific methods; what they needed from us was a clear articulation of the goal of each page and the type of work we wanted completed (e.g. user interface exploration versus graphic design). Once we had a first cut of the designed wireframe in hand, we could then go back and forth with the designer, incorporating feedback and tweaks through several iterations.
All the steps we took with Rewardly this semester—through interviewing, business modeling, product prototyping, and wireframing—reminded us of the power of iteration. As hackneyed as that may sound given lean startup mania, it is important to reemphasize as it is distinct from much of what we learn at HBS. Business school often focuses on the end-points, the funding pitch, the polishing, the analyzing. But with Rewardly, we learned that the first step in starting a startup is often, well, just taking a ton of steps, and seeing where the customers, product, and business lead you.
Assessing Concepts and Developing High-Performing Landing Pages
by Mohammed Aaser
This semester I worked on developing and launching Noor Kids, which is a magazine for Muslim Children. The goal is to build a brand around our characters and launch additional business lines in the future. In order to assess the demand for the product, I created Facebook ads. Based on the performance of these ads, I decided to launch the business, and created an 11-page sample version for prospective customers. In addition, I am currently working on driving sales through landing page optimization. While I learned a tremendous amount through this experience, I would like two share two key insights – 1) How to assess a business concept through Facebook Ads, and 2) How to optimize landing pages.
1) How to assess a business concept through Facebook Ads
Facebook can be a great way to test a business concept before launching. You can place an ad on Facebook targeting a very specific group of people, and can see what proportion sign up for a free trial, or submit their contact information to receive launch updates. While people may sign up for a service, this may not necessarily mean they will pay for it; however it can still give you an idea about demand. The objective of my test was to see if we could get individuals to submit their information at less than $1 an email. Here are the key things that I learned:
Facebook can be a great way to test a business concept before launching. You can place an ad on Facebook targeting a very specific group of people, and can see what proportion sign up for a free trial, or submit their contact information to receive launch updates. While people may sign up for a service, this may not necessarily mean they will pay for it; however it can still give you an idea about demand. The objective of my test was to see if we could get individuals to submit their information at less than $1 an email. Here are the key things that I learned:
· Targeting: You need to have a clear idea of who your customer will be. Even if your business is very broad, in order to get good conversions, you should target very specific groups and use specific ad copy and images. Overly generic targeting will lead to low clickthroughs, high CPC, and high conversion costs. What’s more, if you don’t know who your customer is, then it might not make sense to use Facebook Ads.
· Copy: In addition, the copy should be short and targeted. Usually one sentence is sufficient. Adding the term “FREE” in the copy could increase clickthroughs, but may not increase conversions since customers may not be willing to pay. Recently a company called “Flat-Club” targeted me on Facebook. The business enables MBA students and professionals to rent out their apartments on a short-term basis. It had the term “McKinsey” and “MBA” in the copy, so I clicked on it and signed up.
· Landing page: The advertisement should go to a Facebook fan page. I’ve found that Facebook gives preference to fan page advertisements, often reducing your CPC. What’s more, on the fan page, you should setup a custom landing page and a Google Docs form to capture customer information. More information on setting up a tab can be found here.
· Persuasion theory - You should use elements of scarcity, reciprocity, and social proof to increase conversions. For example you can give a free whitepaper if someone signs up. In addition, you can limit the number of whitepapers you plan to give out or limit the time period for signing up (make sure you communicate this). Finally, try to get hundreds of “Likes” so your concept looks supported by most individuals. More on persuasion theory here.
· Metrics: Keep track of your clicks and what proportion converts. You can continue to modify your ads and landing page to see what leads to higher conversions.
· Investment: You will likely have to spend between $100 and $200 to test your concept.
So how did we perform? Our click through rate was 0.5%, or about 5x higher than most ads. Roughly 33% of people landing on our page submitted their information, which is almost double industry standard. We designed our landing page so visitors entered their email address on the first page, and were sent to a longer survey. Our landing page was very simple, and we highlighted the submission form in yellow. Our total acquisition cost per fan was ~$0.20 and per survey was ~$0.23. This figure is approximately 1/4 of best in class email acquisition costs (e.g., Groupon and Living Social are said to pay between $1-$2 per email acquisition). Further, we were able to secure a very low CPC since our ads were performing exceptionally well ($0.07 per click vs. average of $0.50 per click). If you would like examples of our ads, please contact me directly @mohammedaaser. Below is an example of our landing page:
Step 1. Fill out email on Facebook
Step 2 – Takes user to a survey page. The survey had about one dozen questions.
Step 2 – Takes user to a survey page. The survey had about one dozen questions.
2) Optimizing landing pages
Once we tested the concept, we decided to invest in developing a sample. We developed a landing page where we showed off the sample and sell subscriptions. We held our ads constant, and just modified the design and flow of our landing pages. We learned a few things:
Once we tested the concept, we decided to invest in developing a sample. We developed a landing page where we showed off the sample and sell subscriptions. We held our ads constant, and just modified the design and flow of our landing pages. We learned a few things:
· Keep the page very simple – Usually, there are too many things going on in Facebook at one time and visitors can get confused. We wanted individuals to “like” the page, share with friends, and subscribe to the magazine. We found this very difficult since there is limited space in Facebook. For this reason, it might make sense to break the purchase process in multiple steps.
· Develop an overall checkout process– we started with a very simple process, but decided instead to use a multi-step process. Our initial subscription process was just a landing page with a purchase button. Our new process features an email sign-up to get a free sample. Visitors are shown the sample with a special offer. When they add the item to their cart, they are asked for their email address. We think this process will enable us to triage our customers – those that are interested, and those that are ready to make a purchase but just need an incentive to do so.
· Build an emotional connection – We created a 90 second video that explained our concept. It was very simple. My younger brother was in front of his webcam explaining our goal and how we needed help in launching the magazine. When I talked with many of my friends, most said they didn’t think the video was that great, so I decided to drop it. To my surprise, I found that the landing page with the video converted much better than those that did not have it (almost 3x better). We believe the personal connection and a quick explanation of the product made all the difference.
· Improve shopping cart abandonment rates – About 4% of individuals added the product to their shopping cart, however, only 1% actually purchased. Based on a discussion with our advisor (Jeff Steves at CSN Stores), typical add to cart rates are about 2%, so we are performing well on this metric. However, usually 40% of individuals who add to cart checkout, so we are not performing as well here. To combat this, we added an additional step in the checkout process where we collect customer information. If the cart is abandoned, we can connect with the customer and offer them incentives to purchase.
· Hack metrics together – While there are a ton of good solutions out there, very few analytics tools are real-time and cheap. I used Google and Facebook analytics, but since they report after 24 hours, I just used a bunch of bitly links and tracked clicks on each page. I made an excel spreadsheet and manually updated the analytics every few hours to see how things were performing. While there are many expensive analytics tools out there, I think manually hacking for the first few weeks is a good idea, and then relying on Google Analytics over the long term should be fine. In addition, I used ClickTale to do recordings of visitors. Unfortunately, I didn’t have much success with ClickTale (only had two recording out of 2,000 page views), and it’s likely that I didn’t set it up properly.
I am hoping these insights will be helpful for many of you. If you have any questions, please tweet me at @mohammedaaser.
