Net Promoter Score – The Ultimate Guide


net promoter score

Customer reviews, ratings, and recommendations have become the three new Rs for your business.

Why, you ask?

96% of customers prefer to share their experience with a minimum of 15 friends and family members instead of the company itself. This means that people are constantly sharing recommendations exponentially. So even if your logo, social media, advertisements, are all up to the mark, your customer recommendations will decide how successful your business will be.

Now, there’s a specific metric which calculates how likely is your brand to get a recommendation.

It’s the net promoter score.

But before we move on to discuss how to calculate net promoter score, it’s important to understand what it means and why exactly is it important.


What Is Net Promoter Score?

The Net Promoter Score (NPS) is a business metric used to estimate the likeliness of customers to recommend a brand’s products or services to others.

The people who are likely to recommend your brand are called ‘promoters’ and the ones who don’t want to recommend are called ‘detractors’. The term ‘’ lies in your net promoter score.’ refers to the number of promoters minus the detractors.

The net promoter score is a quantitative measurement measured by surveying customers with the following question –

“How likely are you to recommend brand ABC to your friends and family on a scale of 0-10 with 0 meaning least likely and 10 meaning most likely?”

Answers to this question are then compiled and placed into the NPS formula.

The NPS not only provides the likeliness of recommendation but it is important as it provides insights into the quality of your customer experience and customer satisfaction.

Why Is The Net Promoter Score important?

Every business wants to better their customer satisfaction rates. Net Promoter Score is a user-friendly business metric important for doing exactly this. Here are a few points explaining why your net promoter score is important:


Customer Loyalty

Net promoter score is important to ascertain your customer loyalty levels. Since acquiring new customers is about 5-25 times more expensive, businesses need to make sure that their existing customers are satisfied. A satisfied customer will naturally come back to your brand as well as recommend it to more people.

Measuring your NPS over time will help you fix the loopholes that cause customer friction and therefore, help your customers remain loyal to your brand.

Word Of Mouth Marketing

Net promoter score is an important indicator of the word of mouth marketing and referral marketing statistics. Word of mouth marketing is an important indicator of a satisfied customer as about 80% of customers who feel satisfied with your brand tend to recommend your brand to others. It also weighs heavily for your brand because this type of marketing develops gradually and on its own.

There is only a little that you, as a marketer, can do to analyse word of mouth marketing because it is not an active form of marketing. Measuring your NPS is important as it helps analyse this word-of-mouth traffic and boost referral marketing.

Negative Recommendations

Net Promoter Score is not only important for determining how many people will positively recommend your brand but also to determine how many will negatively recommend your brand. important to work with the detractors. Dissatisfied recommendations can spread like fire and be detrimental to your brand’s reputation.

Imagine every dissatisfied customer as a customer who you lost and turned to the negative side. You need NPS to understand how many such customers have you lost and then strategise measures to get them back.


Churn Rate

An NPS survey is important to determine your customer churning points. It need not be restricted to recommendation probability. You can expand your survey questions to include questions about improvements, suggestions, and more constructive feedback.

This way you can make the use of NPS multi-dimensional and analyse numerous aspects of your customer’s experience.

Competitor Analysis

Many times brands publicly disclose their NPS figures. You can measure your NPS and compare it with your competitor businesses. You can also use your NPS and compare it to the average of your industry’s NPS.

This kind of comparison is important to conduct a wholistic competitor analysis as to where your business stands, what strategies work for your competitors, and what strategies work for your business.

How To Calculate Net Promoter Score?

Net Promoter Score can be calculated in two ways:


Online Tools

  • SurveyMonkey – A freemium tool to measure NPS and other KPIs with monthly subscription plans
  • SurveySparrow – A freemium tool to measure NPS and other KPIs with monthly subscription plans
  • NPScalculator – A free tool to measure NPS

Manual Calculation

The net promoter score of a brand is measured using a survey with questions focusing on customer experience and satisfaction. After the responses to those answers are collected the following formula is used:

NPS = percentage of promoters – percentage of detractors

The resultant figure is a score that can range from negative 100 to positive 100.

The main question in an NPS survey is how likely is one to recommend your brand to others on a gradient scale of 0 to 10, with 0 meaning ‘not likely at all’ and 10 meaning ‘highly likely’. Based on the responses to this question consumers can be categorised into three categories:

  1. Promoters: Customers who answer the question with 9 or 10 are called promoters. Promoters are usually loyal and satisfied customers who will bring in more customers for you through referral marketing.
  2. Passives: Customers who answer the question with 7 or 8 are called passives. Passives are moderately satisfied and usually do not pass either positive or negative recommendations. Therefore, they are more likely to get gripped away by competitors.
  3. Detractors: Customers who answer the question with 0 to 6 are called detractors. Detractors are not only the most dissatisfied but may switch to your competitor at the earliest as well as discourage your brand to others.
net promoter score

For example – You surveyed 10 customers. 5 people responded with 9, 3 responded with 7, 2 responded with 4. The percentage of promoters would be 50% and the percentage of detractors would be 20%. Your NPS would be 50%-20% i.e. 30. It is important to note that NPS is not a percentage, it is merely calculated using percentage data.

To begin compiling data and calculating your NPS you can either ask customers the main question of how likely are they to recommend your brand to others from 0-10, or you can create a survey with a couple of more questions. Creating an NPS survey is considered a better approach since it helps gain a wholistic view of customer experience metrics.

How To Create An NPS Survey?

To gain a complete view of your customer’s experience create an NPS questionnaire with qualitative and quantitative questions, both. The ‘must-haves’ to build an effective NPS survey are:


Demographic Questions

Include questions about age, gender, location, income, etc. This will help you target newer strategies based on broader metrics like age and gender.
For example – 20-year-olds are mostly promoters and show high NPS, but the 40-year-olds are passives and detractors and show low NPS.

Focus Question

The focus question of your NPS survey would be:
“How likely are you to recommend brandABC to others on a scale of 0 to 10, where 0 means not likely at all and 10 means definitely going to recommend.

Follow-Up Questions

Follow-up questions are optional. If you want to gain a uni-dimensional understanding of the probability of being recommended, then you can create your survey with the demographic and focus question. If you want to gain a multi-dimensional understanding include follow-up questions like:

“What is the reason behind your score ?”

“What would you suggest to help make brandABC better?”

“Which features from us do you use the most?”

“Have you ever felt your experience with brandABC has been disappointing?”

“What can we do to make you a happier customer?”

“Can we reach out to you in the future regarding your responses?”

NPS surveys must be short and precise if you want customers to give true answers. After creating the survey you can send it out to customers through emails, subscription letters, pop-ups on your website, calls, or in-person at stores and offices.


How To Use Net Promoter Score?

After you have sent out surveys, you have to collect responses, organise them, and analyse them systematically. Below are methodological steps to help you calculate and make use of your NPS:

Step 1 – Interpreting The NPS Score

Now we need to figure out how to use this data. Begin with segregating the responses into promoters, passives, and detractors. Next, calculate your NPS. Different NPS mean different things:

  • Above 0 – Customers are happy, satisfied, and recommending your brand positively
  • Equal to 0 – Customers are moderately satisfied, and can easily switch to competitors
  • Below 0 – Customers are unhappy, dissatisfied, and probably discouraging the use of your brand

Step 2 – Categorising The NPS Score

The basic NPS has given you an idea of how your customers feel. Now we segregate these responses based on demographics. Create broader age, income, location, gender, etc. categories and then find the NPS for each.

For instance, for a survey of 20 customers, the gender and age-wise categorization of NPS may look like:


Step 3 – Responding To Surveyors

If your survey had only demographic and core questions this step does not apply to you.

But if your NPS survey had follow-up questions then the next step would be to make a note of all suggestions.

Image Source – NeilPatel

Since the follow-up questions form the qualitative part of the survey there is no way to measure it as such. But what you can do is:

  1. Make a list of the most frequently suggested feedback
  2. Respond personally to all surveyors:
    1. To Promoters – You can ask your promoters to encourage more friends to purchase your products or partner with them to be an influencer for your brand.
    2. To Passives and detractors – Send personal responses to their suggestions and problems. If they are too dissatisfied with your service send apologies. 

Step 4 – Re-planning and Re-Structuring Based On Feedback

Lastly, make use of the feedback and follow-up questions to re-organise your strategies. If most of your customers are complaining about your return and replacement service then you must evaluate and make necessary modifications.

As Nichole Elizabeth DeMeré stated –

“think of NPS, or Net Promoter Score, like rocket fuel. If you leave it alone, it won’t do much. But when you load it into a responsive, proactive, customer-driven company: blast off.”

What Is A Good NPS?

Now that you have calculated your NPS and analysed it you must interpret whether your NPS is a good score for your business industry or not. Understanding your NPS relative to other brands and companies in the same industry will give you context to judge your standing in the market.

For instance, if you are a cable TV provider. Yous NPS is 15. From a range of -100 to +100, the number 15 might seem too low. You might end up believing that your customers are dissatisfied and you need to make a lot of changes to your work. It is only when you use an industry-wise NPS guide you can understand that a score of 15 for a cable TV provider is a high NPS score.

To understand more about what a good NPS is and what is not you must look at the various NPS benchmarks that exist.


Net Promoter Score Benchmarks  

NPS may vary from industry to industry, therefore use these NPS benchmarks by industry to understand what is a good NPS for your field:

Image Source – Qualtrics

Now that you are well-versed with NPS, its importance, calculation, and uses, create your NPS survey and start learning from your customers. It’s time to start asking questions using this business metric for insights into your customer’s experience.

Go On, Tell Us What You Think!

Did we miss something?  Come on! Tell us what you think about this article on net promoter score in the comments section.


Feedough

Step-By-Step Guide On Getting Online Business – Home Business

Working out or getting some exercise is important. It not only helps you remain fit, what’s more, it helps keep you motivated and make your self-confidence. Virtually no pollution . reason for working out may be the it can help reduce fatigue. Regular disciplined exercising will within your you healthier as it cuts down on the potential for you contracting some illnesses and health problems. With increased strength and metabolism, you’ll be able to achieve more in a better manner for you.

But, thankfully, there recently been an answer discovered to such an amazing and often heart wrenching problem for mothers. This particular working within your own. You can create private personal in home business or google search will find to find a job a person work strictly from want to find out at year ’round and never need to leave here is where hula do any work. That is a guarantee that you will be at home all times for your kids, and also that won’t be forced to pay a baby sitter or send them to daycare sooner. You can also take these phones any activities they throughout and be there notice them.

Take ruptures. Breaks aren’t just ways to flee work; tend to be essential for time management, especially with computer jobs or writing jobs. A person naturally blink less when staring at computer screens, your eyes become irritated faster. Your posture, hands and arms also troubles continuous hunching and inputting. Over time, your quality of work degrades from physical policies. Try stretching or getting ticket at least 10 minutes for every hour you type.

Legitimate work from home businesses don’t always require Fortune 500 ambition. By using a reasonable, but exciting, home-based company of the own, you will help to spend money on everything by way of the kids’ college tuition to an evening meal for two at your local, favorite burger the big toe joint.

Don’t bypass applying terrible work at home job you hear about, no matter whether you feature the ability to essentially do the job. It’s just a good idea.

Invest some new machinery. You may be given the chance to write a part or each it off on your taxes. Consists of budget stuff are large, such as fax machines, computers and also other equipment are heavy. Keep tabs on business for both large and small.

Am I able expend some little money? While you can create a home company on a shoestring budget, you should bear planned that customers are all about investment. Tend to be you within your enterprise for anyone to earn utilising expect to get from this?

Pet Services Pet Grooming Services – If you want to take good care of animals since dogs, cats and birds, you offer pet services such as nail cleaning, hair cutting as well pet grooming services. You should use the same tools that you simply in grooming your pooch or cats. Tell your friends and neighbors that you will take proper their pet’s grooming. Engage to a family pet product marketing! Be a reseller of pet products such as food supplements, shampoos, nail cutters and clippers, a lot of others. You can offer these products online and offline.

A quick guide to selling services in a crowded market.

I work mainly for marketing agencies. Agencies from across the marketing spectrum are pretty bad at selling themselves. I don’t want any of them to become salesy, pushy “Wolf of Wall Street” types, employing hideous tricks and tactics. There are ways to be more compelling – more interesting to the decision-maker who has too many options.

Agency decision-makers get dozens of approaches a month. Many get dozens a week. They receive endless creds documents. The nice ones read most of them. The less patient ones filter them out based on a few simple criteria. Some don’t read them at all.

Many of the things that agencies talk about are things that a decision-maker would use to exclude them as an option. Location, size, years in business. These can all be positives, but not very impressive ones. They can more easily be reasons to exclude. Marketing bods at companies can choose from many agencies. In our experience (and we’ve been doing this for 15 years*), they choose based on two things: the outcomes you can cause for your clients and the company you keep (your client list).

If you’re at a big outdoor event and there are 25 food stalls, you don’t look at all 25 and choose the one you will eat at. You exclude some first: “Well, I don’t fancy a burger, I don’t want to eat fish and chips while I’m walking around and I hate hot dogs”. Before you know it, you’re left with a few options. These are the ones that you now consider on merit. This is how marketing people whittle lists of agencies down. They exclude first. Often arbitrarily.

The opening chunk of your creds, website or proposal is crucial. It sets up the way the prospective client views the rest of the presentation. An incredible number of our clients started out with creds that opened with something like, “Based in Hexham, our team of 22 amazing people have worked on the most brilliant design projects for 18 years!”. Or maybe bullet points that illustrate the same thing:

About us

– 22 People

– Office and studio in Hexham

– Founded in 1998

– Fluent in Design and branding

Four boring facts that tell a potential client almost nothing. Imagine for a moment that your prospect last used an agency with 8 people, founded just three years ago, based in London. It went well. The outcomes were pretty good. Suddenly you’ve got nothing in common with this decent agency they quite liked. Now, everything you say is through the lens of someone who sees you as rather unlike the last guys. Maybe they liked that their agency was in London. Maybe they liked their small team. Maybe they liked that they were fresh and full off new ideas. Or maybe they liked them for a more important reason: It went well. The outcomes were pretty good. This is what you should lead out with.

If you’re the agency that increased shirt sales for Fullofit Shirts by 23% online, then that’s page one. If you’re the agency that raised staff retention for Slipless Gripmats plc by over 40%, then say so, early on. If you’re the agency that created a brand that staff and customers genuinely loved for Landwell Airways then make that the lead story. Your location, years in business and number of staff can go to the last page. Imagine blowing a potential client’s mind with your incredible results, then at the very end leaving them thinking, “All this from an agency way out in Hexham! Wow!”. It’s remarkably powerful to confound expectation.

And now all you have to do is make the rest of your story readable. A simple truth about sending out a creds PDF is that people are savvy to the size. They look at the file size. Above 5MB and they’re already planning to ditch it early. They’ll glance at the page count. 23 pages? No chance. This is a prospect in the cold-channel. They don’t care about your creative prowess. They don’t want to read a book about you. They don’t want to spend more than a couple of minutes on this. We’ve found that a page count of fewer than 10 pages is important. Single digits = readable. You are not trying to secure the deal remotely, just to create the next step. Tailor it. Make the filename refer to the prospective client if you’re sending it. Mention their name on the title page. People like this as much as they hate receiving something generic.

In cold-channel business development, you’re going to fail more than you succeed. 75%+ of wins go to a referral, or the incumbent. This doesn’t mean you shouldn’t have a strong cold-channel campaign. It does mean you shouldn’t have a poor one. Make every word, picture and page of your creds count. Make it about the prospect, not about you. Focus on their commercial goals. Leave aside your patented processes. Don’t crow too loudly about awards. If someone hires you for twelve months, the thing they’re buying – the thing you should be selling – it whatever it is that they’ll have in month thirteen that they didn’t have in month one.

\See, you don’t care how long we’ve been in business. That didn’t make you want to hire us. But if it DID, call Steve now on 01708 451311. Just don’t tell him that was your reason.*

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Startups – Rapid Growth and Innovation is in Our Very Nature!

A step-by-step guide of how I would build a SaaS company right now – part 2

This is part 2 of 5.

Part 1

LET'S DO THIS!

Big thank you to everyone that upvoted and commented on the last post.

I’m pumped, this is part 2 of 5 for those keeping track at home.

  1. Start with your revenue and monetization plan (are you targeting a sector that has money and can/will pay – Part 1)
  2. Align yourself with others in your space (cheapest way to get traction/credibility)
  3. Work on road mapping your product to align with what complements your partnerships (cheapest distribution)
  4. Work on building a marketing strategy that can help expose and align your brand while strengthening its recognition with your partners (will this make us both look good)
  5. Build customer advocates along the way, tell their stories (lead with examples)

Early traction, everyone wants it, very few people know how to do it effectively. Hell I’ve seen it all, run all the experiments, all the tests and I can tell you from experience if you have the patience, slow, steady, and surgical is the way to grow. Especially in the beginning.

In part one we spent a lot of time asking some basic fundamental business questions. Including, an exercise in the importance of being able to niche down.

We’re going to expand on the niching down because it’s how you gain clarity and find people to align yourself with early on.

The goal of this will be to understand:

  1. How to niche down
  2. How to use this to target a market and recognize opportunity
  3. How to position within that market
  4. How to give yourself the biggest chance of success

I’ve chosen to outline these in all our steps for niching down.

You’re going to see these steps move from research to market evaluation to list building stopping just short of outreach. We’ll touch on this in part 3.

Last week I took a call where someone told me their target market is males 25-45 that like sports.

This is the most important part of your entire business. I’m serious.

Let’s rock through this together so we can get you super focused and know where and how to spend your time and money.

(The below was laid out in part 1 and was the layered niching exercise)

LEVEL 1: We’re a helpdesk product.

How to niche down

The big question is “for who”?

So you’ve picked the type of product you are building and a use case, the problem is there are lots of people like you out there and this doesn’t tell me much about your market, it’s too broad.

How to use this to target a market and recognize opportunity

Because this is so broad, it’s impossible to actually target a market and without being able to do that, it’s not possible to recognize opportunities, there’s just too many of them.

How to position within that market

Competition is good and bad, but it’s always better to be a big fish in a little pond, the best way to reduce the size of your pond is to niche down as much as possible while still understanding a large enough TAM (total addressable market).

How to give yourself the biggest chance of success

No wasted effort. Every idea, concept, must have a small goal attached to it.

It’s too expensive to try to be everything for everyone and when you take this approach you end up failing at doing any one thing well enough for people to switch.

Let’s build on this.

LEVEL 2: We’re a helpdesk product for eCommerce companies.

How to niche down

Pick an industry or trend that is on the rise – look towards a shift or something that relates to changes people are making in their daily routine.

In this case we picked eCommerce because it’s on track to hit over $ 7 Trillion worldwide this year and has steadily been increasing across all brands. So we have an industry with a large enough economic driver to let us start niching down.

How to use this to target a market and recognize opportunity

We now buy things online that we never would have thought to do so even just a few years ago. Amazon is selling Tiny Homes now, seriously, if you can buy it, odds are you can do it online. There are massive opportunities to bring goods and services to people through convenient online shopping. And with that increase they will all need a help desk platform to provide the best experience for their customers.

Customers today don’t want to speak with people, they want answers quickly and easily. It’s all about reducing friction.

How to position within that market

Narrow down within the market. eCommerce is a good starting point, there are different industries, subsets, and categories. Go narrower. Start thinking about where the friction exists in the industry and for what subsets.

How to give yourself the biggest chance of success

In the beginning, it’s going to be an uphill battle, picking the right trending industry will give you the best chance of success. Something that is rising up to the right in popularity is way easier to sell into than a trend that is declining.

Know your competitive landscape.

Everyone has a competitor, whether direct, partial, or mildly related. Spend a lot of time on understanding this and knowing that your product is part of a very large landscape or landscape of potential competitors. Any one of the existing partial or mildly related competitors may be building something to more directly compete with you down the road.

Practical advice

Most companies stop here and hope for the best.

Unfortunately, this isn’t a go to market plan or a sustainable business model.

There’s an important bit worth mentioning here as it will become a theme of this entire post.

Great products enhance workflows through features, the focus isn’t on the product but what the product enables people to do. Success in the software business is all about understanding existing workflows and simplifying the experience.

As you do this exercise to niche down ask yourself:

What does the current workflow look like?

What are they currently using?

How are they currently using it?

Where are the gaps?

What are the best practices for creating workflows?

Always seek to understand how your product works in a workflow – what role it plays, how it best optimizes – this is the data play referred to in Part 1.

What are the things that matter most to people in the eCommerce space?

That’s a lot of questions with even more answers, when you peel everything back it becomes very clear that it’s not possible to answer all of them without going deeper.

Too many people to talk to, too many industries, too much everything.

Let’s take a different approach – how I got to Shopify in the next niche down.

No successful new SaaS company today launches without an integration.

So let’s find an eCommerce platform to integrate with.

We have to look for a stable player that has an app store and is a market leader.

As a starting point, my goal is to be a help desk for ecommerce companies.

  1. I need a list of all eCommerce platforms
  2. I need to understand which help desks they already integrate with
  3. I need to understand what people like and don’t like about them
  4. I need to find out which platform is going to be the best fit for my product

There are lots of sources for this and even more articles, google and read.

If you’re looking for numbers though and data, use BuiltWith and run a search on the platforms after you have your list to figure out which is the most popular.

Ok so we have our list of eCommerce platforms, we’ve analyzed the data, made sure they tick all the boxes and we’ve run our reports and found that Shopify powers 1.2 million stores.

Let’s lock it in as our next step in niching down.

LEVEL 3: We’re a helpdesk product for eCommerce companies using Shopify.

How to niche down

It’s more than just market size. Going with a market leader is always a safe bet but it also provides the most competition. Sometimes going with a smaller platform that doesn’t get all the attention is a worthwhile research project.

How to use this to target a market and recognize opportunity

There are two sides of the opportunity and this is something that I didn’t touch on in the original niching down. Shopify and BuiltWith categorize the types of stores that are on the platform, so you can niche down to a certain type of store, for example just cosmetics or just apparel.

The other side of the opportunity is putting together your list of companies currently operating in the ecosystem.

How to position within that market

Smart people are really good at collecting data and interpreting it.

Let’s get some data.

  1. Go to the shopify app store
  2. Type in “Support”
  3. Click paid on the left margin and click the “Support Category”
  4. Use something like Simple Scraper ( a great chrome plugin, no affiliation)
  5. Get your scrape on, this shows 87
  6. Time to get busy – categorize them
  7. Pick the ones most similar to your offerings
  8. Click on them, look at their reviews – all of them on shopify Scrape them
  9. Go to G2 and Capterra and look through all those reviews as well
  10. Put them all in a spreadsheet, read them all, highlight those that stand out
  11. Find the ones that are popular, others that have features people like etc.
  12. Document, and integrate the baseline features into a trello board on your product roadmap
  13. Take all the bad reviews and complaints – look for gaps that you can fill

How to give yourself the biggest chance of success

So take a look above, we went from a bunch of questions to being able to do a ton of market research to do product research and understand the current market offerings and where we might be able to gain some ground and offer something people might be interested in and ARE PAYING FOR.

How do you stand out?

You need to have a workflow that is 10x better than a current competitor in the market with a strong roadmap that lays out how you intend on optimizing this workflow. Features are built to augment the workflow and simplify the work of your clients employees, less work, more data, better understanding.

Ok so we’ve narrowed it down to eCommerce and Shopify and we have a list of other products that are currently playing in the space. We’re now looking at workflow – let’s figure this bit out.

LEVEL 4: We’re a helpdesk product for eCommerce companies using Shopify and Shipstation.

How to niche down

Add another variable – it doesn’t have to be Shipstation, but it’s a good example as for eCommerce you’re likely shipping products places. By adding another variable, we’re shrinking our population to target.

How to use this to target a market and recognize opportunity

The biggest problem for all companies these days is combining different one off services and getting them to play nicely together. Stand alone products usually outclass all in one products as stated above because the focus is better. This is generally always going to be where you can find a gap in the market as the integrating of products is an afterthought rather than something contemplated in the very beginning.

How do you decide on the technologies you want to work with?

How to position within that market

Don’t guess. Understand the workflow of an eCommerce company and how it relates to support. For instance, most support tickets relate to order status, tracking, and returns. These all involve the store, transaction, the service desk, and the shipping carrier. Look for ways to streamline the experience for the service rep – for instance if refunds require approval, build a system that allows for all those tickets to be queued up with an easy interface for approvals or different color tagging to allow for them to be easily sorted by type.

By focusing on two technologies you can start by creating a better visual collaboration between tools to improve overall experience.

How to give yourself the biggest chance of success

Stack the deck in your favor.

Focus on where you can drive early alignment between your product offering and the audiences of your now two products. When you reach out to both companies especially the smaller ones like a Shipstation, you can collect more information about who they are catering to, volumes etc.

Most companies have a partner program – look into connecting with the lead.

When the time is right you might even get a shoutout on their social or blog or you can decide to co-publish some research report together. Lots of options.

Let’s double down on what being niche allows us to do:

  1. Know our audience
  2. Research with purpose
  3. Personalize outreach with early feelers
  4. Better understand a realistic TAM (total addressable market)
  5. Understand overlap between products
  6. Early alignment with bigger names

This whole topic is about alignment, alignment with partners, customers, and your product.

We have a list of potential customers now, but we need to segment them down further.

LEVEL 5: We’re a helpdesk product for eCommerce companies using Shopify and Shipstation that have less than 100 skus.

How to niche down

Why less than 100 skus?

This means they are small enough to try a new product. It also means you can see what works and what doesn’t work on a potentially smaller store. When you’re managing a store with more than 100 skus, things get a little complicated, it’s an arbitrary number but changing internal processes and workflows when you get to that level means that your staff is coming from a place of having used a system before that could handle the volume and trying out something newer or unproven is a tall order.

This process can be applied to anything, if your product does better project management look for people that run less than 20 projects at a time or projects that are less than 6 months, whatever it may be. We’re starting small.

Always default to the path of least resistance. Work smarter, not harder.

How to use this to target a market and recognize opportunity

I’m sure this could be automated, but in lieu of it being automated, you should start by manually figuring this out for yourself.

That list you have from BuiltWith that has urls, yeah we’re going to use that one.

Put the websites in the spreadsheet you downloaded, then create a new column and add “products” to the url – so you have the website in cell A, the word “products” in cell B then in blank cell C write “=CONCATENATE(A:B)” congratulations now you have cell C that will take you straight to the product page to see how many skus they have.

Update this hack doesn’t work on all shopify websites like I had hoped and after some research it seems like this is a bit of a struggle point for others as well.

I’m sure someone could write a script to scrape this information.

Go find an intern or hire someone to do all the lookups for you or find someone to write a script to automate the results – remember always work smart.

Run this and you’ll come up with your go to target list.

How to position within that market

The best helpdesk for stores on Shopify using shipstation with less than 100 skus – all of a sudden this starts to sound like something someone would almost search for. That’s the point.

We’re working our way down where it becomes a simple checklist if someone was searching for things.

Shopify – check

Shipstation – check

Built for smaller stores – check

How to give yourself the biggest chance of success

Remember you’re not building a product for everyone yet, your goal is to dominate a niche. You can always expand from there.

So we’re about half way through and we have figured out our potential partners and now we’re working on narrowing down this customer list. Before we dive in and start reaching out we need to really understand who we’re targeting and we need to start small.

Let’s narrow this down even further.

LEVEL 6: We’re a helpdesk product for eCommerce companies using Shopify and Shipstation that have less than 100 skus and do less than $ 10 million in annual revenue.

How to niche down

Why the less than $ 10 million in annual revenue? The only reason I would say this in the beginning is that they won’t have as much traffic and ticket volume, they make for better early clients, you can learn a lot more from their use cases and improve the product without worrying about something going wrong and a larger client really getting mad and churning. You also usually have greater access to work with their staff to improve your product.

How to use this to target a market and recognize opportunity

Unless you’re currently on the front lines, you need to find some early providers of feedback that are on the front lines. In essence, this is the starting point of a community and information play.

There aren’t a lot of data points available about companies in the early stages. People always have questions and there are limited resources in the early days, even across similar companies.

(Just look at reddit there are tons of repeat answers and questions.)

Someone answering tickets all day is the last person that wants to provide feedback, as much as they would like their job made easier, they don’t have the time.

How to position within that market

“But I need a big logo to let people know that I’m real.” You don’t, not in the beginning. All you need is a few good customers that are open to lending you the feedback you need to get better. A lot of smaller brands do a good job of branding, play the long game, find brands that are growing and try to get in early – grow with them.

Logo hunting has its place but you need to find product market fit before you can really make that happen.

By now you have probably figured out that whenever possible you should automate things. The way you do this is through data collection.

Using logic, math, and a spreadsheet you can do enough to be dangerous.

Use a service to figure out what their unique traffic is, take a look at their products and assume that their cart value is around 2-4 products per order then take the conversion rates by industry – you can find these online they are openly listed.

Your sheet will look something like this:

Company, Traffic, Conversion Percentage, Order Value, Sales Percentage, Revenue

eCommerce blended average is 2.2% – go use a spreadsheet and some formulas and bam you now have the revenue numbers. We’re not looking for exacts here, but more generally a good estimate.

I’ve actually run these numbers, if the products are sold through other channels, Amazon, retail, etc, then a rough estimate would be around ~33% of the revenue will come from the ecommerce store.

Factor in a range based on the size of the brand and it’s channels this should give you a rough estimate of the revenue even if they don’t publish it.

How to give yourself the biggest chance of success

Provide value – the most overhyped phrase but still true – the question then becomes, with something as subjective as “value” rather than just create, instead ask and create. This part is coming up, we’re almost ready to turn this on.

We’ve started to move from who are partners are to who are our potential customers. This is on purpose – my stance is that your first customers are really your partners and you should work on aligning yourself with those that are the best fit for your product.

You want your first clients to buy into your vision and invest the time to help shape it.

Ok on to the next –

LEVEL 7: We’re a helpdesk product for eCommerce companies using Shopify and Shipstation that have less than 100 skus and do less than $ 10 million in annual revenue with support teams less than 5 people.

How to niche down

So now we’re getting into the easier stuff – this is just a simple LinkedIn Search – small teams are usually before the real deep process point, they are also really good at providing feedback on tools that can actually help them out.

How to use this to target a market and recognize opportunity

If you have less than 5 people on a team, it’s a small enough number to target the entire team – multi prong approach to product awareness.

For customer support they are often the least paid and they have the most stressful jobs – it’s an all around shitty position to be in, so if you can provide them joy, you’re going to make fans quick. Also, they aren’t usually sold into, they are rarely asked their opinion, etc.

How to position within that market

Give them a voice. The same goes for any lower level positions as well by the way. When people are getting started in their careers they are looking to hear about the jobs people have even at the lower levels but the resources just aren’t there. Even for more senior roles, it’s hard to get a beat on what the current status is of their projects, people don’t like sharing – I still don’t know why.

We’re seeing communities around Sales popup SalesHacker, r/sales, Bravado etc. We don’t see as many for other roles, there is a wide open space in this. I don’t see any places for people to better understand customer support/success which is THE ONLY INBOUND TOUCHPOINT WITH CUSTOMERS POST SALE.

How to give yourself the biggest chance of success

This is part of the philosophy and psychology of understanding human dynamics. Find a persona that you can relate to immediately and build your product around fixing their problems, be obsessed with this.

They get paid nothing, but they’d like less tickets, how do you reduce that ticket count, how do you bring other parts of the business that they may need to have access to more prominently in your support system so they don’t have to have multiple windows open. How do you build something to maximize their efficiency?

Better yet, how do you tag someone in the CRM and flag it over to the sales system to see if they purchase more product as a result of a good interaction with support – this is how you turn a cost center into a revenue generator. This is a killer feature that I’m not aware of out of the box.

This could unlock a commission structure and reward system for what is arguably becoming a dealbreaker for most companies.

Which is a great segway to the next drill down – you should be starting to see how this all really blends together if done correctly.

LEVEL 8: We’re a helpdesk product for eCommerce companies using Shopify and Shipstation that have less than 100 skus and do less than $ 10 million in annual revenue with support teams less than 5 people who are looking to automate their processes.

How to niche down

They have to be looking to automate their process or improve their workflow. When people find a tech stack that works, oftentimes new technology doesn’t stick around very long, we’re all creatures of habit.

How to use this to target a market and recognize opportunity

You’re only looking for people that are talking about processes or a company that has something related to the pride they take with their process – you can check out BuiltWith and see a list of products they have tried over the last 18 months.

When a company is testing a bunch of different products it means they are looking for a better process. This is your sweet spot.

How to position within that market

You’ve seen me sprinkle “workflow” into this post. This is pretty much a preview of Part 3 and the importance of product design.

Your product must improve someone’s existing workflow. If it doesn’t it’s not a viable product.

There are two parts to this, does your product improve an existing workflow AND how easy can your product be inserted into that workflow?

Remember, this is their business and they need to make a transition as smoothly as possible with as little disruption as possible. This goes for any product you’re selling. Change is hard.

Understanding a company’s process really is everything.

If people aren’t looking to automate or improve their process, there’s a good chance you should change your approach immediately and work towards more of an education campaign and double down on what it would take to let people quickly switch over from an existing platform. Focus on reducing friction.

How to give yourself the biggest chance of success

Looking for people that are interested, not those we need to educate early on.

Data migration and implementation is one of the main reasons people don’t want to switch or entertain new products. There is always a fear of lost productivity.

Everyone is looking to automate right now, but the price has to be right, and that includes not the subscription amount, but the training, the migration, the new workflows, the time to adopt, the willingness to adopt, etc.

During almost any transition, the company will be paying for two systems at the same time during that handoff. This is rough, not enough companies actually address this in a meaningful way.

The argument is that a pure SaaS play doesn’t exist or shouldn’t exist for an early stage company, there should always be a service and consulting component. Hold everyone’s hand, understand their problems and make them feel like you’re building a product just for them.

Ok we’re almost there –

LEVEL 9: We’re a helpdesk product for eCommerce companies using Shopify and Shipstation that have less than 100 skus and do less than $ 10 million in annual revenue with support teams less than 5 people who are looking to automate their processes who are currently using Zendesk.

How to niche down

Let’s spearfish.

Zendesk – great platform – but has its limits that only show up based on workflows. Zendesk will work great until you have a workflow that incorporates other tools – then it starts to struggle.

This is true of most large legacy platforms. As legacy platforms moved up market to Enterprise for revenue reasons, they usually forget about smaller teams. Instead relying on dev house partners to do customizations.

This is where industry experience really comes into play – knowing the goals of a company or team, their workflows, and where you can create a better solution for those with those workflows for things that the legacy platforms prefer to source out to their dev house partners.

How to use this to target a market and recognize opportunity

Your calls can now go from generic to focused with questions that can hone in on workflows and gaps. For example, Zendesk’s UX/UI sucks for partner integrations, we’ve seen companies like Kustomer, Gorgias, and others become more popular because of a better UX/UI that supports the whole customer experience and journey. This is a fundamental switch in approach.

From one of our earlier research steps we found 87 companies that people were using for support with shopify, we have them in a spreadsheet, we then could take those and put all the competitors in builtwith to run some reports to understand market penetration (you can do this with number of reviews as well by the way if you’re lazy – don’t be lazy).

Download your list – populate your CRM – you now know what people are using, how long they’ve been using them.

Narrow down your list to the top 20 clients – yes only 20.

Even if you have 100 clients or a thousand clients at this point, this process works for every single Sales rep you have – and I’m going on a 95% chance none of them are doing this stuff. And if you tell me they are, I know from the amount of generic ass emails I get regularly spewed out to me they aren’t doing it well and I guarantee you money is being left on the table. (Topic for another day)

How to position within that market

You know what software they are using, you know their tech stack, your goal is to figure out their workflow. If you don’t know, ask. You should understand the general business workflows for the industry – again industry knowledge is required.

Engage them with conversation and find out. Base your questions on conversations you’ve had with other people in the space and be a source of information about how other people are doing it.

The above is completely able to be put into a human measurable process, one based on quality over quantity, relationships over transactions, and geared towards long term growth.

Be about the things that other platforms are not. Focus on changing the narrative from cost center to revenue generator.

The helpdesk for Shopify and Shipstation customers looking to streamline their processes and free up their support teams to become revenue generators in an organic and measurable fashion.

How to give yourself the biggest chance of success

It’s all about workflows, data, and automation.

Niche down, learn from the inside out, follow the trends and work on being able to tie back data to creating more revenue no matter what your product does and you’ll be able to start conversations with people actively looking to create more optimized workflows.

Focusing on a legacy product and small businesses usually allows you to find a sweet spot, they don’t find value in all the features because they won’t use them all. But they do want the more advanced features like automation and workflow help. These are usually cost prohibitive in the platform.

This is why you focus on workflow over features, you’ll never catch up with the big guys in terms of features, but there are always ways to compete on workflows, because everyone has their own independent goals around them. There aren’t standards, only best practices.

Side note – there are entire companies that are hired to implement systems like Zendesk and build integrations on top of it and it’s a market leader. The same goes for any market leader.

LEVEL 10ish: You can add location to the end of our narrowing down. A company physically local to you (at least this was the case prior to COVID-19) can allow for an in person visit which has been massive in building trust with early clients. Makes it easier to have a conversation as well.

That’s it. Go through this process, substitute your values, keep drilling down and recognize opportunity along the way. When you do it correctly you’ll see massive improvements for your initial outreach.

Emails go from:

We’re a new helpdesk company.

To:

We’re a new helpdesk company for customers that use Shopify and Shipstation. We help agile support teams that are looking to better automate their workflows. Our integrations also allows your support team’s interactions to be directly tied into future revenue generation.

___________

I can tell you from experience I’m visiting the url for the second email even if I’m not looking to make a change.

This is a good place to stop, we hit question 2 of 5 and we’re almost at the halfway point.

If you have more specific questions about this part just drop them in the comments and I'll respond to them.

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Startups – Rapid Growth and Innovation is in Our Very Nature!

Growth Strategy for Startups – The Ultimate Guide

GROWTH STRATEGY

Your vision for the startup lies 3 storeys up, but this time, you won’t use the stairs or the elevator to reach the top, you use a ladder.

Yes, a ladder.

Each rung on the ladder signifies a challenge you have to overcome to move on to the next one.

One wrong step, and you’ll have to start over.

Each rung signifies your growth strategy and the ladder altogether is your path to success.

Only a good idea cannot sustain a business in the long run. Without a growth strategy, without a plan, you’re bound to lose your balance.

Did you know?

Only about 50% of businesses survive their fifth year while a mere 30% make it to the ten-year mark.

So, if your startup does not have a growth strategy yet, it’s time to formulate one and this article is here to guide you.


What is a Growth Strategy?

Growth strategy refers to a method adopted by a company to capture a larger share of the market. This strategy sustains the business in the long run and its formulation goes beyond the current market conditions.

Several factors influence the formulation of a growth strategy, as listed below –

  • Market conditions
  • Target audience and potential or untapped audience
  • Existing competition in the market
  • Distribution channels

When you climb up that ladder, you need to be very cautious about the steps you take. There will be competitors who’d try to pull you down, hoping you fall. The weather might be windy, it might rain. What would you do then? How will you continue climbing?

Thus, it’s not wise to only focus on the vision. Or even worse, have no vision in mind and climb aimlessly.

However,

Don’t confuse Growth Strategy with Growth Hack:

Growth Strategy vs. Growth Hack

Growth hacks yield massive growth in a short period and are often cheap processes. Growth strategy, on the other hand, is a long-term process that requires testing several approaches to foster growth.

You can majorly distinguish them on the following basis –

  • Results: Upon implementation, results for growth strategy are steady and slow. Whereas, for growth hacks, you can see quick results.
  • Implementation Speed: Growth strategy is implemented over a long period and through this, small businesses aim to grow their customer base and try different channels.

On the other hand, a growth hack is focussed on growing user base quickly and at a low price by executing a particular technique on a specific channel.


Develop A Growth Strategy For Your Startup

Following are key factors you should be well versed with as you develop a growth strategy for your startup:

  1. Information on the market through market analysis. This includes understanding –
    1. Industry
    2. Audience
    3. Competition
  2. Long Term Growth Strategies each of which will be explained in detail, so you can select which strategy best suits your company.
  3. Growth Milestones form the framework for the execution of selected long-term strategy.

Market Analysis

To get a clear picture of the service that you can offer, you need to understand the audience you seek to serve, the market conditions and services offered by your competitors.

Competitor Analysis and understanding the audience’s demographics gives you a clear idea of where you’ll stand if you enter the market.

Often competitors don’t fulfil the consumers’ needs, however, due to lack of alternative the consumer has to stick with that product or service.

You can gain an edge here and offer services that your competition doesn’t.

This is what DuckDuckGo did.

With the value proposition “The search engine that doesn’t track you”, DuckDuckGo was competing against Google Chrome. From its commencement in 2008 to now, it boasts of 30% annual growth.

DuckDuckGo separated itself from the competition early on in terms of privacy that no other search engine had ever offered.

This is an example of how you can serve the repressed demands of the customers.

Apart from this,

Sometimes customers don’t realise that there is a possibility of an alternative. Back in 2009, when Whatsapp was launched, BlackBerry Messenger, SMS, and G-Talk were the few means to exchange virtual messages.

The founders of Whatsapp understood the need of the customers (SMS-like internet messaging to actual phone contacts) and launched an app with the tagline “No Ads! No Games! No Gimmicks!”. Needless to say, they’ve stuck by it ever since.

This is an example of how your startup can become an alternative for people.

So, you see:

It all comes down to your value proposition. How is your startup bettering customer’s lives? What incentive do they have upon consumption of your product or service?

For any startup to succeed, it is important to fully understand the need of the customers and identify areas where your competition lacks.

Competitor analysis can help you ascertain the areas you can better serve and areas you can venture into. That said, your competition can be the cause of your failure if not monitored with caution.

Here’s an example of ShareChat’s Growth Strategy:

When India was already dominated by Whatsapp, Facebook, and Instagram, ShareChat came up with the unique proposition of a social media platform sharing information in vernacular language. ShareChat today, boasts of 60 million monthly active users.

The app appealed to the customers not because they could share messages, but because they could do so in their own language. An idea as simple as this, turned ShareChat into a $ 650 million dollar company. It successfully made the customers realise its value and created a need for the application.

Long Term Growth Strategies

Once you’re through with market analysis and have a clear idea of the product or service you offer, the biggest task is to decide which long-term growth strategy you’ll adopt.

So, let’s look at some realistic strategies for startups along with examples of growth strategies.


Network Effect

The Network Effect simply means that a product or service increases in value as more people use it.

There are six forces that usually contribute to network effect:

Buyer-to-Seller Cross Side Buyer Same Side
Direct-to-buyer Seller-to-Buyer Cross Side
Seller Same Side Direct-to-Seller

You can understand them with the help of the following examples:

  1. Buyer-to-seller cross side: “You should list your place on Airbnb. I want to rent it”.
  2. Buyer same side: “Don’t list your place on XYZ website, list it on Airbnb, it’s trustworthy”.
  3. Direct-to-buyer: Airbnb advertisement asking people to book their stays through Airbnb.
  4. Seller-to-buyer cross side: “I’ve listed my place on Airbnb, you can make your reservation now”.
  5. Seller same side: “I listed my place on Airbnb, you should too”.
  6. Direct-to-seller: Airbnb advertisement aimed at asking sellers to rent their place at Airbnb and make easy money.

Consider the example of Segment.

Segment has used the network model to increase its users. The company models the aforementioned six growth channels and assigns quantitative metrics to them.

Segment uses this model to make data-informed decisions and identifies which channel to invest in, to maximise profit.

You too, can choose your primary market segment as a specialised market niche and plan for gradual expansion intro the market through building a network.

However,

To convince your users to refer the product/service offered by your company, you should:

  • Provide good customer service
  • Define your value proposition
  • Ensure your system can handle the growth

Remember:

Network effect evolves positively for a startup if its users derive both inherent value and network value upon consuming and referring the product.

In-Person Approach

The in-person strategy refers to increasing awareness of the brand and its usage by contacting prospective customers in person.

Tinder’s clever strategy is best to explain this approach.

Tinder targeted specific demographics and successfully took over the online dating scene. Initially, to grow its user base Tinder organised social events, gatherings, and parties for college students where only those people who had installed the application were allowed.

They also took to college campuses and very quickly the application gained popularity. Users understood its value as summarised in the following points –

  • Free and easy-to-use interface
  • Hassle-free sign up
  • Tangible opportunity to meet people in person

There were hardly any players in the field of online dating and Tinder became the online dating solution.

There is a lot to learn from Tinder’s growth strategy. They give users complete control over who they wish to talk to and offer a very realistic experience.

Free Product Strategy

As you might have guessed by the name, you can get all key stakeholders to try your product through this strategy.

Clearbit, a marketing data engine, exploited this strategy so much that it was their single biggest traffic driver.

How they did it?

Clearbit launched a logo API where a company could directly design their logo. They prioritised instant gratification and soon, drove over 60,000-page views in their first week.

It was a valuable tool given away for free which helped generate insane brand awareness.

Matt Sornson, CMO at Clearbit, stated that free giveaway of their service led to a surprising amount of inbound from large enterprise customers.

This method is especially useful for highly technical or SaaS products.


Referral Bonus Strategy

The aim of this strategy is to incentivise the customers for the company’s growth.

PayPal got its early users through this strategy.

The company got its early users to refer them to others and gave them money to do so. The bonus was set at $ 20 for signups.

Naturally, word spread and users grew quickly. And as they grew, signup bonuses were reduced to $ 10 and then $ 5.

This was highly effective for PayPal as the referral program helped them grow to 5 million daily users and the company now has an active user base of 305 million.

We can conclude that, although this strategy requires high capital investment in the beginning, the returns are commendable if executed after proper research.

Growth Milestones

Once you have selected the growth strategy for your startup, it is time for you to share your vision with your teammates.

Break down the long-term strategy into defined annual and quarterly plans.

Strategic annual and quarterly plans will help you:

  • Divide tasks amongst team members
  • Hold each person accountable
  • Reinforce the vision
  • Empower each team member
  • Improve decision making

Strategic plans will force your team to consciously take into account the internal and external factors affecting the business.

Establishing KPIs also support and influence business objectives. They demonstrate how effectively you are working toward the set goals.

Ask yourself what targets you should fulfil to achieve success.

Final Thoughts

So now that you’re ready with your product:

You can create a network of people including your friends and family and ask them to test it first. Their feedback can help you ascertain areas of improvement and also help you make assumptions about the target audience.

No matter which industry you’re in, the climb to the top will never be easy. It is thus important to not lose sight of your vision and continue climbing, one rung at a time.


Go On, Tell Us What You Think!

Did we miss something? Come on! Tell us what you think of our article on growth strategy for startups in the comments section.


Feedough

A Internet Marketing Business Guide For Bloggers

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So, just don’t go and quit your job until you fully exactly what it takes to home-based. If you opt to go for the world wide web home business, here are my best three “work from home” guide.

SAAS Email Marketing Guide

Hi, I'm looking for an email marketing guide for SAAS Startups with case studies showing success.

Backstory: We are releasing the MVP of our marketing software and I have 2500 targeted leads of business who I know first hand would benefit from our solution across a select few industries.

Before you patronize us, we make healthy sum of monthly recurring revenue with our managed (hand on) service which utilizes our software solution. Now we believe is the time to try to license out the software. We are familiar with the market as we have been doing this for over a year.

We have pretty substantial ROI positive case studies that would provide good content for some of the emails.

Any guides on how we can grow our customer base through email marketing would be great.

Websites like Almanac.Io, Starter Story and Product Hunt appreciated.

Thanks!

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Startups – Rapid Growth and Innovation is in Our Very Nature!

Step-by-step Guide for On-Demand Delivery Services for Groceries?

Hi all,

I was wondering if there's any guide for On-Demand Delivery Services for Groceries that has information and guidance about what do I need to do in order to start my business up and running (like iOS/Android app for the consumer, delivery representative and the grocery store, the company structure, legal affairs, budget etc)?

Tried to google but I mostly found either for Food/Restaurant on-demand delivery service, or simply statistics about them.

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Startups – Rapid Growth and Innovation is in Our Very Nature!

[Phantom Auto in TechCrunch] Help Wanted: Autonomous robot guide

On-demand delivery startup Postmates partnered last year with Phantom Auto, an autonomous vehicle teleoperations company. Postmates uses Phantom Auto’s software development kit to remotely monitor, guide or operate its fleet of cooler-inspired autonomous delivery robots known as Serve.

Read more here.

The post [Phantom Auto in TechCrunch] Help Wanted: Autonomous robot guide appeared first on OurCrowd.

OurCrowd

A step-by-step guide of how I would build a SaaS company right now – part 1

LET'S DO THIS!

I've been getting some questions recently from people that have reached out to me for advice and I wanted to pay it forward to the community. I've advised a ton of businesses from idea, to seed, to raising money and exiting.

My focus is on business strategy, sales, and marketing. All around building repeatable processes and streamlining operations.

This is what I advise my clients to do right now –

General thoughts about B2B and B2C

If you're B2B you're looking at either ongoing services or software and in some cases a little of both.

If you're B2C you should be looking at consumable products, things people buy multiple times, with high LTV (lifetime value) customers or a product with a subscription element. NO OTHER EXCEPTIONS HERE.

If you're selling into either businesses or consumers today, it's all about perceived value, which means there is some wiggle room depending on who you're selling to, BUT the following really should be held as foundational:

These are pretty much the only reasons people buy things for B2B:

  1. It saves them time (reduces friction or replaces a time consuming task)
  2. Makes/saves them money (creates revenue/ adds value that lets them win business)
  3. Adoption is simple for their workforce (is easy to incorporate into an existing workflow and anyone can use it/cost of switching in relearning)
  4. Adds transparency and allows for bigger insights (provides data)
  5. B2C additional one – provides them joy or enhances their life

That's it.

The most high growth businesses usually knock out at least two of the above. Really high growth companies hit four or more.

Uber is an example of hitting just about all of them:

  1. No need to call a cab company and hope they show up, know where they are
  2. Saves them money, no more guessing on price and subsidized rides
  3. Just download an app on your existing phone and add your cc number
  4. Tells me where my ride is, how long until they come to me, and how much it will cost
  5. Gives me an easy way to get a ride when parking is tough or drinking is involved because of their reliability

This works for a lot of businesses though – and there are more than a few SaaS companies that I’m close with that have nailed the majority of them and are creeping up in clients and funding as a result in historically busy spaces.

Overall management advice because it’s more important than people think

Managing is tough, just because someone was a great employee doesn’t make them a great manager and just because someone is an executive doesn’t make them a great communicator.

Respect that everyone has different ways of communicating.

Two lessons I’ve learned from working with a ton of senior leadership.

Internally, break down everything into little goals, constantly ask yourself "What's my goal?" when it relates to calls, emails, outreach, posting, hiring, meetings, etc.

Make that shit your mantra then distill it down to the simplest form it can be.

You should always strive for clear and concise communication throughout all interactions. If you disagree with a request or find it not in the best interest, agree anyway first, then raise questions about it. Remember, we’re all in this together and our goal as a company is to help everyone clearly articulate “What’s my goal?” at a micro level to encourage good communication.

Record all your processes from day one – process is what sets apart winners and losers, always be looking to improve your processes because down the line you're going to be looking to automate these – having records of your approach and what worked and didn't will be invaluable while growing, scaling, or building systems to streamline your approach.

There is a tool for everything, that doesn’t mean you should use every tool. Find what works for your team and what has the highest level of adoption, create good habits around using the tools that provide you the best organization.

Pep talk done let’s get down to business

When you're starting out the only things that matter are:

Business strategy, partnerships, product, and marketing strategy.

IN THAT ORDER

Some of you will argue a team should be included, but I’m of the belief that if you nail all the above correctly, the people you have running it don’t matter as much. It’s more a matter of consistency and process than the people are executing.

Today most smart businesses follow the same path:

  1. Start with your revenue and monetization plan (are you targeting a sector that has money and can/will pay)
  2. Align yourself with others in your space (cheapest way to get traction/credibility)
  3. Work on road mapping your product to align with what complements your partnerships (cheapest distribution)
  4. Work on building a marketing strategy that can help expose and align your brand while strengthening its recognition with your partners (will this make us both look good)
  5. Build customer advocates along the way, tell their stories (lead with examples)

The above if done correctly massively increases your chances of success

Let’s go over them one by one. (this post only covers number 1 – let me know in the comments if you want me to write up 2 through 5)

REVENUE AND MONETIZATION – Will they pay? Do they have money?

The following three questions can help you quickly weed out your ideas:

  1. Is what you’re building something that people are used to paying for?
  2. Is the part of the business you’re looking at a cost center or a revenue generator?
  3. Is what you’re providing a race to the bottom or increasingly a data play?

You're answers should be, YES, Revenue Generator, Data Play.

This is your best shot at success. Even a reduction in costs isn't as sexy all the time. Just compare your support budget to your marketing budget and these things become clear.

Story time relevant to number 2 above – cost center v revenue generator

We were using a series of three tools to automate a series of tasks we all hated. The three tools cost us around $ 1500 a month, the tools that did all the automation that we added, less than $ 200. We had to use the other tool either way but for $ 200 we were able to automate 80% of our work. To us we would have paid 10x for those solutions. The gap was we didn’t have any other good options to accomplish what we needed.

I thought about building out a system and a product to fit this space, knowing the amount of savings this provided, but I ran into a problem – People weren't used to paying that amount for what we could provide, the part of the business was viewed as a cost center, and the data play is something that hadn't been used in that way before. Great idea, needed, proven out, but not marketable.

You always want to be part of revenue creation – people are willing to pay more just about every time.

Even really good ideas sometimes aren’t worth pursuing if the market conditions can’t support them.

If you hit all the above three then we can move on to the best steps for getting this up and running.

The steps for validating an idea

  1. Market knowledge
  2. Competitor research
  3. Niche
  4. Earmarked budget

Market Knowledge

Know the industry you're entering.

Please, for the love of everything, only start a company if you have intimate domain experience. Put differently, if someone was looking for someone to present even at a local level around what you're building would you be able to speak articulately about it where people would respect your opinion because of past work you've done?

If the answer is Yes, pat yourself on the back.

If it is no, stop, don’t pass go, you’re stuck with two options –

  1. Recruit someone to work with you that has enough domain knowledge for the both of you, or
  2. Go get some experience in the field, then come back to your plan

Far too often I talk to people that have had massive success or are really really smart, but they are taking on a project or product that is outside of their sweet spot. This leads to utter and total chaos and really is a waste of time and money in the vast majority of cases.

Those that don’t know, partner. We’ll get to more of this in the second step, I’ve seen this work with companies where some groups lacked complete domain expertise. These were 3x CEOs and founders with healthy exits. This is harder to do, but works if you're smart about it.

So what happens when a founder doesn’t have domain level experience especially in the early going, problems with go to market and validation, sometimes a general lack of understanding of business principles and market conditions. The result 99.9% of the time is that without domain expertise, founders end up misjudging the market massively and fail to provide the appropriate value.

They often find themselves playing catch up and not in a good way, this is something that is easy to avoid, but hard to admit to oneself.

I’m a huge proponent of learning an industry on the fly, but I feel like the better decision when possible is to get paid by someone else while you’re learning.

But what about getting advisors and consultants to help me bridge the gap?

I’ve seen this one in person, I’ve been part of this one, people don’t listen all the time. In some of the companies I’ve done work for, I’ve laid out what steps they should take, and watched as they fought back based on calculations that lacked all possible basis of being remotely possible losing millions of dollars in the process. The lack of domain expertise kills you when it comes to decision making if you’re not open to listening. But as an advisor, your job isn’t to make decisions for the teams, it’s to provide guidance and engage in conversations to bring issues to light and help people focus on goals.

I've literally called business results months in advance in single meetings with executives only to watch things play out exactly how I predicted – usually negatively.

Competitor Research (this is just an overview – this is it's own post and a half)

The basics

  1. Selling to someone that is using an existing solution is easier than enticing someone on a new concept or idea – cheaper too
  2. If there's competitor there are easy ways to build entire spreadsheets of their client list
  3. Look for industries within those client lists to build case studies around
  4. Remember you're in the game of creating content – be a resource for your community
  5. Qualify potential customers by using their opinions in your content marketing
  6. Use existing platforms for distribution where possible (integrations anyone?)

You have more competitors that you know when launching a product, even if you’re a market first, you’re going to quickly find that the barriers to entry are steep and if the market is big enough people will be able to out spend, out maneuver, and out shout you pretty quickly.

This shouldn’t deter you, it just means you need to be smarter.

Existing Providers

Know the entire landscape for the type of product that you are creating. Know all the sort of competitors, talk to people and see what they are using, ask questions on Reddit and in other forums, understand who people know in the market.

Then go to G2 and capterra and every other place that people talk about those products, scrape all the reviews with pros and cons – on some websites the reviewers even have linkedin links – go to their profiles learn about the companies they work for, the roles they have etc.

There is so much data out there, work smart from the start.

This is literally a post in it’s own or a chapter of a book. (if you’re reading this and you want me to break this down I can in another form).

Correlate what your competitors do well, what they lack, and everything else in between.

If you look up CRM you’ll see more than 250 listed probably more than 300 now, not including all the new ones like airtable and others that have popped up recently that aren’t direct traditional CRMs but just as useful.

That’s a lot of space junk to get through.

But there’s an easy way to get through it.

NICHE YOUR SHIT DOWN

The biggest problem that most companies have is being able to properly niche down to the most ideal customer profile first, then work to expand the market after the fact.

Remember that perceived value comment from way above.

So how do you find yourself in the best possible chance of creating something that you can do well with?

Build something that people are paying for, generates revenue for the business, and includes a data play as icing on the cake that improves processes and decision making.

This will never work in broad terms, you need to be specific.

One of the most common missteps people have is saying, their product is for everyone or every business. This is a red flag, don’t do this. Focus on doing one thing better than everyone else, look for data that supports a 10x uptick. This is basically required if you want someone to give your product a try as moving things over from an existing system are annoying.

Your product needs to be very narrow, when you think you’ve gone narrow, you need to go more narrow.

Example:

We’re a helpdesk product.

v.

We’re a helpdesk product for eCommerce companies.

v.

We’re a helpdesk product for eCommerce companies using Shopify.

v.

We’re a helpdesk product for eCommerce companies using Shopify and Shipstation.

v.

We’re a helpdesk product for eCommerce companies using Shopify and Shipstation that have less than 100 skus.

v.

We’re a helpdesk product for eCommerce companies using Shopify and Shipstation that have less than 100 skus and do less than $ 10 million in annual revenue.

v.

We’re a helpdesk product for eCommerce companies using Shopify and Shipstation that have less than 100 skus and do less than $ 10 million in annual revenue with support teams less than 5 people.

v.

We’re a helpdesk product for eCommerce companies using Shopify and Shipstation that have less than 100 skus and do less than $ 10 million in annual revenue with support teams less than 5 people who are looking to automate their processes.

v.

We’re a helpdesk product for eCommerce companies using Shopify and Shipstation that have less than 100 skus and do less than $ 10 million in annual revenue with support teams less than 5 people who are looking to automate their processes who are currently using Zendesk.

Just keep going deeper.

There are perks to going deeper –

The deeper you go usually the less competition you have – the more specific and tailored the easier the sales pitch is because you spend time creating things to help with workflows that relate to how they are working. When you know these workflows it's easier to have meaningful conversations.

I’ve harped on the idea of process the entire time. And I’m going to continue to do it. Build things to simplify processes and watch people sign up and pay you to solve their problems.

The ideal solution is turnkey that works with all the workflows people have or simplifies them with the amount of tools out there find the ones that you want to be part of the process with and integrate deeply.

Earmarked Budget

Is the budget expanding, will it be expanded if you can tie results back to your product?

This is actually really important because it comes to the ability to grow an account once you are in the account. Some businesses are better than others.

If you’re a support desk product like above, and you reduce the amount of work people need to do, you’re reducing seats, if you can’t add features and other elements to increase the revenue per account or the size of the support team you’ve actually tapped out. This is the argument behind being a revenue generation company rather than a cost center. When it comes to a cost center it’s a race to the bottom and kills expansion, it forces you to always be acquiring new customers to increase revenue.

This should be plenty to digest as you're thinking of ideas to pursue.

Let me know your thoughts in the comments, hope this helps people out.

I've got to stop here, we hit question 1 of 5 and we've barely scratched the surface.

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Startups – Rapid Growth and Innovation is in Our Very Nature!