This guest post is written by Stuart Logan, Co-founder & CEO of Clowdy, a platform that gives creatives an identity to start their career and the network to grow. Clowdy joined Seedcamp in early 2015 and have been attending our Academy learning sessions. In this article, Stuart shares his learnings from a recent workshop.
During Onboarding Week we were lucky enough to have Malcolm Bell speak about ‘Your customer, positioning and finding product market fit.’
Malcolm has been working on the ambitious start-up, Mailcloud, for the last year and is about to release the first version; you can read about this here. Malcolm had an awesome experience with his first company Zaggora.
The following is my decoded version of what Malcolm taught us, with a few other things I’ve learned during my time with tech.
Truly knowing your customer
Hotpants™ – Zaggora’s flagship product – was initially created as a quicker way to burn calories for people wanting to get more out of their exercise time.
They were hugely successful, creating more orders than they could keep up with – 100,000 products sold within 10 weeks of website launch. This was cleverly engineered for positive cash-flow but that’s another topic altogether. Malcolm and the team thought they were doing an awesome job; they were targeting the fitness community, particularly women, and had a huge backlog of orders.
When they began trying to improve their marketing, they surveyed their customers with outstanding results. They had been assuming their customers were avid fitness fanatics but what they actually discovered was their customer wanted to lose weight. Their whole business had been focused around fitness so this changed everything; their customers didn’t climb mountains or run marathons, but went walking. Their website messaging, their imagery, their brand, their company focus had to completely shift. When they did this, their sales conversion massively increased too.
My key takeaway was that even when you have users, if you don’t speak to your customers and explore their needs, your focus could be all wrong.
Everyone wants growth, right? That hockey stick curve that investors drool over. That’s certainly something we’ve focused on at Clowdy – a lot. The logic behind this is that if we continue to grow, build our network, and reach critical mass… then boom, we’ve won at life.
Wrong, well kinda.
Growth isn’t a bad thing but Malcolm argues that you need to find advocates and retention first – those evangelists who love your product and just keep on coming back. Think of those people who queue outside Apple stores each time a new version of the iPhone is launched, or how every Call Of Duty game breaks pre-order records before anyone gets to play it. If you find these evangelists for your product you have a massive opportunity.
If you segment these users then you can really study them and build up a persona. This persona will be your ‘perfect customer’ bible. When you learn this, you can then start looking at their retention. Why? There’s nothing more important than retention of your customers.
Think of it this way, if you have a bucket with perfect water retention, and increase the amount of water in there, it will fill up. If you have a big hole in the bottom, it’s retention will be shit and it won’t matter how much water you pour in, it won’t fill up. That fill rate is your growth. It’s impossible to have 100% retention, but if you have just a really small leak, you have the perfect platform for growth. If you have a big hole, you will struggle to grow.
How do you retain your evangelists? Solve their problems first and focus on them.
So, now what?
You now have your perfect customer mapped out. You know who they are, where they are, what they like, what they don’t like. Everything gets easier. You’re focusing on retention and it’s working.
It can still feel like a burden, all the different parts you need work on: product, customer, go to market and funding. Malcolm introduced us to the concept of Kaizen. Kaizen means “continuous improvement”. It comes from Japanese words 改 (kai) which means “change” or “to correct” and 善 (zen) which means “good”. Toyota are a famous advocate and it’s worked really well for their company culture. Iterate in small steps, monitor the feedback, change, test, rinse, repeat.
With these small improvements for retention, you’ll be changing your marketing channels, your tone, your imagery for product, your brand identity and a whole lot more. But understanding the full map of who that advocate is helps everything come together. The other great thing about this segment of your users is their patience. You will be able to test more with these folk than you can with others, so give them your beta tests.
When you’re testing you need a reason or purpose for that test and you need to track it. Sending out a test without some way to prove its success is completely wasted. When you’re tracking you can test new features and see what works, but be wary of wasting time on the wrong features. The graph below shows that you want to aim for the top right, a feature that all your target segment use all the time. Avoid the top left, features that serve the few within your target segment – even if it’s all the time. Basically, don’t make a feature that only one person will love – even if that person is you.
This is exactly what Burbn did. Burbn let users check in at particular locations, make plans for future check-ins, earn points for hanging out with friends, and post pictures of the meet-ups. There were a lot of features. They tracked the usage of the feature-set and found no one was using the check-in features. Their users were using the app’s photo sharing feature. They doubled down on this an Burbn became Instagram. Look at your core. Remember kaizen.
When you’ve figured out all of the above and have your evangelist segment and retention, only then can you get that hockey stick growth. Your product-market fit makes traction so much easier.
Thank you Malcolm for an inspiring talk!