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August 11, 2019

Blue Ocean Strategy: Value Innovation To Create An Uncontested Market

A blue ocean is a strategy where the boundaries of existing markets are redefined, and new uncontested markets are created.

At its core, there is value innovation, for which uncontested markets are created, where competition is made irrelevant. And the cost-value trade-off is broken. Thus, companies following a blue ocean strategy offer much more value at a lower cost for the end customers.

How does a red ocean look like?

The blue ocean strategy is the fruit of the homonym book, and research conducted b W. Chan Kim and Renee Mauborgne.

To understand and appreciate what makes a blue ocean strategy so powerful, it makes sense to look at a place called the red ocean.

A red ocean is a place where competition is the norm. Players in a red ocean are all fighting for the same contested space.

This is usually an accepted market, with well-defined boundaries and where players either provide a service at a lower cost. Or they differentiate it through higher quality by making that service less accessible.

It is a place where rules are well defined as well, and everyone plays according to them. Innovation is marginal, and even if that happens, it is not a breakthrough.

By nature, a red ocean, as it is a very crowded space, it is also a place where profits margins are narrow, and products and services are commoditized. And where differentiation mostly happens on pricing.

The anatomy of a blue ocean

A blue ocean is any industry which is not yet defined, where boundaries are still to be built and where competition doesn’t exist. There is a new demand ready to be molded and captured. And the rules of the game are still to be written.

The new market forming within a blue ocean has exponential growth potential, and it is ready for grab to those players able to see it. Those creating this new market will be able to tap into a new demand, which will have them enjoy higher margins and lower competition.

The first able to create and also capture that demand will also be the one able to create a lasting advantage.

To understand the blue ocean strategy, it is essential to retrace how such strategy reinterpreted the process of value innovation in business.

The former value-cost trade-off

In the old days, companies would usually compete by either creating higher value for customers, thus charging more. Or by creating a more standardized value proposition, leveraging on operational efficiency, and offering decent value for a lower cost.

That was the old days. Digital businesses today can break this trade-off and innovate by offering more value at a more reasonable price. That is the whole point of companies like Amazon.

The new era of more value at lower costs

If you look at the core principles of Amazon business model design, you’ll notice that its flywheel starts from customer experience, which can be summarized as more selection of items, coupled with a fast delivery service, and the ability to find almost anything.

In short, Amazon wasn’t just offering a much better customer experience. It was offering a better customer experience at a lower price. The same applies to platforms like Airbnb or Booking and the whole logic of their value proposition design.

More value at a lower cost is the key to understand how to build a successful digital business model.

Value innovation in a blue ocean strategy

Therefore, value innovation looks slightly different in a blue ocean model. More precisely, it looks at five core concepts:

create uncontested market: the whole point of a blue ocean strategy is to look beyond the conventional boundaries of existing markets to create an uncontested market.
Competition is made irrelevant: a blue ocean also makes competition irrelevant. Not because you compete and win. But as you’re creating a new market, you’re are creating the rules of the game. This also implies another key aspect.
Create and capture new demand: a blue ocean strategy is not just about creating new demand. We know now that the so-called first-mover advantage is just an illusion. And the key to success here is actually to capture that same demand. In short, roll out a business model with a strong distribution strategy to take hold of that new market. Otherwise, the risk is that a first-mover is creating a market to see latecomers take it over.
Break the cost-value trade-off: the central concept of the blue ocean strategy is to break the cost-value trade-off. Thus, you not only can offer more value. But as you leverage on a more efficient cost structure, you can pass lower prices to your end customers. You are thus making your value proposition as more value at a lower cost.
Align the organization around the more value at lower cost principle: as blue ocean players are aware of the possibility of breaking the cost-value trade-off. They need to make this principle a built-in feature of the overall organization. So that all can be aligned around these principles.

Key takeaway

A blue ocean strategy enables the creation of new markets, buy moving beyond the boundaries of existing red ocean markets to create uncontested markets. A key concept of this blue ocean strategy is value innovation.

In this context, value innovation is built around the break down of the cost-value trade-off. Thus a successful business model needs to be offering more value at a lower cost.

That’s the key for a blue ocean strategy.

Business resources:

What Is a Business Model? 30 Successful Types of Business Models You Need to Know
The Complete Guide To Business Development
Business Strategy: Definition, Examples, And Case Studies
What Is a Business Model Canvas? Business Model Canvas Explained
Blitzscaling Business Model Innovation Canvas In A Nutshell
What Is a Value Proposition? Value Proposition Canvas Explained
What Is a Lean Startup Canvas? Lean Startup Canvas Explained
What Is Market Segmentation? the Ultimate Guide to Market Segmentation
Marketing Strategy: Definition, Types, And Examples
Marketing vs. Sales: How to Use Sales Processes to Grow Your Business
How To Write A Mission Statement
What is Growth Hacking?
Growth Hacking Canvas: A Glance At The Tools To Generate Growth Ideas

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Published on August 11, 2019 12:43

Microniche: The New Standard In The Era Of Dominating Digital Tech Giants

A microniche is a subset of potential customers within a niche. Identifying a microniche nowadays has become critical to kick off the strategy of an online business.

In this article, we’ll see how to do that. Follow along!

Niche marketing isn’t enough anymore

There used to be a time when starting a business in a new space implied a market big enough which we called a niche.

Amazon, for instance, did just that. When it didn’t know whether the internet would prove the proper distribution channel and a new way of doing business. Rather than build an e-commerce selling anything. It started from a specific niche: books.

When it finally proved that e-commerce was a viable business model. Amazon expanded its selection. First in adjacent niches. Then in larger and larger niches. Until it reached a critical mass. And it stopped being e-commerce and it became a platform driven by a powerful flywheel and network effects.

As those digital tech giants like Amazon and Google were among the first to dominate the digital space. They were also the ones that now have the most control over the distribution of content and the purchases made over the internet (in the western world).

As new platforms that emerged throughout the first decade of the 2000s, like Facebook, Twitter and Instagram, the media industry got more and more consolidated into the hands of a few players, with an incredible grasp for digital business modeling.

Those new models implied a few key changes, which made digital businesses move:

from linear business models to platform business models.
From sales funnels to flywheels.
From word-of-mouth to virality.
And from linear growth to an exponential growth spurred by network effects.

It also made it possible for the same digital platforms to reach billions of users across the world. Thus redefining the concepts of niche marketing and market segments.

Enter the microniche era

Therefore, if you’re starting a business today you need to make sure to identify a potential target, by being as specific as possible.

Indeed, generally, micro niches represent a small part of potential customers within a broader niche, and while niches do have advantages, micro niches present even more opportunities in the short run. Some of them are:

A less crowded space.
With potentially high conversion.
An extremely engagement community.
Very high margins.
A strong demand.
A potentially strong brand recognition.
Thus a lasting competitive advantage.

How do you pick a microniche?

Let’s start from a simple example. Let’s say you’re opening up a bookstore, looking for opportunities to kick off the store.

Where do you start?

The platform with the most data when it comes to books is definitely Amazon. You start from the Amazon broadest categories to start looking for opportunities:

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There was a time when it was possible to stop there. As the web was not such a crowded space for you to start a business. However, nowadays you need to a lower level to look for your microniche.

Thus, saying something like “I’ll start from literature, or historic fiction” isn’t enough. Those are too broad. So where do you start?

Go a level down:

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Within Amazon‘s literature and historical fiction, we can identify a further category for us to start with. For this example I took something like “historical fiction” and went a level down:

[image error] I selected for instance, “Reinassance” as the key area within the micro-target I’m picking to kick off my business distribution strategy.

Thus the process looks something like that:

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Within that microniche you can see how the bestseller has quite some substantial reach:

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The interesting thing is that what it might actually seem a very small audience it turns out to be a decent audience for a business which is starting out.

Indeed, by crossing the data from Amazon to the keyword volume for the book’s author “Johanna Lindsey” you can see how she is a micro-celebrity:

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Example of how a microniche analysis uncovers the audience around a micro-celebrity and it opens up opportunities to kick off your business distribution (data: SEMRush)

It is interesting to notice how we uncovered a potential audience made of over four thousand people each month, by just doing simple research on Amazon and by crossing that with keyword volume.

Thus, if you were to start a bookstore in that category you might want to make sure to have all the books of that author available, create a content strategy around it.

And for instance, invite the author for an off-line session with her fans. While for instance, also transmitting that live online so that you can reach a wider audience and create the first set of loyal customers for your bookstore!

Key takeaway

As the web has become a crowded space, plenty of businesses which serve any kind of niche. Gaining traction in this scenario has become quite expensive. Therefore, it is important to identify a micro-niche, to kick off your customer base, and make you recognized among your potential customers.

A micro-niche has several advantages. Such as higher margins, better brand recognition and potentially a deeper connection with a smaller audience.

Thus, if you’re starting a business today you might want to start from identifying your micro-niche!

Business resources:

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Published on August 11, 2019 08:07

How To Start A Bookstore And Succeed Nonetheless Amazon Dominance

Amazon was among the first companies to prove forever the commercial viability of the Internet. Indeed, after the dot-com bubble, many were still skeptics about the ability of the internet to deliver new business models.

Arguments were finally over when Amazon among others proved the Internet was indeed so viable that the company, after just a few years from the dot-com bubble was worth billions of dollars. And Amazon had started that journey from a niche: books.

At the time, when the web was not a competitive place as it is today, opening up a bookstore was indeed a niche. However, as the years have passed, and most companies have joined the digital transformation, a bookstore online isn’t any longer a niche.

That is why we’ll see why it is important to microniche.

In addition, books have become a challenging industry as it sits in between two tech giants which capture most of the book intents: both Amazon And Google.

Google answering directly to a query “best business books” with a book carousel, which leaves little space to websites to gain visibility on that query, as Google can intercept that. This is part of a war between Amazon and Google to gain as many users as possible on shoppable items where both Amazon and Google earns commissions.

Therefore, if you’re trying to build up an effective marketing and distribution strategy for your online bookstore, I want to show you a few simple steps you need to take.

What do Google and Amazon want?

I’ve been dissecting business models for a few years now. And one of the first objection I get when it comes to business models of tech giants like Google and Amazon is the fact that they won’t apply to small businesses.

While we can agree on that. It is true that today most of the digital distribution passes through those tech giants pipelines. Thus, if you do not understand the logic behind them, how can you build a successful business strategy in the first place?

That’s why I believe is critical to have a deep understanding of those companies’ business models to uncover their motivations, and thus being able to take advantage of these to build a successful small business.

In the case of Amazon and Google, they are both after users. But most interestingly where Google is trying to intercept users’ intent so it can better target them for advertising. Amazon wants them so it can sell more products through its store.

This gives you three key insights:

Google wants the users’ commercial search intent
Amazon wants more shoppers
Google also craves for (at this stage) great editorial content which can help intercept users’ intents from several angles

Now, let’s get to what I’d do if I were o start an online bookstore, given what we said so far.

Microniche

Start from a very specific niche: that doesn’t mean you can say I want to be the best in non-fiction.

That is not a niche for today’s standards, that is a topic and it is at this stage too large and competitive. So it might make more sense to think in terms of microniche. Thus, something like, I want to dominate “business leadership” within non-fiction.

That is a better starting point.

Carve an editorial format to differentiate your positioning

Rather than trying to compete with existing tech giants (Amazon has a ton of reviews and loyal customers. Google has a ton of searches, and it’s able to intercept them like no other can!).

You might want to carve a space and a format that will enable you to rank quickly. Thus, rather than trying to rank a book title and subtitle directly, which is what Amazon and Google are already doing.

You need to have an editorial format, where you can highlight key concepts and rank for them. For instance, for a book like “how to win friends and influence people,” which is hugely competitive.

You might want to have an editorial piece or focus your book page on a concept contained in the book like “the most popular quotes from how to win friends and influence people” and rank it for the key “how to win friends and influence people quotes” which is way less competitive, but it has an extremely high commercial intent.

Multiformat the content

While creating this new editorial format to carve a space in an otherwise crowded and dominated space. You might want to make sure you enable the same content to be delivered in several formats, from text, audio, and video.

That is important because within that microniche you want to target people based on their pure interest for the topic. And it is important that you enable them to consume it at their own pace, and in the format that they enjoy the most.

In addition, you create a deeper connection with your audience, which will make you better positioned within that niche.

Execute at high speed

Once you’ve identified your microniche, you’ve curved your editorial format, you made it available in several delivery formats (from text, audio, video) it is time to execute at high speed. Rather than pace the rhythm of execution.

In the beginning, it is fine to be less efficient, but push out your content as quickly as possible, rather than trying to pace it out.

Indeed, you need to prioritize on speed initially as the initial content base will give you critical mass, for traction, and you want to minimize the time it takes for people to see available content.

Give yourself time

Also, a microniche strategy won’t be successful overnight. It takes some time, depending on the microniche you picked to really build a relationship with those people, which will be your power users to help your brand to get across as many people as possible.

Thus, even though you’re executing at a high tempo, you want to make sure not to stress too much on ROI metrics at the beginning. Remember you’re just starting to spin the flywheel, and as it gains momentum, you’ll need to push more and more.

Reached the critical mass required you’ll see the flywheel to speed at a higher and higher pace.

That is when you start dominating on a microniche within a crowded industry.

Option to scale

Once dominated that small space. You’ll have the opportunity on whether to expand gradually to adjacent, larger niches. With that in mind, you will need to repeat the strategy above, over and over, until you’ve reached the scale you were looking for.

Business resources:

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Published on August 11, 2019 05:52

August 10, 2019

What Is Market Segmentation? The Ultimate Guide to Market Segmentation

This is a guide about market segmentation, the technologies that allowed marketers to create more and better-segmented audiences and how the way of communicating changed from mass marketing to one-to-one marketing starting 1920s until today.

The guide is divided into three main sections:

a brief history of advertising
everything you need to know about market segmentation
the most powerful online tools for marketers

Each of those sections will give you an understanding of three main concepts. First, how marketing evolves with new technologies and how new technologies are used by marketers.

Second, you’ll learn all the aspects of market segmentation. From how, why and when to create market segments. To the requirement necessary for creating market segments and the types of market segmentation.

Third, you’ll learn what tools today marketers can leverage on to create audiences and small segments with utmost details.

A brief history of advertising

Marketing has evolved through the technological devices that allowed marketers to convey the same message to millions of people a the time, like mass media.

To technologies that instead allowed marketers to speak to millions of people with customized messages, like social media and SEM.

Let’s dive a bit into the story of marketing associated with the technological devices that made it possible for marketers to develop new ways of reaching an audience.

I argue that as new technologies at the beginning of the 1900s became available for marketers, those allowed to speak to vast audiences.

That also meant crafting a message that could be understood by the masses. It was the rise of pop culture.

As technology has evolved, it allowed marketers to have accurate data about users. Thus, the marketer could finally craft a personalized message for each user.

It is interesting to notice also the change in terminology. From masses to users. From television viewership to the user experience.

That is also why marketing is now back to building communities, tribes, and personal relations. This is the story of how we went from mass markets to one-to-one conversations.

The rise of Radio and Mass media

As reported in the book The A to Z of Old Time Radio Frank Conrad, an electric engineer who worked for Westinghouse held more than 200 radio-related patents he started off with his own radio transmitter.

Initially, radio broadcasts consisted just of transmitting location and equipment used. Yet Mr. Conrad was soon to be bored by this kind of set up.

That is why in 1920 he started a new format called The Radio Amateur News. During the show, Frank Conrad took his phonograph and began to transmit it. At the time 400 people listened to that show.

When another executive at Westinghouse noticed the potential for advertising, he understood they should test the same concept with a broader audience and more structured programming.

The chance to test that came with the Election Day:

When KDKA became the radio’s first commercial programmer, it started by asking “Will anyone hearing this broadcast, please communicate with us, as we are anxious to know how far the broadcast is reaching and how it is being received?”

In that occasion, more than a thousand listeners were reached.

Technology and marketing walk hand in hand. In the 1920s, radio had become the primary medium of communication.

Across the U.S. and Europe, broadcasting stations such as KDKA and British Broadcasting Company (BBC) began to rise.

The power and potential of mass media were still hard to foresee at the time. Experimentation allowed those first marketers to understand its potential.

In fact, disciplines like growth hacking claim to have brought the scientific methodology into the marketing world. In reality, good marketing has always been about experimentation.

Also, Frank Conrad was an electrical engineer, and for what we know he might have been the first mass media marketer. Even though he reached just a few hundred people, he changed the rules of the game.

We think of Sergey Brin and Larry Page or Mark Zuckerberg as a new expression of a tech world dominated by engineers.

Yet as this story shows broadcasts made it possible for companies to send advertising messages to large, undifferentiated audiences at once, giving birth to the mass market concept and the first mass marketing techniques.

Then television came, and mass markets became even more prominent.

Television and mass marketing

The Brooklyn Dodgers are playing the Philadelphia Phillies. It is July 1, 1941. Suddenly, before the game begins a 10-second advertisement from a watch company – called Bulova – gets broadcasted:

This ten-second spot was the first TV commercial US people saw. Imagine the effect of it – if any. From there a multi-billion industry was born. A bunch of commercials became part of the pop culture:

TV dominated the advertising together with other media outlets dominated the advertising industry:

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Source: eprints.lancs.ac.uk

Until 2017 came:

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One of the things for which 2017 might be remembered is the take over of the advertising spending by digital over TV.

The end of mass marketing and the beginning of niche targeting

As we’ve seen so far, back in the days, marketing budgets would be spent primarily on mass media channels. This enabled companies to channel the message toward the largest number of people possible.

Which in turn made it possible to create mass cultures, and manufacture mass consumer behaviors which spurred growth and profitability for these companies in years to come. Those brands which mastered demand generation managed to be on top of their game for decades.

Until the web reshuffled the rules of the game. Finally what used to be an odd person or a nerd who could not recognize herself in the mass culture. With the web became a person who belonged to a small community spread across the world.

Thus anyone no matter how weird she felt during the mass culture age; could find other people like her around the world, through the Internet.

That opened up a new ways of communication, and marketing.

Before becoming a tech giant Amazon was a niche player

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When we become grown-up it’s hard to remember when we were kids. That seems to be the case for tech giants.

As we see them today as trillion empires, spanning across geographies it’s hard to remember that once a company like Amazon was simple e-commerce which sold books on the web. Amazon, like any other tech giant, picked a niche, dominated it. Expanded to adjacent, larger niches, until it dominated an entire industry.

That applies also to Facebook. Started as a social network for top universities (it was open to just a few initially), it then rolled out only when there was massive demand from new colleges.

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Facebook timeline between 2004-2006 according to its S1

As you can see, while Facebook grew pretty quickly. It opened the registration to workplaces only in 2006. Interesting fact, Facebook rolled out the News Feed in the same year.

No doubt a feature like the news feed was a key element to enable Facebook to broaden its reach.

In other words, the rise of the web and the enablement of digital business models created a need to start from specific niches.

Below we’ll see the case of two companies, in particular, who have changed the way to segment the market: Google (with AdWords, now Google Ads) and Facebook (with its Facebook Ads Platform).

The internet, Google, and its AdWords

Mountain View, California – October 23, 2000, Google makes the following announcement:

Google Inc., developer of the award-winning Google search engine, today announced the immediate availability of AdWords(TM), a new program that enables any advertiser to purchase individualized and affordable keyword advertising that appears instantly on the google.com search results page. The AdWords program is an extension of Google’s premium sponsorship program announced in August. The expanded service is available on Google’s homepage or at the AdWords link atadwords.google.com, where users will find all the necessary design and reporting tools to get an online advertising campaign started.

The beta debut saw the involvement of 350 businesses and advertising agencies worldwide. However, Google AdWords would be rolled out broadly in 2002:

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In 2003 Google reported over $790 million in turnover!

Google’s advertising revenues have grown exponentially to monopolize the digital advertising market together with Facebook. [image error]

In 2017 Google‘s revenues from its properties came primarily from AdWords. Revenues reached almost eighty billion in 2017!

On Jun 27, 2018, Google announced Google Ads:

The new Google Ads brand represents the full range of advertising capabilities we offer today—on Google.com and across our other properties, partner sites and apps—to help marketers connect with the billions of people finding answers on Search, watching videos on YouTube, exploring new places on Google Maps, discovering apps on Google Play, browsing content across the web, and more.

The aim is to provide under the same umbrella access to Google Marketing Platform:
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Social networks, Facebook, and its advertising network

Facebook announced Facebook Ads:

“Facebook Ads represent a completely new way of advertising online,” Zuckerberg told an audience of more than 250 marketing and advertising executives in New York. “For the last hundred years media has been pushed out to people, but now marketers are going to be a part of the conversation. And they’re going to do this by using the social graph in the same way our users do.”

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If you want to know where the advertising money is, just follow the eyeballs

New technologies influence human behaviors for better or worse. Companies or people operating in the business world use those technological advancements to understand how to alter the responses of people to specific stimuli.

Technologies like Radio and TV allowed companies to speak to a broad audience. They also created a monologue between corporations and the public.

This also incentivized companies and marketers to use a sort of “universal language” that could be understood by anyone. It was the era of pop culture.

This kind of advertising model made sense because companies knew little about who they had on the other side.

Thus, they either used mass marketing campaigns that were undifferentiated, or they used invented customer groups based on what they thought were their ideal customer.

When tech giants like Google and Facebook entered the advertising industry, it all changed. Advertising was no longer something “magical.”

Those companies founded and run by engineers looked at advertising and tried to make it accountable, and measurable.

So that any business paying for advertising could stop focusing on metrics used in TV advertising like gross rating points (audience reached by the frequency of its exposure to the message during a given period); and focus more and more on conversion targets with PPC (pay-per-click) also known in the business as CPC (cost-per-click).

The reason why in the history of modern advertising I included mainly Google and Facebook is that those two companies combined took over the advertising industry. In fact, as Statista points out:

Over the past two decades, advertisers have gradually shifted their budgets away from traditional media (e.g. TV, newspapers and magazines) towards online ads. The rise of the smartphone has only accelerated this shift, as smartphones have fundamentally changed the way that people consume content. Ad dollars have always followed eyeballs and thus it doesn’t come as a surprise that mobile ad spending is currently growing at a breathtaking rate.

As reported by Statista 25% of global ad spend goes to Google or Facebook.

Part of this process has been driven by the change in behaviors of users driven by new technologies. In fact, as mobile devices are becoming less and less expensive, most of the consumption of content and information is connected to those devices. That is why ad spending has followed.

This short history of advertising could have well been called “history of eyeballs.”

In this landscape, we’ll see also how advertising has changed and how it has evolved from mass marketing, with the so-called shotgun approaches, to hyper-personalized approaches.

In other words, market segmentation moved from undifferentiated to highly personalized.

Those changes were driven by a word that today represents the most important asset any company is willing to fight for: data!

Everything you need to know about market segmentation

As Peter Drucker pointed out in his book Drucker Management, “there will be always, one can assume, be need for some selling. But the aim of marketing is to make selling superfluous. The aim of marketing is to know and understand the customer so well that the product or service fits him and sells itself.”

In this guide, we’ll see how market segmentation is aiming at just that, allow marketers to know customers need and pain points so well as a sales enablement device and tactic.

What is market segmentation?

Market segmentation is a marketing practice that allows companies to divide their customers into groups, thus classify them based on specific characteristics.

Market segmentation isn’t new. In fact, it has been used since the 1920s when mass manufacturers needed to offer a more comprehensive product line that could fit broader groups of people.

Market segmentation at the time (up to the 1980s) was mainly based on demographic, socio-economic and lifestyle factors.

In fact, those were the main characteristics that could be figured out about a group of people that companies were targeting.

As more and new data became available market segmentations took into account also so-called psychographic segments, organized according to activities, interest, and opinion.

From the 1980s going forward, there was a shift in market segmentation that allowed companies to narrow the segments they were targeting to include more sophisticated features of those groups.

The ear os the so-called hyper-segmentation begun and in a way, we are still living it today. With new kinds of market segments that allow one-to-one and personalized experiences, thanks to the ease of data acquisition through digital devices.

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Graph from Google Ngram Viewer shows the mention of the term “market segmentation” in millions of books throughout the 1900s to 2000s

What are the bases of market segmentation?

It is important to point out that proper market segmentation is about starting with the customer in mind.

In short, the reason for segmenting a market is based on differentiating the otherwise undifferentiated offer to fit the customer needs based on their preferences.

Thus, market segmentation is justified when it provides customers with better products or services.

Market segmentation is also critical to understand the distribution channels needed to grow your business.

In fact, with tools like the business model canvas or the lean startup canvas, one of the main aspects is understanding customers based on their needs and pain points are and what kind unique value proposition you can bring with your product and service.

Therefore, there isn’t a fixed number of segments that can be created. In fact, there can be many examples of market segments based on the following characteristics:

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Those include market segments based on gender, age group, income, place, occupation, usage, lifestyle and more.

For the sake of keeping things simple, we’ll discuss the four main types of market segments. At the same time, we’ll also look at why, when and how to create a market segment.

Why, when and how to create a market segment

For an ideal market segment, there are different criteria to take into account. In fact, the more you can divide up the market into small groups of people the more the marketing effort it will be easy to plan and execute.

It doesn’t always make sense to create segments unless you have available data about those segments.

In fact, as more data becomes available (think of the billions of queries that each day goes through Google or the social knowledge graph Facebook has at its disposal) so new segments become possible.

Therefore, segments must be measurable. At the same time market segmentation makes sense when it can generate enough profit from your marketing effort.

Imagine the case in which market segments might be comprised of a small group of people with low spending availability. Your marketing effort would be wasted.

Also, you need to make sure to target a group of people with characteristics that will last in time.

For instance, imagine the case in which you set up a market segment, and a marketing campaign based on that.

When the campaign is about to get rolled out. If that segment doesn’t exist anymore. It becomes a wasted marketing effort.

At the same time, that market segment needs to be reachable through several channels. Think of customers that can be reached through your website, social media accounts, events and so forth.

Also, would you be able to persuade that market segment? If that is too hard or not possible, the market segment itself loses relevance.

The last element which is critical is about having enough data to support the creation of that market segment.

Those are the requirements for market segmentation. Let’s see them more in detail.

Requirements for market segmentation [image error]
Measurable and identifiable

Can we measure those segments so that they can be identified?

Accessible

Can we reach those segments through communication and distribution?

Different

Do those segments respond differently to different marketing mixes? In short, do they have unique needs?

Substantial

Is this segment large enough to be profitable, thus justify the marketing effort required?

Durable

Are those identified segments stable enough to allow proper marketing campaigns?

The aim is to provide a better product, service or experience to customers. Which will, in turn, lead to an improved marketing effort rewarded by more sales.

Types of market segmentation

We can identify five main categories and types of market segments:

Demographic: sex, age, race, generation, occupation, etc.
Geographic: geographic regions such as county, state, city, neighborhood.
Behavioral: knowledge of, attitude towards, usage rate, response.
Psychographic: activities, interests, and opinions (AIOs) of customers.

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What is demographic segmentation?

Demographic segmentation is about classifying people based on characteristics such as age, gender, relationship status, education, workplace, and more.

This is among the most common market segmentation techniques. In fact, it was also the first market segmentation used which comprise factors like age, life cycle stage, gender, income, religion, race, nationality and more.

A demographic segmentation might be useful to companies also to create several product lines.

What is geographic segmentation?

This market segmentation is based on reaching people in areas that are closer to the final customer.

For instance, take McDonald’s, the chain has restaurants all over the world, yet the strategy will be localized, as much as possible:

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In this picture, you can see how McDonald’s uses a famous Italian-American chef as a testimonial for a selected menu. In a country like Italy where high-end food is critical, McDonald’s associated its brand image with quality food.

What is behavioral segmentation?

This market segmentation strategy is base on customers based on benefits sought, occasion, usage rate, brand loyalty, user status, buyer readiness status.

In short, it looks at purchasing behaviors, device usage, and other activities.

What is psychographic segmentation?

Psychographics started as an attempt to go beyond demographics. As computational power grew more data became available, this gave a chance for marketers to better segment potential customers.

As recounted on archive.ama.org when Emanuel H. Demby, one of the founding fathers of psychographics when he was asked “What do you call what you’re attempting to do?” he said “Psychographics!” which was meant as a combination of psychology and demographics.

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Source: archive.ama.org

Another founding father of psychographics was Paul Lazerfeld and his associates during the 1950s at Columbia University’s Bureau of Applied Statistics.

As pointed out by Emanuel H. Demby, Paul Lazerfeld taught that any market research that wanted to understand consumer behavior had to “involve an interplay among three sets of variables; predisposition, influences, and product attributes.”

Therefore, psychographics is an attempt to move away from just demographics and give meaning to numbers by focusing more on individuals with feelings and tendencies.

Give meaning to numbers is the primary aim of a marketer. Imagine those two scenarios, Mr. X earns $40K per year. With the other situation, Mr. X earns $40K, after getting a 10% rise compared to the previous three years salary.

Without going too far we can put ourselves in the shoes of Mr. X, how accomplished he feels and the purchasing tendencies he might have after such a raise.

Maybe he wants to buy a new car or a new TV set. Keep in mind that marketers focus is to increase sales. And there is no better salesperson who has insights and personalized information about her target customer.

While in the past it was tough to get valuable psychographic data, that isn’t the case anymore.

For instance, at the time of this writing, tools like Google Ads and Facebook Ads allow marketers to go quite in-depth with psychographics definition of their audience:

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Source: searchengineland.com

Above an example of how Google Ads enable marketers to target specific interests and psychographic traits of a group of people. This allows a segmentation that can be laser targeted.

The four-level of market segmentation

As Philip Kotler suggests in “from mass marketing to mass customization” to reiterate, the four steps of market segmentation which are: probing, partitioning, prioritizing and positioning. This is an ongoing feedback loop.

He also divides the market segmentation into four levels:

mass market
segmented markets
micro-markets (distinct from segmented markets)
and individual markets

Mass marketing and the shotgun approach

As Philip Kotler recounted in “from mass marketing to mass customization” it all started in Japan where he noticed market researchers going to one household as a sample for a product launch.

Philip Kotler noted, “how can you generalize from the sample of one?” and as the story goes, the Japanese market researches replied “We Japanese are homogeneous. We’re all alike. If this family likes the product, everyone will like the product.”

This kind of “market segmentation” can be referred to as a shotgun approach.

In short, just like a shotgun is used to aim at moving targets in the air, so the shotgun approach tries to reach a wider audience, with no specific focus.

In short, mass marketing runs along with mass production, mass distribution, and mass promotion. In this scenario, Mass media has played a crucial role.

This kind of approach favors such large audiences that can be reached with mass marketing media, like radio and television.

While this kind of approach might have had sense in the 1980s, it has become obsolete now. Large corporations, like Coca-Cola, still spend a significant amount of money as a branding effort to feature TV spot shown to millions of people.

For large corporations that want to keep a strong brand and be on “top-of-mind” for their consumers, this strategy is still robust. For small businesses or startups using a similar approach might lead to bankruptcy.

That is also why startup has made of the scientific method and measurable results more and more their credo, with disciplines like growth marketing and growth hacking.

Segmented markets

When a market gets segmented based on several characteristics (like demographics: sex, geographic, behavioral and psychographic), this is where marketing and communication campaigns can be customized to the need of the still large group of people, yet in a way, those are differentiated.

Thus, we move from an undifferentiated approach of mass marketing to a differentiated approach to segmentation.

Niche marketing and micromarketing

To give you a visual representation of niche marketing, think of it as being a big fish in a small pond.

Niche marketing is about becoming an authority for a small community of people of which you know their main characteristics.

As Peter Thiel, co-founder of PayPal, pointed out successful companies target at monopolizing markets instead of going where competition is.

In his book Zero to One, there are four steps to take to dominate a market:

Start small to monopolize
Scale-up
Stop with the BS of disruption
Be like a chess player, think about the endgame

Is First Mover Advantage a Myth? When the Last Mover Takes It All

While niches are mainly based on interests, when we move toward micromarketing this might become more localized. Therefore, where niche marketing focuses more on behaviors, benefits, feature, lifestyle and so on.

Micromarketing focuses on small localized groups. The niche and micro-marketing approach are more suited for a small business or startup as it allows them to have a way higher and measurable ROI on their marketing effort.

Also, in small segments, it might be easier to create a feedback loop that allows small business to learn and grow faster!

One-to-one marketing

One-to-one marketing is the approach that starts with creating personalized interactions with the potential customer and personal relationships with customers.

In an article dated 1999, HBR asked “Is Your Company Ready for One-to-One Marketing?” defined as “being willing and able to change your behavior toward an individual customer based on what the customer tells you and what else you know about that customer.“

The main aim of one-to-one marketing is to establish a “learning relationship” with your potential customers and customers.

In short, for any interaction, there will be a learning experience, a better understanding of that customer needs.

Most companies opted for the mass marketing approach. It consisted of reaching the highest number possible of people with a message that needed to be simplified.

One-To-One marketing starts from the opposite assumption, and it is based on two types of one-to-one marketing:

Personalized: Think of Amazon personalized experience:

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Customized: Think of Converse where they give you a basic shoe, and you can customize it with your own creativity:

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In the era of large tech companies like Netflix, Amazon, and Spotify which have built their success on subscription business models (Amazon Prime is still a small part of Amazon revenue, but it is very promising) the one-to-one marketing has become the norm.

In fact, the reason why many people stick with those services is due to the degree of personalization.

Netflix algorithm knows your TV series preferences better than your best friends, while Spotify knows the kind of music you like better than yourself.

This is possible thanks to algorithms based on behavioral patterns create predictive models based on customers data.

As data becomes critical for one-to-one marketing, the essential asset for those companies become the so-called User ID, which contains the whole history and interactions of customers with those personalized platforms.

The most powerful online tools for the marketer

In this section, I want to show you some practical tools today marketers have at their disposal to segments customers, users and grow a business with the power of data.

Google Analytics: from behavioral to psychographics advertising

As defined on neilpatel.com:

Behavioral advertising is a technique used by online advertisers to present targeted ads to consumers by collecting information about their browsing behavior.

What kind of data does behavioral advertising aim at? Once again Neil Patel helps to define the sort of data it targets:

The pages browsed on a website
The time spent on the site
The clicks made
The recency of the visit
The overall interaction with the site

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With Google Analytics you can quickly get any data that goes from demographics to psychographics:

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As a user navigates between web pages, Google Analytics uses cookies to store and remember valuable pieces of information.

In short, Google creates a so-called Client ID used to identify users and their activities on the site (anonymously).

Retargeting and the art of repeating the message

Retargeting starts from the assumption that message repetition brings to conversion.

In fact, traditional sales funnel (an imagined path a person goes through before becoming a customer) looks something like this:

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This path seems linear. However, in the real world the path a user takes before it becomes a customer is very unpredictable.

Retargeting might help in making the path of a user more predictable by repeating the message.

For instance, have you noticed that after you visit an e-commerce store, when you land on an unrelated website through Google, you find that same store as a banner ad? That is retargeting in action.

Google’s in-market audiences

With Google in-market audiences you can target a wide number of variables:

Apparel and Accessories
Autos & Vehicles
Baby & Children’s Products
Beauty Products & Services*
Business Services*
Computers & Peripherals
Consumer Electronics
Consumer Software
Dating Services*
Education
Employment
Financial Services
Gifts & Occasions
Home & Garden
Real Estate
Sports & Fitness*
Telecom
Travel

Google knows a lot about you based on the data it collects. For instance, if you go to adssettings.google.com/u/0/authenticated you can see how Google has profiled you just like it profiled me:

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What about Facebook?

Facebook audience insights

For years users have been giving to Facebook a growing amount of critical data about themselves.

Facebook has built a business on that data. In fact, marketers can select their audience with a laser target:

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Source: facebook.com
What does Facebook know about you?
You can check how Facebook profiled and segmented you here: facebook.com/ads/preferences, to see the information that best describes you (according to the Facebook algorithm), click your Information > your Categories:
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As specified in the ad preferences “the categories in this section help advertisers reach people who are most likely to be interested in their products, services, and causes. We’ve added you to these categories based on information you’ve provided on Facebook and other activity.”

Even though I seldom use Facebook the algorithm knows quite a few things about me and those are passed on to marketers that use Facebook Ads.

In fact, those marketers get access to Facebook audience insights:

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Source: facebook.com

With this suite, marketers can gain insights into demographics, page likes (thus interests), location and language, Facebook usage, purchase activity and more.

With this kind of tool, you can build smaller and smaller segments but also more qualified.

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Source: blog.hubspot.com

It is important to notice that targeting a narrow audience will make the marketing campaign way more expensive yet that same campaign will get better results regarding ROI!

What Is a Business Model? 30 Successful Types of Business Models You Need to Know

Key takeaway

In this guide, you got an in-depth understanding of the advertising world through market segmentation, its evolution, and its tools. It is easy to lose the sight of what marketing is for. Too many times it becomes an end in itself.

Instead, I’d like to repeat Peter Drucker statement “there will be always, one can assume, be need for some selling. But the aim of marketing is to make selling superfluous. The aim of marketing is to know and understand the customer so well that the product or service fits him and sells itself.”

Will the day come when marketing will have reached its final mission, make selling superfluous?

Business resources:

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Published on August 10, 2019 12:22

Inbound Marketing Best Practices For Your B2B Company

Marketing has become all about customers today. And it is no surprise since the competition in the market is raging high with hundreds of new businesses opening every day. This requires established brands to fight that much harder to maintain their stature as well as startups to play on customer’s need for instant gratification for a quick built.

For this reason, inbound marketing tactics have found a brand new place among even B2B companies because it is all about attracting customers “in” instead of pushing your products out. So the best way to catch the eyes of potential clients is through inbound marketing.

Here are some of the most effective tactics that will help you in establishing your brand and pumping up your conversion rates.

Read on.

The Content

Content always has been and always will be the king when it comes to brand marketing. Conveying the right things, to the right people, in the right way, at the right time is what good content is about.

The best thriving kind of content is the in-depth original research with establishes your expert status in the market. And everyone listens to and follows an expert. In fact, even statistics prove it. According to data given below by serpIQ, the most preferred length of content among the general audience lies around 2400.

Talking about B2B industries, if you are associated with software or if you are an eLearning content provider, then offering in-depth and original content to your users can boost your brand image fairly quickly. And thankfully, there are a number of ways to promote yourself outwards in an accessible way to the audience, like email marketing and push notifications for content marketing.

Bottom line is, content development does not stop after creation. It is, rather necessary to promote your content for enhancing the sales of your company.

So, longer pieces of content are not just good for search engine rankings but users love it as well. And once correctly marketed, it will make your website traffic surge positively and you will have higher chances of converting deals.

Adopt multimedia

There have been numerous studies about how videos, animations, and images are much more effective when it comes to marketing than written content. This does not negate the usefulness of long written pieces of content but simply add to it.

For instance, if you are thinking about reviving some old articles, you can consider turning them into an infographic or a video and then republish. Recycling of content is a must to maintain the health of your website and keep it ranking high on SERPs and making that content more interactive will only take the outcome of this exercise many levels higher.

Collaboration is the key

To get visible on the map of the internet, the quickest way is to be seen with the ones who are already on it, that is, the experts and big names of your industry.

Collaboration can come in many ways, you can hire them as an influencer or collaborate with them for content. For instance, if you are creating a webinar or a simple expert video then you can ask them to speak.

This marketing strategy works in two crucial ways –

It establishes your brand’s reliability as well as the authenticity of your content.
It helps you in building long-lasting relationships within your industry and expand your reach.

Not only this but when you collaborate with bigger brands that yourself and they generally will have a larger set of audience, they will also share the content in which they have contributed among their media channels. This means that your content will reach a larger audience and help you gain more leads.

Optimization

Anyone who owns a business website knows that not every page and every article will rank high on the search engines and attract traffic. In fact, sometimes, content is only created to maintain the consistency and activity of your blog and media channels.

For instance, if you are in the eLearning industry, specializing in Sales & Services Training then there is a chance that your compliance training posts might not be able to gain much traction.

Nevertheless, your focus should be the posts which do rank high in attracting traffic and their optimization. From the perspective of inbound marketing, review your old and aged content that is still bringing traffic to your site and find ways of creatively optimizing it. It can be by updating the facts, dates, or even content itself. What helps greatly here is remarketing that content again through emails and social media channels to increase the traffic.

You must also add a CTA with your marketing ways so as to ensure higher conversions.

Lastly,

As said before, inbound marketing is all about enticing the customer enough to land at your site and stay. So maintaining its health along with the content are the most paramount of practices.

Guest contribution by Suzanne Elly, freelancer, and ghostwriter.

Business resources:

The post Inbound Marketing Best Practices For Your B2B Company appeared first on FourWeekMBA.

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Published on August 10, 2019 09:44

August 9, 2019

Small Giants: Companies That Choose to Be Great Instead of Big With Bo Burlingham [Interview]

https://fourweekmba.com/wp-content/uploads/2019/08/smallgiants.mp3

In today’s session, I had the pleasure to have Bo Burlingham, contributing writer at Forbes, co-founder of the Small Giants Community, former editor-at-large for Inc. Magazine and author of several books among which I really loved and enjoyed Small Giants, which is going to be the topic of this conversation.

What drove you to the research about what you call in the book Small Giants in the first place?

Bo Burlingham: Well, I had written an article about a very interesting company. When I was at Inc. Magazine, I’d written an article about this very interesting company in the United States called Zingerman’s Community of Businesses.

Zingerman’s had a very interesting story. It had started out as a delicatessen in Ann Arbor, Michigan in 1982 and their goal, the founders, there were two founders and their goal was to create a delicatessen that was going to be great and unique and that was going to be known the world over as being a great and unique delicatessen.

Believe it or not, 10 years later, they had really achieved that goal. I mean, they’d been written up. They were certainly very well-known in the United States and I think that even when people listed sort of the great delicatessens of the world, Zingerman’s was on it.

So they came to a crossroads where they sort of realize that if they’re going to keep growing, they had to decide what they were going to do next. They had a lot of options. I mean, there were already people lining up who wanted to create Zingerman’s delicatessen in other cities around the United States.

So they could have franchised easily or they could have raised private equity and started Zingerman’s in other towns, college towns in particular around the country, but they decided they didn’t want to do that. They said, “Look, when we started out we wanted to create something that was great and unique, and by definition when you start replicating something it’s no longer unique, and a lot of times it isn’t even very good, let alone great.”

So they decided they had to do something else. So they met and they had some help with this. They had brought somebody in to help them sort of think through where they wanted to go next. A couple of years later they came out with their plan. It was 1994, they came out with a plan called Zingerman’s 2019. It was their vision of what this company was going to look like 15 years in the future.

In it they said, “Well, we’re no longer going to be just a delicatessen. We’re going to have a whole community of businesses and all of them are going to be in the Ann Arbor area. All of them are going to be food-related and each of them is going to be great and unique in its own right.”

So for example, they could have a bakery. They actually… By the time I went to see them and today I think they’ve got actually… By the time I went to see them in 2002, they were already easily halfway toward their goal for 2009. They had a bakery, world-class bakery. They had a terrific restaurant, quote, “Zingerman’s Roadhouse.”

They had a mail order company. They had a catering company. They had a coffee company called Zingerman’s Coffee. They had a gelato company called Zingerman’s Creamery, made gelato and cheese. They had a chocolate company. They had all these different companies and each of them aspired to be the greatest in the world of what they did.

I was fascinated. I think the thing that really interested me most about this company was their ability to attract people from all over the United States to come and work there in Ann Arbor with them to create these businesses.

I mean, they had people, entrepreneurs who’d built successful companies, who sold their businesses in order to come to Ann Arbor to make cheese. They had people who had been partners and big national accounting firms who came to Zingerman’s to make bread and often they gave up big salaries.

They were making much more before, but they were so attracted to what Zingerman’s was doing that they found that this was where they really wanted to be.

So I wound up writing an article about them for Inc. Magazine and it was called The Coolest Small Company in America. It was all about Zingerman’s. It got a very big response from our readers.

One of the people who responded to it was a publisher in New York who called me up and said that he thought that he was really interested in this article. He thought there might be a book fair.

At first I didn’t really understand what he was talking about because I thought there might be a book for the founders of Zingerman’s, but I didn’t see how that would be a book for me.

I agreed to go meet him. When we got together in New York, he explained that really what he was talking about was he wondered if there were other companies out there that had this opportunity to get a lot bigger, a lot faster and that could have in fact grown to be conceivably very big companies but who had chosen not to because they had other goals that they considered more important than getting as big as possible, as fast as possible.

What is the definition of small giant if there is any?

Bo Burlingham: Well, the short definition is in fact the subtitle of the book, which is… It’s about companies that choose to be great instead of big. They have their own definition. Each company has its own definition of what it means by greatness and every company is certainly… Every founder or owner of a company is certainly entitled to determine his or her own definition of what a great business is.

All the companies that I wrote about, there were about, there were 14 of them in Small Giants. They all had something very special going for them. It was like a kind of… It was something you could feel if you spent time around them or if you talk to their employees or talk to their customers. It was a kind of electricity or power of attraction. It’s what I call in the book mojo, which is sort of the business equivalent of charisma.

When a leader has charisma, you want to follow him or her. When a business has mojo, you want to be associated with that business. You want to buy from it, you want to sell to it, you want to work for it, you want to read about it, you want to wear its T-shirts and its caps. It’s what you feel when you’re really in the presence of a great business and all of these-

What’s the mojo? And why it matters so much for small giants? Is it about money?

Bo Burlingham: No, it’s really about the relationships that these businesses have with all the people who surrounds them, in other words the relationships they have with their customers obviously and with their employees, also with their suppliers and frankly with their neighbors and with the community at large.

I realized that the question was for me. I mean, actually, I’d been at Inc. Magazine long enough and I’d sort of seen companies from the early 1980s that really had this quality. I mean, I was there when Apple was just getting founded, Microsoft was just getting founded. I got to know a lot of these companies when they were still pretty young and they had that special quality. Most of them eventually lost it.

What fascinated me about these small giants is that they not only have it, but they were able to hold on to it. So the question I had was, well, how are they able to do that? What are they doing?

What are some examples of companies that as they’ve grown, they lost their mojo?

Bo Burlingham: Well, I had been actually on the US board of The Body Shop. I will say that when I first became involved with The Body Shop, it had that sort of special quality that mojo. It did eventually lose it and the size was frankly a factor. I was friends with them.

I knew the founder, Anita Roddick, who was a wonderful person. When Small Giants came out, she wrote to me and said that she’d wished that I’d written it when she was starting The Body Shop because that was in fact the sort of company that she wanted to have. I mean, there are lots of… There are companies around that have that special quality but then they lose it and they lose it usually because they grow and they can’t handle.

There are things you have to give up when you grow, just as there are things that you can’t have when you stay small. There’s a company in the United States called Whole Foods. Whole Foods when it was just starting up, it was a store in Austin, Texas and it was a small giant.

The founder decided that he wanted a much bigger company and that would have more influence. So he went public and raised a lot of capital and then went around and bought similar stores all over the United States and brought them, made them one company.

There are certain things that you just can’t do when you’re a larger co… or you have to do. For example, when you have a large company like that, you want the customer experience to be the same whether or not they, whether they walk into one of your stores in Austin, Texas or in San Francisco or in Boston or wherever.

So you don’t really have the same relationship to your customers that you have when you’re small where you’re unique and where you’re the only one who has that quality. That’s just a fact of life, the things you have to do differently. There are different ways in which you have to run companies once you get bigger.

When you’re small, you can make your exceptions for people. When you get larger, it’s dangerous to make exceptions because it becomes something that other people are going to want as well and you can’t really make personal exceptions anymore.

How can small giatns defent their profitability or their position in the market?

Bo Burlingham: Well, I will say this is that all of these companies that I wrote about were very profitable. That was one of the criteria that I used to choose them, because I wanted companies that had been profitable for an extended period of time.

So they’d been through the ups and downs of business. They’d been through recessions and so forth and yet had managed to maintain their profitability. How you do that whether you’re a big company or a little company is, well, that’s a whole of the discussion we could have about, but-

Is the relationship aspect a key element for Small Giants’ success?

Bo Burlingham: That’s true. It’s basically the relationships, they are able to maintain their profitability. The small giants are able to maintain their profitability because of these extraordinary relationships that they have with their customers and their employees. In other words, that obviously has an important effect in the market because people talk about the company.

People are as passionate about… If your customers are as passionate about your company as you are, what are they going to do? They’re going to talk to other people and say, “You’ve really got to know this company, really gotta buy from this company,” and that allows… When you have that kind of demand for your product or your service, that allows you to maintain and in fact increase your profit margins.

Because in effect, profit is sort of the applause that customers give to you. They’re basically saying that they want your product or your service so much that they’re willing to pay you more than it actually took you to create it. When you have that sort of thing, that’s how you achieve profitability and when you have small companies, small giants. Now understand some of these small giants are actually, they’re not so small anymore.

There’s one that I wrote about called Clif Bar, which was… It’s sort of an energy bar company. They were very small or relatively small when I wrote about them. They’re probably 10 or 15 times bigger today than they were back then. When you have that sort of special relationship with your customers, you’re able to increase your profit margins or maintain your profit margins and you’re growing by word of mouth. I mean, I will say this that all the small giants I wrote about were still growing. They just weren’t growing as fast as possible.

Gennaro Cuofano: The Clif Bar case that you just mentioned, I think it’s one of the most interesting. In the book, you also mentioned that the founder, one of the founders had actually the chance to walk away with a lot of cash, with a lot of money because he was about to exit the company, but then the ease mind. I mean,

What were some of the motivations for actually not doing an exit on a company that you fear is going to be taken over by the competition?

Bo Burlingham: Well, I mean, each instance is a little different. If you look at Clif Bar, it was a case where their two biggest competitors had already been acquired by Kraft and Nestle, and they received an offer from Quaker to buy Clif Bar for $150 million, which is a lot of money. At the last minute, the founder Gary Erickson really began to feel very bad because he had found out that in fact Quaker was going to move the company to the Midwest, which meant all of his employees were going to lose their jobs and that he wasn’t going to have any involvement with it after the sale, which means that he couldn’t actually protect the brand.

Those were two reasons why he was going to actually consider the sale in the first place, and he decided at the last minute, literally the last minute. I mean, the papers were drawn. He was sort of standing with his partner in an office waiting for the lawyers to pick them up to take them to sign all the papers for the sale. Literally, he got so nervous and anxious about what he was about to do that he decided he wanted to walk around the block. He needed fresh air. So he told his partner, “I’ve got to go out for a walk. I’ll just walk around, I’ll be back.”

When he went out to walk around the block, he got out there and realizing what he was about to do. He felt so horrible that he was actually in tears, and then he realized, “Gee, I haven’t signed anything yet,” then suddenly he felt a lot better. So he walked back to the office and basically told his partner, “Send them home. I’m not going to do this deal.” Now I wouldn’t say that that’s typical. It does happen, but usually it’s something that happens late in the process.

I write about Anchor Brewing, which was a beer company that actually sort of started. Craft Brewing is very, very big in the United States. Anchor Brewing was really one of the first Craft brewers. It was probably the first Craft brewer. It was so popular what they were doing that they couldn’t keep up with the demand. They were actually having to ration customers and say, “Well, we can’t. We can’t meet all of the… We can’t give you all of the Craft brew that you want.” This was very upsetting obviously to the owner and he began to consider building another brewery. In order to do that, he needed to raise capital, so he was going to go public, do what’s called a direct offering here.

Again, late in the process, he began to think about how his life was going to change if he became a public company. He got his team together at Anchor Brewing and they all talked about how things would change if they went through with this plan. They all agreed that they wouldn’t like the company as much. It wouldn’t be as special to them as it was and so they decided that they would not go ahead with that. He called up the people who he was going to do the deal with and said, “I’m out. I’m not going to do this. We’re not going to build a new brewery.”

It was again that realization. The question is, when do you get the realization that the life you’re going to have after you make a certain choice to grow fast is not going to be the life you want and the company that you create is not going to be the type of company that you want?

Gennaro Cuofano: Actually, it’s about your company losing the essence that you were trying to instill. Also, I think it’s very important because on a smaller scale, it’s not that you lose control on your vision when you go to an IPO, which is for larger companies. Also in the start-up world, there is this dilemma on whether, for instance, to take outside the capital, which is called the venture capital one, of course, you’re growing your company.

One of the drawbacks for sure is the fact that you lose control or you might lose control over your vision or either in any case, either you make sure that whoever is putting the outside funding is in line with your vision and it’s going to be so in the long run. Otherwise, of course, the risk is that you’re going to be building up a company that you should not be able to identify with anymore. So I think that’s a critical point, and I guess it’s one business.

Bo Burlingham: That’s a critical point that you’re making that it does have to do with the fact that, for example, when you do take in venture capital, private equity that you’re basically teaming up with people who really have to have growth.

I mean, their customers are their investors and they have to deliver a return to those investors, so. You have to, as the owner of a company that is considering… I mean, obviously, having the extra capital does allow you to do things that you can’t do if you don’t have it. You do give up some control because you’re basically saying, “Yes, okay. We’re going to make this a good investment for you.” Making a good investment often means being forced to grow much faster and get much bigger.

Is there a specifici small giant business model or any small giant has its own specifics and there is no way for us to put any kind of generalization?

Bo Burlingham: Well, there are certain management practices that are very common to a lot of the small giants. For example, one of the books that I wrote before Small Giants was called The Great Game of Business. I did it in a… I had a coauthor who was a CEO of a very interesting company in Springfield, Missouri. Basically, that book was about the whole idea of building a company in a way that everybody in the company.

I’m talking about people down on the shop floor, the welders, and everybody who worked in the company knew all, understood all the finances of the company and shared all the finances. What we know in the United States now is open-book management, but The Great Game of Business has become very, very popular.

I mean, there’s a conference every year, in September in Dallas, where seven or 800 people from around the country get together to talk about their experiences and to learn things. There are certainly hundreds if not thousands of companies that are practicing this open-book management and that is particularly something that is very widely practiced by small giants. There are other practices that I think are important.

I mean, Zingerman’s developed a whole methodology for creating a vision of the kind of company you want to have in the future. I mean, that’s what they did. I mean, they did it in 1994 and then they had to do it again in 2009 because they got this so they had a new vision to take them to 2020. Now they’re working on the vision that’s going to take them to 2030. They have a methodology for doing. Again, I highly recommend them that I think a lot of other small giants have adopted.

There’s not one particular model that you have to follow in order to be a small giant, but there there are certain techniques that had been developed by these companies that they share with other companies and that have become very, very popular among small giants.

August 2, 2019

10 Conversion Rate Optimization Strategies To Make More Money

Conversion rate optimization, often abbreviated to ‘CRO’ is the most crucial performance metrics for all marketers and the most significant leverage point for any company.

However, driving conversions is apparently tricky and intimidating task. The increase in the competition has made it hard for marketers to understand their conversion dreams.

Every company has certain goals to achieve. For instance, for your website, your goal is to make visitors click on ‘subscribe’ or ‘buy now’ or ‘call now’ button. Every time a visitor clicks on these buttons, you earn a conversion.

Therefore, your conversion rate is the percentage of the people who have taken action v/s total number of visitors who have visited your website. In short, conversion rate optimization is the process of turning visitors that visits your website into customers.

The best practices for conversion rate optimization are not commercial. Instead, they depend on clever persuasion. Let’s have a look at some of the best conversion rate optimization tips that can help you in improving your objectives.

Use Effective Headlines

Whenever a person visits your website, headlines are the first thing that they probably notice. A great headline is the one that sums up the whole sales pitch in one bold sentence. It is meant to generate curiosity, solve a problem, answer the question, or be instructional.

Without an effective headline, there is a risk of losing a potential lead. Here are some types of headlines that have proven to be impactful in generating leads:

Question headlines
Command headlines
How-to & Instructional headlines
Direct headlines
Problem-solving headlines

Strategic CTA’s

Just like a name, the call-to-action button prompts visitors to take a specific action. It should be there on all your pages and should be visible to visitors. While creating CTA’s three things need to be kept in mind:

Color and shape: The color and shape of your CTA button should be such that it matches with other elements of the website. It should immediately catch the attention of visitors.
Placement: Placing the CTA at the top of your fold is more helpful than one below the fold.
Make it benefited oriented: Bland CTA’s like ‘Download’, ‘Continue’, etc. are not action-oriented. In place of that, make them benefited oriented like ‘Stay connected’, Get my ebook’, etc.

Easy Navigation

A lot of website owners ignore the significance of navigation. They are unaware of the fact that even navigation plays an important role in visitors’ journey through your website. How? The answer is quite simple. The quicker a visitor gets what they want, the more chances that they will purchase it.

Therefore, it is vital to have simplistic navigation. Your visitor should reach any of your website pages with maximum two or three clicks. Since the usage of smartphones is at its highest than ever before, therefore, you should pay more attention to your website navigation on mobile devices.

Reduce Page Loading Time

The website loading speed plays an important role in engaging visitors and making them take the next step. The faster the page gets loaded, the lesser are the chances that the visitors will leave the website.

Surveys have also shown that users expect a site to load in two or three seconds. It not only increase conversion but also helps in getting higher position in search engine results. Here are some of the best practices that can help in improving the page loading time:

Implement Content Delivery Network (CDN) — a server group that brings pages and other content near the physical place of the user. Just because the server is nearer to the customer, it loads more quickly.
Compress the image size
Evaluate and disable the plugins that are no longer in use
Prevent ad scripts and pop-ups

Payment Security

Since technology has developed so much and everything is online today, people are more concerned about keeping their information private. To win their trust and make them feel secure; it’s important to display security symbols on the checkout page.

The more trusted emblems you display, the more comfortable customers will feel, and this is a great way to increase online sales. Apart from displaying security symbols, you can also give users multiple payment options like debit card, debit card, mobile payments, etc. It will make visitors feel that your site is customer-friendly and trusted.

Time Limit

The more you give time to people think about making a purchase decision, the greater the chances are of them changing their mind or getting distracted by competitor’s offers. To improve your conversion rate, you should set a time limit.

Create a sense of urgency such as ‘Get 60% off on all purchases during the next 48 hours.’ In 2016, Amazon, the e-commerce king, took this approach, and its conversion rate increased by 74%.

Play on Scarcity Effect

Another great way to increase the conversion rate is to create a sense of scarcity. During your online shopping, you probably have experienced that you want something, and that item is out of stock.

And next day or probably two days later, when you visited the same website, you found the same product in stock with a small message below it ‘Limited stock.’ Well, that was a scarcity effect action.

That product probably never was out of stock. It was done by that particular website to drive sales because scarcity or short supply of the product makes people purchase the product quickly.

Optimize for Mobile

The mobile industry is growing very fast. There has been a tremendous increase in smartphone users, and the numbers are expected to reach 4.78 billion by 2020. After knowing the fact, you cannot afford to ignore mobile users.

Check your mobile conversion rate and figure out the areas of improvement. Speed up your mobile site and have a responsive design for all your mobile pages.

Display Testimonials

Trust is the critical thing that encourages people to make their purchase decision. These days, because of cut-throat competition, customers have started giving importance to other customers’ reviews. No matter how persuasive your website is, the first time visitor will hesitate to make a purchase decision.

Showing the authentic testimonials of other customers may convince them to buy a particular product. If you have a well-known client and that client is very much happy with your services, then showing their logo along with their name will help you in building more trust among other clients or customers. You may also choose to display testimonials in the form of videos.

Shorten Checkout Funnel

Checkout funnel is a series of a path that a user takes to get from a landing page to the ‘Thank you’ page. The shorter the checkout path, the more likely it is to convert a visitor. Imagine that you want to buy something, and after adding the item in a cart, you need to follow too many steps.

Don’t you feel irritated? Chances are you may leave the item in the cart and quit the website. Similarly, if your website also has the long checkout process, you may lose the potential client or customer. Therefore, it is advisable to keep the checkout funnel short. Users will feel comfortable during their checkout process, and they may become loyal customers of your website.

Key takeaway

Conversion rate optimization is a continuous process. You can always do better. We hope that the above tips will help you in growing your business. There is one piece of advice we would like to give at the end is to continuously experiment with new ideas and figure out which one performs better for your business.

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Published on August 02, 2019 07:18

How To Help Your Sales Team Find Motivation

Results in sales teams are not so easily achieved. But, salespeople, while able to influence them to a point, are not able to guarantee what will happen. So, they often get disappointed and stressed that their plan didn’t work.

This is where you, as a team leader, step up and help them find their motivation again. While this may be difficult and stressful, you should show them what a real leader is and motivate them to work better and enjoy their work.

If you want to know how to do this, here are some helpful tips that will help you:

Focus on key sales activities instead of results

When you constantly tell your team to focus on results, they can become stressed and burned out. Sales are something that they can surely influence, but they can never predict or be sure of.

So, you need to allow them to relax and focus on what they are doing instead of fearing of what will happen. Fear is never efficient. It’s killing all motivation. Instead, working on separate small tasks will help them find joy for the work they love and do.

Build trust with the people on your team

Trust is one of the most important components of any relationship. If you want your team to work successfully, it needs mutual trust. First of all, your team members have to trust you, and you have to trust them. This is not just achieved through telling but through showing.

They need to see that you are willing to let them work on their own on important tasks. They also need to trust you enough to talk to you and let you know if there are any problems. They need to trust each other as well.

Get creative

Motivation is a fickle thing. But, one surefire way to get it back once you lose it is to have some fun as a team. Get creative and come up with games or competitions between different people in your team. Organize hang-outs after work or have some other kind of fun. This is a great way to build team spirit and find the motivating your team needs.

Blur the line between boss and employee

There needs to be a line between you as a leader and them as employees. But this line does not have to be a thick, dense wall. Sure, you are a leader – your job is to lead by motivating and helping people work better.

You can be their friend as well. Know their names, their stories, and so on. Be the person that they trust, and that can inspire them. Don’t be this closed off, distant person that only comes to criticize. Work with them, side by side.

Understand your direct reports’ personal and professional goals

Your employees have their personal and professional goals. While their professional goals may be to be the best at their job or advance in their career, they also might want a better work-life balance, for example. When you understand this, you can offer them the right motivation.

Make sure they’re covering the basics

Your employees should know what the company culture and goals are. So, make sure that they know and fully understand that.

Set daily, weekly, and monthly goals

Without goals, we would all be lost. Just imagine, going on a journey without a destination – how do you know that you have done something well? How do you know what success is? What do you compare your results against?

Set goals for your team. Attainable, measurable goals that are defined by time. Make sure that they are easy enough to reach but still present a challenge for your team. You should also celebrate the achievement of these goals. This is the best motivation and direction they can get.

Remind employees about the autonomy they already have

Work on showing your employees that they already have some autonomy that they are not fully using. Make sure that they know what it is and that they are fully taking advantage of it.

Figure out where the issue lies

Do you know why your employees are not motivated? You should. Without understanding the real cause of the issues, you could be doing many things to fix their mood, but none of them may work because they are not a real solution.

So, before you get into the solving issues, ask your employees what the problem is. Are the results not great despite hard work? Are you the problem? Are their any team issues like fights or disagreements? This way, you automatically know where to start.

Transparency and honesty

Being honest and transparent with your employees is a great technique. Don’t let them be confused by what and why you are doing. Help them understand.

First off, be transparent about your mission – they need to know it so that they can get into that mindset. You should also share with them the overall goals of the company.

You should share all of the relevant information. Be honest with them when they could do be doing better or when they are doing well. This will all help you create trust with your teammates and build, and environment that they would love to work in.

Let people pick their own rewards

Letting your employees pick their own rewards is a great technique that can work as an extra motivator. Sometimes rewards can be too generic and might not suit all of your employees. So, why should they work hard for something for a reward that’s not even their favorite one. Allow them to pick their rewards – for some it will be to have a day off, some will like to travel, some will like a dinner or tickets to a movie, and some would prefer money.

Give great rewards

This builds upon the previous point. While money is a great reward to some, most people are actually more interested in other rewards, especially if their pay is already sufficient for their lifestyle. For example, people with families would probably like to have a day off, and younger people would like a free trip. Some may like dinners, sports games, or movies. Use these to motivate your employees in a better way than money ever could.

Show the benefits

Money is great. But what your people may want even more are the benefits, especially after a while. So, offer them those benefits – access to various facilities, medical or lifestyle benefits, and so on.

Finding motivation and helping other people find it is hard, especially in sales teams. However, you should be the leader everyone wants to work for and build new ways to help your employees and teammates stay motivated.

These have been some of the tips that have proven effective in the past, but there are many more you could try on your own, knowing your team. Hopefully, this will help your team stay motivated.

Guest contribution by Aimee Laurence, sales manager at Essayroo . She also is a freelance HR and ghostwriter.

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Published on August 02, 2019 05:54

How To Use The Bullseye Framework For Marketing Channel Prioritization

The bullseye framework is a simple method that enables you to prioritize over the marketing channels that will make your company gain traction.

The premise is that when you grow a company from scratch, in most cases, you don’t have a massive marketing budget. This requires a scientific method for marketing experimentation to prioritize on those channels that have the highest potential.

Often, this marketing prioritization process will bring you to experiment with new marketing channels which might still be underutilized by your competitors, and for such reason also the ones with the highest potential.

The bullseye framework was manufactured by Gabriel Weinberg, Justin Mares, in their book, Traction.

Let me give you a bit of background about the story of one of the authors, Gabriel Weinberg, and how they came up with this framework.

Enter DuckDuckGo

Gabriel Weinberg is the founder of DuckDuckGo (DDG), a search engine that offers private navigation on the web. Over the years, DDG has evolved into a set of tools which provide privacy for users around the web.

DuckDuckGo primary monetization strategy is still based primarily based on affiliate revenues generated when a user goes on a site like eBay or Amazon. DDG business model revolves around a value proposition which emphasizes privacy.

This value proposition is quite powerful as it offers an alternative to Google, which primary business model is based on data tracking which enabled the search engine from Mountain View to build a multi-billion dollar business, which in 2018 passed the hundred billion-dollar mark in revenues:

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DuckDuckGo itself has used a bullseye framework which prioritized on several marketing channels when growing.

But what are the primary marketing channels available to founders when first launching their company?

According to Weinberg and Mares, those can be traced back to 19 primary channels.

The bullseye framework in a nutshell

The bullseye framework follows three simple steps, intending to hit one target: traction!

The first layer is about what’s possible. In other words, this is a brainstorming phase in which the team starts to gather at least a strategy per channel that may be used to start “moving the needle of growth.”
The second layer is about what’s probable. In short, this is the phase where you start experimenting and testing the strategies that were brainstormed in the first step. Here it is crucial to start with inexpensive tests. That is not the phase where you have to go all in. Look at it as a testing phase. Where you start testing the market to see what works and what does not.
The inner ring is the bullseye. That is where you identified the channel or channels that are fueling the growth. Therefore, focusing on them at least until they will bootstrap your startup to the next growth phase. Eventually, you’ll restart the process to identify which channel or channels will work for the next growth stage.

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In the book, Gabriel Weinberg identified 19 channels for growth:

Targeting Blogs
Publicity
Unconventional PR
Search Engine Marketing
Social and Display Ads
Offline Ads
Search Engine Optimization
Content Marketing
Email Marketing
Viral Marketing
Engineering as Marketing
Business Development
Sales
Affiliate Programs
Existing Platforms
Trade Shows
Offline Events
Speaking Engagements
Community Building

Each of those channels will be able to propel your organization in a specific growth stage. It is important to understand that marketing prioritization isn’t a process that you do once, and it stops there. It is a continuous process.

The bullseye framework requires continuous tuning

When you finally master a marketing channel which propels you to the first phase of growth, that channel might lose efficacy over time, for several reasons:

Certain marketing channels are well suited for a specific reach. For instance, while using niche blogs to propel your growth in the first phase is a great marketing strategy. Over time this channel might become not sufficient to bring you toward a second growth phase.
As your competitors find out that you stumbled upon an effective marketing channel, they will start to copy your strategy. Until that marketing channel becomes saturated, thus losing efficacy.
While growing your company, you might also be expanding the customer base and the audience you talk to. Thus, a marketing channel that worked to deliver a specific message to a niche might not work to spread that message further as your audience might not be there anymore. Thus you will need to figure out where your audience hangs out to expand the reach of your marketing message and trigger a further growth phase.

Key takeaway

The bullseye framework is a straightforward methodology – presented in the book “Traction – to prioritize the marketing channels that can help to grow your business.

According to Weinberg and Mares, the authors of Traction, this framework can be used to understand what of the 19 potential marketing channels can trigger the growth of your organization throughout the several growth stages.

Related articles:

The Power of Google Business Model in a Nutshell
How Does Google Make Money? It’s Not Just Advertising!
How Does DuckDuckGo Make Money? DuckDuckGo Business Model Explained
How Amazon Makes Money: Amazon Business Model in a Nutshell
How Does Netflix Make Money? Netflix Business Model Explained
How Does Spotify Make Money? Spotify Business Model In A Nutshell
The Trillion Dollar Company: Apple Business Model In A Nutshell
DuckDuckGo: The [Former] Solopreneur That Is Beating Google at Its Game

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Published on August 02, 2019 05:04

August 1, 2019

A Simple Growth Strategy Framework To Get Your Business Out From The Death Zone

You had a brilliant idea, which inspired you to take action. Quit your 9-to-5 job, and start your own company. After a bunch of pitches, you also managed to get some venture capital funding. However, after growing your company to pass the seven-figure mark, you find yourself close to the death zone.

That is a place where the lifetime value of your customer is barely sufficient to cover for your cost of acquisition. Therefore, bringing in an additional customer is a painful process. Where the company’s growth is in jeopardy, and you still didn’t manage to master the proper organizational structure to scale further.

How do you get out from this zone?

Beware of the death zone

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This data is from Nathan Latka’s [list of SaaS companies]

There is a place where no startup wants to be. However, many do fall into that. That’s the death zone. More blindly that happens when a company never reaches that sweet spot between growth, profitability, and cash flows to enable it to build a sustainable business model.

Indeed, if we look at some of the primary reasons startups fail; some of them can be traced back to no market need, running out of cash, pricing/cost issues, and a product without a business model.

As highlighted in the infographic above, successful enterprise companies, from Hootsuite to Qualtrics have mastered three things that those in the death zone might have not:

they understood their key customer.
They mastered the pricing strategy that maximized the company’s growth and profitability.
They structured their sales, marketing and engineering teams around their key customers.

Tuning the customer segments

One of the biggest mistakes most companies make is to choose and pick the wrong customer. That might sound trivial.

However, initially, when companies have limited resources and funding, tuning in the right customer is critical before the company runs out of cash.

Among the biggest mistakes, startups’ founders might make is to want to serve pretty much anyone in that industry.

Instead, proper distribution and sales strategy should identify right away the kind of customer to target. And I don’t mean it in a generic way. You need to be very specific.

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The customer/problem quadrant from the LEANSTACK

For that matter, a tool like a customer/problem quadrant by Ash Maurya might help you focus right away to the customers you can serve when wanting to solve a specific problem.

Therefore, rather than starting from the solution you have in mind. Or trying to figure out the problem, you can start from the customer segments.

You need to be very specific and be able to identify the early adopters. Or those customers that might want to buy your product even if it is not perfect yet. However, it promises to solve a specific problem.

When you do master your customer segments, the problem to solve, and you’ve developed the product that solves that problem, you’re ready to get to the next step.

Raise prices, don’t look for more customers

The mantra of serving more customers wants that successful entrepreneurs need to serve as many customers as possible. This is extremely dangerous, especially in the initial stage of growth.

Indeed, that stage requires a deep understanding of the customers to serve. A strategic assessment of the market. And a deliberate execution. Therefore, it is a great exercise at that stage to understand the least customers you can serve by raising prices as much as possible.

That might sound counterintuitive, as the first examples that are readily available to our minds are those of large tech companies like Facebook and Google; which became successful by serving masses of free users, with an asymmetric business model, financed by businesses and marketers bidding for attention on those platforms.

Those cases, of companies built on a massive and distributed customer base, are more an isolated phenomenon, rather than the rule of thumb. That is why, as a founder or CEO, you might want to look at those few customers to serve, which can make a difference to your business.

For instance, if we look at companies like Algolia (a search engine for websites), it is interesting to notice how of the over six thousand customers, about three hundred might make up around 80% of the company’s overall revenues.

That doesn’t mean you should ignore the other potential customers in the long-run. If your customer acquisition for segments that are less valuable for your business (for instance, because they have a higher churn rate and lower lifetime value) is low, then you might still want to exploit those opportunities.

However, often, those same opportunities come when you already have an established brand and a scalable business model. In most other cases, focusing on the customer segment, which is not in line with the business might be too risky.

Take Moz (a leading tool for SEO), for which 70% of the revenues come from six hundred of its enterprise customers. The company still focuses on SMEs as Moz has an extremely low acquisition cost for those customers. In short, Moz is able to create short term liquidity and cash flows for its business by investing minimum resources on the SMEs segment, even though that is not the primary driver of the company’s revenues.

Once again, Moz is the most established brand in the SEO industry, and it can leverage its brand and business model to execute this sort of strategy.

Beware of the wallet

In the business world, often things might get confusing. That is because we like to generate useless complexity when we can get along with simple heuristics. For instance, we create many categories for companies, like differences between B2B, B2C, B2B2C, and more.

However, we’ve seen how in building up a successful company, once you’ve picked up the proper customer segment, you’ve understood what the highest price you can charge for that segment (based on the value provided) is. A third and critical point is about the organizational structure.

In short, are you going to leverage marketing, sales, or both? Are you going to hire more engineers to add features to your product? And what’s the proper balance between marketing and sales?

Rather than looking at complicated things, I want you to focus on a single idea: the wallet.

For such I mean:

how big is that wallet (the value of the contract)?
Who is going to make the purchasing decision (a person or a group of people)?
What motivates that person or group of people to make such a purchase?
And what motivates that person or group of people to keep your product in the long-run?

In short, usually the larger the wallet value, the more you’ll need salespeople able to interact and meet with the person or people in charge of that wallet. This will imply an organization that leverages on a very specialized salesforce.

Also, it is critical to understand the motivation of the key customers you’re serving. For that matter, you need to look at where’s the wallet, who’s in charge of it (so if it is a person of a group of people) and what motivates that person or group of people to make the purchase.

For instance, if your key customer base is willing to purchase your product because it trusts your brand. Then you know you need to organize your company around content marketing.

Thus your organizational structure will highly focus on hiring marketers and engineers.

Also, you need to understand what makes the wallet holder keep paying for your product.

Therefore, if the key customers are willing to stay with you longer because they know you will keep adding key features to the product, you’ll need to hire more engineers.

At the same time, if your wallet is in the hand of a group of people with mixed motivations, that relationship becomes too complex to be left to marketing and branding alone.

Thus, you will need a specialized, high touch sales team able to understand conflicting motivations among the group of people in charge of the wallet.

And at the same time, those salespeople will need to be able to reassess by time to time how those motivations change, converge or conflict with your offering.

In that case, your organization will be primarily comprised of outside salespeople (those that meet the client face to face regularly) and engineers able to swiftly change the product features and specifics based on the feedback of the sales team.

Key takeaways

There is a death zone that as founder or CEO of a company you want to avoid at all cost.
Often that death zone comes from a misunderstanding of the proper customer segment. The lack of focus on the key customer. The wrong pricing. Or The misalignment of the organizational structure to the key customer.
For that matter, founders and CEO should focus on understanding the key customer. Look for the price point and the acquisition costs that make the most sense to build a viable business. And understand how big, who and what motivates the wallet keeper.
With those things in mind, the founder and CEO can finally build a viable company that leverages on taking care of the key customers. While having a satisfying pricing structure. And an organization structure aligned with its key customer.

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