The YO Moments in Your Business

This is a guest post by Kirk Wagner. He is a growing business owner. He tweets at @kwagnerimt.


You want to grow your business.  Your potential investor says “Yes” sounds great but “nO” it’s too risky.

Sales are down.  Yes!  An opportunity to engage your boss on your customer jobs to be done analysis. Your boss’s answer: a 5 year sales projection STAT.  nO!

Yes!  You have a customer that says your product solves their problems.  But then says it costs too much. nO!
Welcome to the YO moments in your business.

A YO is modernity’s answer to opacity and zero failure attitudes. YO’s sound wise but ultimately they are dangerous because like invisible tentacles YO’s strangle an important business process; namely iterative learning thru small failures.

Whether you are using wisdom from a trusted advisor, data driven decisions, or just your instincts train yourself, your team, to identify and dislike YO’s. Then get past them.

#YO if you recognize a YO moment in your business.

Why you shouldn’t use your competitor’s pricing as your benchmark?

This is a guest post by Grishma Govani. Grishma builds and grows communities at early stage startups. She focuses on growth and customer retention by way of word of mouth, analytics and user behavior. You can find her on twitter as  @StrangeLoops


As entrepreneurs, most of us have studied our competitors thoroughly at least twice: once before we start building a product and once before we set our pricing. Before we start building a product, we gauge the market by understanding what products our competitors are selling, where they are lacking and what their customers are unsatisfied with. When it comes to pricing, most of the time, we wait until we are almost ready to ship our MVP.  At this stage, we tend to price our products proportional to the amount of value we are adding over our competitors.

For example, if we believe our customers will save time by using our product over our competitors, we will calculate how much time we are saving our customers. We will also try and understand how much that extra time is worth to our customers. The more time our customers save, the more value our product creates leading to a higher price point.

 The problem with this pricing method is it is a very short-sighted strategy. By using our competitor’s price as our benchmark, we will completely miss seeing all the new ways our product can possibly provide value to our customers. The portable bar code reader was one such product. The company that first made them used their competitors as benchmark to price the reader. They priced their product proportionally to the amount of time they were saving customers over their competitors. But they missed understanding how else they were adding value to their customers by completely allowing them to redesign their supply chain and logistics. Comparison pricing led them to undervalue one of the most innovative products in the market.

One effective way to address undervalued pricing is to get a full picture of where you plan on adding value even before you start building the product. You can start by mapping your customer’s minimum expectations and your competitor’s performance on the following three scales – product performance, operation/cost excellence (price) and service/community as shown in Dr. Barbara Kahn’s chart below for leadership strategies.

strat_lead

Based on this map, you can design a product strategy to add superior value on one of the three scales where customer’s expectations are high but are not being met. You, also, need to make sure your product is good enough on the other two scales too. This will form your hypothesis for a market strategy which you can then validate.

Evaluating your product along these three scales is a great way to understand value pricing while you solve actual problems your customers will pay a premium for.

Further Reading:

Read how a very innovative portable scanner completely missed the boat on pricing when they only looked at their competitors’ prices. Also, it gives an in depth look at how to develop your pricing. (http://www.mckinsey.com/insights/marketing_sales/pricing_new_products)

Here is a good article on why entrepreneurs are bad at finding competitors and tips on how to find your competitors. (http://www.berserkia.com/blog/doing-a-competitive-analysis)

BAD Metrics

This is a guest post by Ron Shevlin.  Ron  is a senior analyst at Aite Group where he specializes in retail banking issues including sales and marketing technologies, customer and marketing analytics, social media, customer experience and consumer behavior. Find Ron on Twitter at @rshevlin or at his Snarketing 2.0 blog.


bs_metricOrganizational Effectiveness experts (sometimes called Change Management experts) have a saying: “You get the behavior you pay for.”

Simply put, it means that an organization’s rewards and incentive structure dictates employees’ behaviors. Pick the wrong metrics, get the wrong behavior.

If your primary measure of customer relationship success is the Net Promoter Score (NPS), you’ll get employees who will stop at nothing from getting customers to give them a top-box score on a survey. Unless, of course, you’re smart enough to understand the behaviors that drive the intention to refer.

And if you are smart enough to understand that, then you wouldn’t need to measure “intention to refer.”

NPS is an inferior metric because (among other reasons) it captures attitude, not behavior. Even worse, it captures attitude regarding future behavioral intention. So you intend to refer a company to your friends or family? What’s the actual likelihood that you actually do it? You intended to lose weight, stop smoking, and get your financial life in order last year (and every year before that). But that didn’t happen, did it?

NPS proponents tout the metric as a “simple” metric, but simple doesn’t make it right, nor does it make it free (or cheap). There is always a cost to collecting survey data from customers, and always trade-offs that must be made, because it’s impractical to survey every customer.

The old world of marketing relied on survey data to collect attitudes, however, because, even with its limitations, it was more effective and efficient than capturing the actual behaviors of customers. The old world of marketing also relied on demographic data about customers and prospects because they were relatively easy to capture, both through external sources as well as from internal data collection efforts.

The adoption of online and mobile technologies holds promise for a new set of metrics, however. Metrics based on actual customer behavior, and not just attitudes and demographics.

It’s not that marketers haven’t had behavioral data about customers. They have. But typically that behavioral data has been limited to actual purchase behavior.

The purpose of the attitudinal and demographic data, however, is to help predict and understand sales behavior.

The new technologies give marketers an opportunity to create, track, and measure a new set of metrics. Metrics based on actual consumer behavior that relate to non-purchase related behavior regarding product research and referral behavior.

The challenge marketers must meet is how to create a balanced portfolio of metrics that include behavioral, attitudinal, and demographic (i.e., BAD) factors.


Conscious Coffee

This is a guest post by Andi Debel, founder of socially conscious coffee company.

I am starting a socially conscious coffee company named – Conscious Coffee. We deliver fair trade certified coffee directly from the farmer to companies and consumers.
We buy the coffee exclusively from Unions for Cooperatives in Ethiopia. Because we have found that this is where it is necessary to support the coffee growers.
They used to get prices down to 0.5 cent per pound of coffee cherries. Now they get several 1000% more, and are able to develop their lives, build new houses and put
their kids to school (schools build by the Coffee Unions). Our target are the 50% of all consumers that according to Andersen institute are socially conscious, and are
willing to pay more for those products. We are able to charge a regular coffee price for world class coffee, and pay a price thats 250% higher than the fair trade minimum.
securing that more social projects can be started in Ethiopia.

Understanding the buying scenario

This is a guest post by Noah Farb. He runs hrvst3D, which sells 3D-printed jewelry and accessories in the San Francisco Bay Area. His background is in distressed real estate acquisition, and coaching tennis. Noah resides in Berkeley, Ca. He tweets at @nfarb.

You too can write for a select audience. Start here.

 


I recently launched a business that designs three-dimensional models of Bay Area landmarks and sells them as jewelry and accessories. They are designed using CAD software and made using 3D-printing technology. We sell mostly through design-oriented retailers.

Within a month of showing our product to customers we made an observation that shaped our product positioning since. The insight was that most of our sales were impulse buys, purchased in addition to another item.

We adjusted the pricing to make customers comfortable adding to another purchase, and we encourage our retailers to display our line by the register so it is seen at check out.

Simple insight. Big impact.

ABC of #ResponsiveOrg

This is a guest post by Praveen Rajasekar. He is an entrepreneurial Product Marketer and Trusted Go Getter; MBA Grad with 7+ years of technology industry experience; possess strong marketing and analytical skills, with an aptitude for creative solutions. Believe in ‘being the change I wish to see’! Praveen tweets at @tweetpraveen.

Here is how you can get your 100 words guest post in this blog.


As a kid, I was taught this prayer: “God give me the strength to accept the things I cannot change; courage to change the things I can; and the wisdom to know the difference”. IMHO, this is relevant to everything. But most of the organizations seem to fail to understand/acknowledge the need for change. Even if they do, it is usually too late. In my career, I have had the opportunity to work in several organizations, of varying sizes as an employee and as a consultant. There is always an inertia for change. But acknowledging the need for potential change and having an inherent belief in what we do is quintessential for an organization to become The Responsive Organization.

In my opinion, an organization that quickly responds to changes in the needs of their customers both internal and external (Agile) without the fear of cannibalizing its own successes or products or processes (Bold) and inspires everyone involved (Catalyst) to deal with ambiguity will become The Responsive Organization. But it is easier said than done, given the complexity of businesses, the ‘how’ to build or transform an organization into responsive one, doesn’t seem to have a standard prescription.

In summary, the ABC of the Responsive Organization #responsiveorg  is Agile Bold Catalyst of Change-Agents (for the people and by the people involved – employees, customers and partners).