B2B Growth Insights: July 2021

Written By Bryan Elanko
July 2021 Newsletter.jpg

8 MINI “GROWTH CASE STUDIES” OF THE MONTH 

[1] Pick a very specific niche for a lifestyle strategy and supercharge growth via events and community 

Tractor Supply Company (TSC) considers itself a ‘rural lifestyle brand’ and offers everything that fits into the ‘tractor lifestyle’ including animal feed, tractor apparel, fencing. The focus on farm-specific needs is the key differentiator versus competitors like Home Depot, Lowe’s. The lifestyle strategy of TSC includes the hiring of experts with farming and ranching experience, partnerships with local organizations like pet clinics for on-site events, choosing store spots based on the number of cattle farmers, offering a loyalty program, among others. The focus on folks that “enjoy living the rural lifestyle” powers Q/Q growth rates for revenue and profits close to 50%.  

[2] Find markets with some regulatory friction to aid customer retention and expansion opportunities 

Clear offers an identity verification solution for a faster experience through airport checkpoints – a highly regulated space. The company’s solution benefits from several built-in market and regulatory features – (1) limited space for kiosks in any terminal, (2) easier rollout to multiple airports after clearing regulatory hurdles, (3) upfront friction for a new customer to set up an account (ex: fingerprints, other biometric info). These ‘sticky’ features and an annual subscription fee helped Clear increase revenue even during 2020. With its success in a regulated space, Clear now has the brand identity and credibility to offer an identity platform for multiple use cases including healthcare records like vaccines, COVID tests (through its Health Pass feature), extending into the check-in process for sporting events, concerts, hotels.   

[3] Win traditional non-customers by eliminating tangible/intangible gatekeepers in every interaction  

We can realize the true promise of e-commerce through the democratization of our value delivery systems. The removal of biases, delays, roadblocks, non-value adding intermediaries while making different types of transactions accessible for non-customers.  Tesla and Carvana circumvent the dealerships known for their lack of trust by leveraging the increasingly well-established online buying behavior. In-home vital system assessments like Levels, Base offer a chance to bypass the delays during medical emergencies from doctors and nurses trying to unravel the problem through endless questions.  

[4] Decide on expansion plans for your marketplace business based on constraints and network effects 

There are four different types of marketplace businesses based on supply vs. demand constraints and local vs. regional vs. global network effects. The ideal strategies to grow change with each type of marketplace: (1) Supply Constrained – ex: Uber – push demand to your best suppliers (drivers) as possible. (2) Demand Constrained – ex: Amazon Prime – innovate products to attract users and drive personalization. (3) Global Network Effects – ex: Airbnb – opt for blitzscaling i.e., scale in high-demand locations. (4) Local Network Effects – ex: DoorDash – create a divergent, novel go-to-market strategy for local networks (DoorDash’s suburban focus).  

[5] Kickstart an AI flywheel using customer satisfaction to constantly delight customers into the future 

Lemonade offers homeowners, renters, and pet insurance at low prices with fast payout rates. By delivering on their core promise repeatedly, their satisfied customers use their system more frequently and provide data. These same customers refer Lemonade to their friends, thereby bringing in additional users. This “growth generates predictive data, which improves machine learning, and increasingly accurate predictions further delight customers”.  

[6] Rewire your organization to support selling on outcomes or impacts to improve win rates  

Qualtrics dominates the survey software market despite SurveyMonkey getting a head start of 3 years! One of the reasons for Qualtrics’ success is a 3-pronged, organizational approach to winning customers. For starters, the company put the focus entirely on selling outcomes and impacts vs. selling software. This focus coupled with access to cheaper Utah labor (vs. Bay Area) and relentless pursuit of C-suite executives helped them win the software market with high net retention rates despite a much more expensive product compared to the competition.  

[7] Onboard new customers for deep products by showing value through ‘physical engagement’  

Amazon, Warby Parker, and several other online retailers are opening new stores while traditional offline retailers are closing theirs. Part of the reason is that customers prefer to inspect certain products in detail (‘deep products’) in a physical store before they purchase them. What does this mean for retailers that sell products which need some sort of physical engagement? (1) Offer a promotion for deep products in-store to increase spending, (2) Train sales folks to assist customers in the in-store experience, (3) Encourage new customers to initially purchase a deep product in-store.  

[8] Pay a premium to own the category king in an emerging category and accelerate your future  

Think about what’s common in the following acquisitions: Google acquired YouTube in 2006, Amazon acquired Twitch.tv in 2014, Facebook acquired WhatsApp. Each acquisition was considered crazy at its time but still turned out to be an incredible choice than any acquisition to consolidate a slow-growth category (ex: Kraft acquisition/merger with Heinz in 2015). Wall Street understands category consolidation better (ex: cost savings) than the valuation of higher risk, future-focused acquisitions in emerging categories.  Yet the latter type of acquisitions offers better payoffs. The key questions you want to ask are: “(1) What is my assumption about the future, and why? (2) Do I want to bet on the past being the same or the future being different?” 

2 INTERESTING BOOKS OF THE MONTH  

[9] “You’re Invited: The Art and Science of Cultivating Influence” by Jon Levy 

Key Takeaways: The central thesis of this book is the ‘Influence Equation’ which states that “our influence is a by-product of who we are connected to, how much they trust us in that capacity, and the sense of community we share”. My top 5 picks for actionable insights from this book –

  • IKEA Effect – The fastest way to build trust between people who have nothing in common is to have them put collaborative effort into a common goal or problem. Another reason why a joint activity with clients like a hike, a fitness class, volunteer work, and art projects work better than expensive dinners.

  • Connecting with Industry Influencers – If you want to be noticed by and connect with industry influencers, you need to create something new that stands out. You want to ask yourself: How can I be generous or create a space of generosity?

  • Design Backwards – When it comes to developing profound results, influence, community, and so on, we must design backward. What do we want people to feel, think, and do? What will lead to this type of membership? What attracts the right people to engage in this way?

  • Move Away from Galas – For cause-based organizations, focus more on relationships and creating novel low-cost experiences and less on the glitz and glam. When a cause is integrated into a person’s social circles and routines, participating, and donating become a natural expression of what they care about.

  • On Company Onboarding – A simple addition of an hour conversation exploring what people can add to the team signals that they are valued and have a place to grow and contribute.

[10] “Cyber Crisis: Protecting Your Business from Real Threats in the Virtual World” by Eric Cole  

Key Takeaways: The central thesis of this book involves 2 questions that any company needs to ask itself: (1) What is the value and benefit of its information? (2) What is the security risk or exposure? Asking these questions can help a company strengthen cybersecurity to preserve confidentiality, integrity, and availability. My top 5 picks for actionable insights from this book –

  • It’s your responsibility to recognize, enable, and correctly configure the security features of any device, program, or application you or your team use.

  • You should always ask yourself: What is my critical data, where is it located, and who has access to it?

  • Always back up your critical data to offline storage.

  • Prevention is ideal but detection is a must. The key to security is proper detection. Turn on monitoring for all critical accounts.

  • Always act under the premise that you are compromised.

BONUS GENERAL BUSINESS READS

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Bryan Elanko
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B2B Product Marketing Insights: Aug 2021
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B2B Growth Insights: Jun 2021