B2B Growth Insights: Jun 2021
MINI “GROWTH CASE STUDIES” OF THE MONTH
[1] Find partnerships that subsidize your offerings to maximize reach within your preferred customers
Peloton identifies its target demographic as households aged 18-70 with $50K or more in household income. It’s no surprise that the company has launched a corporate wellness program to reach its target customers beyond traditional marketing efforts. Business or corporate partners that sign up for this program can offer subsidized access to Peloton’s membership, high-end cycles, and treadmills. The employers who’ve signed up for the program (ex: Samsung, SAP, Wayfair) aim to use these ‘subsidies’ to attract and retain talent in a tight labor market.
[2] Provide complementary experiences to drive traffic to the core product and generate extra revenue
Luxury retail brands are tapping into the desire for interactions, experiences post-pandemic to appeal to folks tired of online shopping. Enter restaurants. Brands like Dior, Gucci, Louis Vuitton, Browns are opening restaurants in their flagship locations to drive foot traffic, generate additional revenue, advertise their wares in action. Few other brands are experimenting with cafes, bars for the same purpose.
[3] Explore four different types of transactions to create new participants in a marketplace platform
Disruptive innovations target folks who are left out of existing markets i.e., individuals/businesses unable to consume (‘non-consumers’) or profitably produce (‘non-producers’) goods and services. A truly disruptive marketplace platform connects non-consumers and non-producers. The four non-mutually exclusive transaction types that invite these new participants are as follows: (i) smaller supply units – ex: slicing homes into smaller rental units through Airbnb, (ii) bundles – ex: Classpass bundles excess exercise class slots into a membership, (iii) new suppliers – ex: Patreon makes it easier for creatives to monetize their skills, (iv) trust wrappers – ex: blockchain solutions that remove trust barriers in healthcare provider applications.
[4] Earn loyalty by avoiding rewards programs and helping customers develop a sense of community
You can't earn a valuable customer base by forcing people to earn points through trivial means like filling out product reviews, sharing your posts. Create exclusivity. Make customers want to be part of your club. Memberships should speak to the customer's need for self-actualization. A few hallmarks of successful membership strategies to remember - over-deliver on specific customer sub-segments, embrace mythmaking, connect members, offer a steady stream of touchpoints.
[5] Link real-time customer behavior directly to manufacturing decisions to improve time to market, product selection, and new sales
Shein is an online Chinese apparel retailer that’s incredibly popular with Gen Z and young millennial shoppers. The company’s appeal comes from the endless, fast-changing collection, on-trend choices, price points much lower than their fast-fashion competitors (ex: Zara, H&M). Besides tax exemptions from China and the US, Shein benefits from (i) deploying a proprietary technology that uses customer’s search data on their app to inform supplier decisions on design plus production and (ii) selecting suppliers not more than 5-hr drive from Shein’s sourcing hub. These choices reduce the design and production process down to just 10 days enough to capitalize on trends and price points better than the competition!
[6] Build a dedicated ‘growth engine’ to turn ventures into businesses within a mature company
BP’s Launchpad grew a land-surveying solution from a pilot to a fully independent company with a growing customer base within 12 months. The genesis of this accomplishment traces back to the company setting up a dedicated team to increase success rates and speed of execution. This ‘growth engine’ consists of (a) sales, (b) tech, and (c) product talent. The team works on multiple ventures – in different phases: foundation, scale-up, strategic growth – at the same time!
[7] Quantify the virtuous behavior of customers in dollars and communicate it to them after the purchase to boost the recurring buying process
Aetna, the health insurance provider, offers its customers details on the money they save through their insurance. The company compares customer savings to out-of-pocket payments to a medical provider that doesn’t accept Aetna insurance. Similarly, grocery stores always inform their customers about their fuel rewards, coupon savings after every purchase. Communicating these savings are an easy way for a company to reinforce customer actions/behaviors that it values. And it’s also a great way for the company to justify the price it charges while starting a relationship that feeds into a recurring buying process.
[8] Embrace elements of ‘conversational commerce’ across the customer journey to improve conversion rates
Conversational Commerce “uses AI such as chatbots, RPA, and personalized push notifications for brands to facilitate sales and increase average revenue per user”. A new study found that conversational commerce channels can facilitate spending of over $290B by 2025. Several interesting use cases pop up while thinking about social interactions – (i) Blueprint offers an e-commerce SMS platform for improving retention and personalized upsells, (ii) Great Jones is a cookware brand that uses a free, direct SMS line to provide real-time recipes and cooking tips, (iii) Betty uses SMS as a product discovery tool to identify relevant childcare products.
INTERESTING BOOKS OF THE MONTH
Key Takeaways: Within a decade post-Prohibition, the American beer industry grew close to 900 breweries before losing 40% of them due to WW2 and gradually getting to a point where the top 10 brewers made 93% of beer by 1980. There was a spike in brewery count starting from the late 1980s with the surge of craft beer until big beer intervened starting in the 21st century. This book talks about the craft beer journey. Following is a cross-section of big beer’s decisions to dominate craft beer -
Thinking like streaming companies: I’ve written in the past about how Netflix and Spotify compete to win a share of your viewing and listening habits. The expansion into craft beer and other niche beer offerings is big beer’s idea of “capturing occasions” (ex: Super Bowl, night out) from other beverages.
Sales pitch to craft breweries: A sale to big beer is appealing to small breweries once you consider big beer’s powerful distribution network, access to capital, increased access to raw materials, exposure to newer markets.
Illusion of choice: Try to pay attention to how many true craft beer brands exist out there. Even the local brewery you may be fond of is probably a big beer operation. The same goes for imports!
Prioritizing quantity over quality: After acquiring a successful regional craft beer brand, AB InBev normally moves production to one of its big facilities sometimes in a whole different state even while celebrating the brand’s local history.
Niche messaging: To win over people’s beer preferences, big beer sometimes also acquires blogs, magazines, and rating sites to drive under the radar, organic conversations on local craft brands that still fall under its huge portfolio.
Key Takeaways: This short and accessible book revolves around tools for avoiding bad customer conversations for idea validation as they aren’t just useless but also lead to bad investment decisions.
The Mom Test offers 3 rules to craft good questions that even your mom can’t lie to you about: (i) talk about their life instead of your idea, (ii) ask specifics in the past instead of opinions about the future, (iii) talk less and listen more
Results of a good meeting: (i) concrete facts about what the customer does and why they do it, (ii) the customer shows they’re serious by giving up something they value like time, reputation risk, or money, (iii) they’re moving to the next step of your funnel and getting closer to a sale
5 key elements to ask for an idea validation meeting: (i) vision – half-sentence of how you’re making the world better, (ii) where you’re at and what you’re looking for, (iii) where you’re stuck and how you can be helped, (iv) show that they, in particular, can provide that help, (v) ask for help
BONUS GENERAL BUSINESS READS
Study – ‘Spongebob’ and ‘Transformers’ cost US taxpayers $4 billion
Why are investment funds obsessed with old songs?
Why gross margins improve over time for tech firms focused on digitizing industries like energy
Survey – Bulk of U.S. consumers prefer to sit through ads on streamers if it saves them money
Is your company ‘woke washing’?
The B Impact Assessment – measure your company’s impact on workers, community, environment, and customers
Why buy-now-pay-later financing is so attractive
Banking the Unbanked – El Salvador’s move to accept bitcoin as legal tender
What’s Netflix exploring to tackle slow subscriber growth? – e-commerce, gaming, podcasting
How poultry and a pandemic made Tractor Supply one of the hottest retailers of 2020
Why brands like L’Oreal are creating their own TV shows
80% of tech could be built outside IT by 2024, thanks to low-code tools
Visualizing the biggest companies in the world in 2021
Interview with Roger Martin – Strategy is about imagination, choices, and capabilities
Amazon and other tech giants race to buy up renewable energy
The smartest way to finance clean energy that you’ve never heard of
How America quietly lost 2,700 ships
The next LinkedIn won’t be another LinkedIn
What’s an appearance on Shark Tank worth to direct-to-consumer brands?
Why America doesn’t really make solar panels anymore
Keep Learning and Carry On!
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