B2B Growth Insights: May 2021
MINI “GROWTH CASE STUDIES” OF THE MONTH
[1] Create connections between your customers after you deliver on your core promise to them
An easy way to understand platform business models is using the ‘hub-and-spoke’ architecture. The benefits from a platform mindset occur in 3 phases – (i) “the producer, or the hub, can connect to more consumers, or spokes, thereby increasing value and market share”, (ii) spokes provide feedback/reviews to the hub, (iii) consumers (spokes) connect with each other. The takeaway for companies is to try and build a spoke-to-spoke system on top of their existing hub-and-spoke model. The connections you enable between your consumers and the community you create becomes your flywheel for growth and harder for your competitors to disrupt.
[2] Launch buyback programs to create new retail channels and sales using your existing footprint
Our access to inexpensive furniture leaves quite the footprint in emissions and overall waste. Americans throw out about 12 million tons of furniture annually. Firms like Ikea have launched “buyback programs so customers can buy refurbished pieces”. The whole furniture resale industry is expected to hit $16.6B by 2025. A buyback program for a company like Ikea builds on brand recognition, goodwill already in the marketplace and allows customers to buy specific products previously unaffordable.
[3] “We branded a previously unbranded industry and de-commoditized a previously commoditized product”- FIGS, Inc.
FIGS is a DTC brand that sells scrubs in a variety of colors and styles to healthcare professionals. It’s an unusual brand in the DTC world that usually faces increasing per-unit costs along with ever-growing customer acquisition costs. FIGS’ growth strategy in an unbranded industry allowed it to (1) “build a community and lifestyle around a profession”, (2) “become a category-defining lifestyle brand”. The truth is in the numbers: 26 cents for every dollar in pure profit, 60% repeat purchases.
[4] Select micro-influencers who follow a relatively small number of influencers for your brand partnerships
Back in December last year, I covered the trend of companies like Walmart, TopGolf turning their employees into small-scale influencers. This effort overlays on the existing trend of a company to partner with a niche micro-influencer (1K to 100K followers) to ‘influence’ a select set of users. The latest research offers an interesting hack in selecting these micro-influencers – “marketers should consider the number of users these influencers are following…having fewer sources can signal independence, inspiration, and potentially greater influence”.
[5] Maximize digital investments via timely brand partnerships to boost customer loyalty without any change to daily operations
McDonald’s launched their Famous Orders program last year (re: partnerships with Travis Scott, J. Balvin) in the US which ended up boosting their digital sales. Their latest deal with the pop group BTS takes this effort globally. It includes a limited-edition merchandise line, BTS meal, digital surprises featuring BTS in the McDonald’s app, TV spots. Among the list of wins for McDonald’s with this partnership: (i) easy differentiation from the competition, (ii) immediate improvement in margins, (iii) driving customers to its app to boost loyalty and sales, (iv) no change to their existing restaurant operations.
[6] ‘Unship’ product features to increase your product’s NPS and improve organic customer acquisition
Product teams forget to review the value of a feature/product regularly after the general release. ‘Unshipping’ – the process of removing a feature or product that has shipped – improves both internal metrics (ex: decrease in support tickets, increase in win rate) and customer impact (ex: increase in NPS, organic acquisition). Mixpanel’s choice to focus on its core of product analytics led it to discontinue a previous feature called Messages & Experiments. This decision led to the tripling of its NPS over 18 months, a retention boost, increased win rates against competitors, and a decrease in support tickets and support costs.
[7] Expand immersive experience to include digital and physical worlds to increase lifetime value per subscriber
Streaming companies – Netflix, Amazon Prime Video, Hulu – were able to show impressive subscriber growth during the pandemic due to the demand pull-forward effect. As relatively new services like Disney+, HBO Max try to increase their clout in this space, the battle will switch to customer retention and improving customer experience in the foreseeable future. One suggestion is to rely on merchandising, licensing, unique experiences to let a subscriber interact with their favorite content universe. An example scenario – “Disney can collect $6.99 per month from a Disney+ subscriber. This subscriber can also buy a $30 official Raya and the Last Dragon T-shirt, a one-park ticket for Disneyland for $149, or even, at the high end, a two-bedroom villa at Copper Creek Cabin at Disney’s Wilderness Lodge”.
[8] Embrace venture buyout to quickly scale and unlock the full potential of internal digital ventures
Intrapreneurs face challenges with their ventures for a range of reasons – be it initial funding, winning additional resources, or gaining legitimacy within the parent company. The proposal of a venture buyout (VBO) “involves an established company partnering with a venture capital firm to spin out an internal venture”. In essence, VC firms would allow their scaling playbook to come to life inside established companies. The established company benefits from tapping into the VC ecosystem, driving accelerated growth, attracting the right entrepreneurial talent, to name a few. The venture itself now benefits from a clear time frame to go public or be acquired while embracing an independent identity from the parent company to attract new customers.
INTERESTING BOOKS OF THE MONTH
[9] “Bad Blood: Secrets and Lies in a Silicon Valley Startup” by John Carreyrou
Key Takeaways: The story of Theranos as known today was shaped by the great investigative work done by WSJ’s John Carreyrou. I’m structuring the takeaways here (in no order) as a checklist of sorts using the Theranos story to help analyze startups better or validate them effectively for investment or employment.
Review the list of board members and their roles: Theranos famously used major political figures from yesteryears that had no exposure to the pharmaceutical or biotech industry as their board members to gain credibility and appear attractive to newer investors and employees.
Go behind the mechanics of the prototypes: The prototypes that Theranos would use during presentations didn’t always work anytime investors came to view it. An easy checkpoint for any new investment should’ve been a working prototype.
Follow the downstream effects of the major innovation claim: Theranos’ claims were built on running a laundry list of tests on just a drop of blood. For this claim to pan out among other things – (1) there needs to be enough volume of blood to accommodate multiple tests, (2) all these tests would have to occur in a small device that packs multiple instruments.
Don’t let FOMO drive your decisions: Safeway overlooked discrepancies in the tech evaluation process and continued to finance their partnership with Theranos simply because they didn’t want to miss out on ‘game-changing tech’.
Research the marketing footnotes: The preliminary marketing literature from Theranos on the accuracy of their tests pointed to one specific study. Any straightforward analysis of the study would’ve pointed to a ‘big leap in logic’ to get to that accuracy claim.
Key Takeaways: The authors of this book teach a course called “Humor: Serious Business” at Stanford’s Graduate School of Business on how to use humor and levity to transform their future organizations and lives. A collection of a few interesting tidbits from the book below,
When there is serious work punctuated by levity – that’s where we find meaning.
Humor is a powerful leadership strategy to humanize oneself to employees, break down barriers, and balance authority with approachability.
There are 4 primary humor styles based on content and delivery (find your style here) – Magnet, Stand-Up, Sweetheart, Sniper.
Use laughter to bring these 4 benefits into the workplace: power, bonds, creativity, and resilience.
Organize a ‘Bad Idea Brainstorm’ to uncover new business/product insights. Explicitly ask your team for the silliest, craziest, worst possible ideas they can think of – the ones they think have no chance of working.
BONUS GENERAL BUSINESS READS
Why dead trees are ‘the hottest commodity on the planet’
“Gross Ecosystem Product” – UN-approved concept that quantifies how nature contributes to economic activity or human wellbeing
The only way to create the future is to pay attention to the outliers
Is Wayfair a home brand or a tech brand or a logistics brand or a design brand?
Rental companies buy up used cars as the chip crisis get worse
How Pepsi acquired the world’s 6th largest military
Netflix’s 3 steps to employee freedom: increase talent density, increase candor, remove controls
ESG investing to reach $1 trillion by 2030
Companies ignoring ESG may become ‘uninvestable’
Avoid common mistakes by designing a personalized experiment flow
The new world of “going public” – pros & cons of IPO vs. SPAC vs. Direct Listing
Bias is a big problem. But so is ‘noise’.
Banks that fail to use an internal price on carbon are assuming a high degree of warming
How parking destroys cities
Shopify’s Playbook: How to kick start the carbon removal market
How ‘Zoom’ became the ‘Kleenex’ of video calling
The world economy is suddenly running low on everything
How Equinox is transforming into the ‘HBO of fitness’
These 4 paradigm shifts will define the next decade
New industrial startups require a new category of venture capital
Keep Learning and Carry On!
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