Starting To Become Market Driven

Really knowing who your customers are a couple of years after launch is surprisingly hard for eCommerce companies. When the company first launches every sale is noticed: alerts are set up to see when a sale happens, the entire company will talk about it, and there is a good sense of who is buying and why. A few years into a successful eCommerce company the marketing team becomes removed from the customer. People start focusing on improving metrics like click-through-rate, average order value and conversion rate. These numbers allow revenues to grow without knowing who is buying and why. Getting back to knowing the customer isn’t easy, but here are a few steps I’m taking.

Regular Phone Calls

Every week I’m calling customers to understand why they buy from us, what problems our sign solves, and what experience they have with our company. The purpose of these calls is discovery. I’m looking to get a sense of the psychology that drives purchase behavior. Good information comes from these calls, but they don’t help quantify the problems. In a month or two, I’ll start sending out surveys to see how many people are affected by the problems I’ve discovered. Another technique to reach the customer is customer visits.

Customer Visits

I’ve done this intermittently so far, but it will become a bigger focus in the near future. Seeing how people use your and competitor’s products is enlightening. There are small details of the user experience that often get overlooked during the design of the product that become apparent when you can see a customer use the product. 

Here’s a small example: we sell double-sided tape that could be used to mount these signs without the masking tape showing, giving a more professional look. We don’t go out of our way to let people know about it on the site, but the double sided tape would have solved the customer problem and resulted in more revenue for us. 

Data Mining

Getting customer data from your database is always a great thing to do. Figuring out what variables matter, writing queries, formatting data, and then running tests can take awhile. However, this can be a very powerful tool to identify different types of users based on behavior. SPSS is a great software package to use for this purpose, but Excel and add-ins can go a long way to replicating SPSS functionality at a much lower cost.

Usability Testing

I’m going down the usability testing route for my fist time next week, but expect great things. I’ll write a post with more details about what I tested, how I tested it, and lessons learned after the actual tests. 

Of course, all of the time spent talking to customers and understanding their pain could be a waste of time if actionable ideas don’t come out of it, or the execution on those ideas are poor. More to come as ideas from the market focus get put into practice.

Belmont Menu Needs Help

Had dinner at Belmont tonight and spent about ten minutes looking at the menu before I figured out what I wanted to eat. The menu layout made it hard to see what was available. Whereas most menus start with appetizers, move to soups and salads, then entrees and desserts this one seemed to have no pattern. 

 

I had no idea where to start looking or how to find what I wanted. I eventually figured out that the menu goes top to bottom, left to right. After discerning the pattern it was pretty easy to order. Conventions are useful, even in small things like menus.

Why Give A Sense of Mission

A sense of mission is one of my favorite parts of any organization. It creates team camaraderie, makes decision making easier, and makes people happier. One of my past employers did a great job giving a sense of mission to the company. For a year, the team of 15 people or so felt like the company was going to change the world… the world of freight at least. It made going to work an a fun experience and created a tight bond with early employees. That sense of mission wasn’t lost, just diluted as new people were hired and they didn’t have the same indoctrination as early employees. 

With the new marketing team there isn’t a sense of mission yet, and creating that sense is going to be a big focus. Here’s why.

It creates a shared goal. Shared goals have the effect of creating mutual trust (assuming shared effort), which leads to a less stressful work environment, greater information sharing, and less micromanaging.  These qualities help speed up decision cycles, allowing the company to move productively faster. It also helps people focus on the larger, company goal. 

It makes job intent more apparent. Team members make decisions everyday, and if the goal is understood, the intent of their jobs is more apparent. Search marketing people might be hired in a web startup to increase revenues from Google but they can contribute a more. For example, BAS has a mission to be the best source of signs that people and businesses need most. How does search marketing help? By helping the usability team understand what signs people need and what they call those signs. If the job were just, “grow search profitability” then the team member would have less incentive to help. When the mission is “To be the best source” each marketing team member has a better understanding of what the company TRULY wants to accomplish and how that person’s skills fit into the goal. 

It makes work more satisfying. Money is great and having a job in this market is fantastic. However, working for more than money makes people happier. Because when the job gets stressful and the money doesn’t feel like enough, if people are motivated for other reasons they become more resilient. Think of it as happiness diversification. It’s why people should live well rounded lives with work, friends, family, civic participation and hobbies. When one of those areas is difficult the others can provide support. With a mission, when the money isn’t enough, or the chances of an IPO start dwindling, mission provides another reason to value work.  

It creates trust in management. When the company grows beyond one room every-non manager’s visibility into decision making decreases. Employees will hear a decision but not the reasoning behind it and question why it happened. Some decisions will make no sense. When the mission is apparent people can evaluate the decision through the mission lens – “How does this fit into the company’s mission? How does it support it?” Decisions make more sense, new ideas can be evaluated with the mission in mind, and the managers seem more consistent, creating trust. 

Having a sense of mission is important, but instilling it in a positive way is just as important as having one.

Two Quick Observations on Usability And Marketing

I walked into the women’s restroom for the first time in my life. Complete accident. Wasn’t my fault. I was at the new AT&T center checking out the venue for my eventual wedding and needed to use the facilities. I looked at the sign pointing to the restroom and the man was on the right of the sign and the woman on the left. I headed towards the restroom, opened the right door and surprised myself quite a bit as a nice, understanding woman told me I was in the wrong room. Lesson to designers: if you’re going to start a convention make sure to keep following it. If all of your calls to actions are on the right, don’t put them on the left for just one page, keep them all in the same place.

The other observation is a personal note on anchoring effects. I have an obsessive personality and recently got on a boot kick. Cowboy boots ain’t cheap, and I would never pay for shoes what I pay for cowboy boots. I just bought my second pair and I’m pretty amazed. However, I noticed that they seemed pretty cheap when compared to $500 or $2,000 boots. Having that upward price anchor really made my boots feel like a frugal purchase.

Create The Right Teams

Functions Versus Teams

My limited experiences with early stage, web companies leads me to believe that when building out a marketing team the founding group thinks about building a specific function instead of a cohesive team, unless the company is very well funded. It makes sense, why spend hundreds of thousands on employees you don’t need until you need them. The result though is that there are marketing functions but not a marketing team. Different managers or directors end up owning bits and pieces of the marketing team and the marketing group doesn’t really view itself as a marketing department.

Group Related Teams

The first thing to do is assess what functions make sense together based off the people in the company: product management, product marketing, communications, sales, et cetera. Then reorganize the team members to be on their respective teams. BAS has organized the team around channels and design. For example, the sales and internet marketing people are on one team and the design team is on another. There are a couple of people still floating in undefined groups, but those should sort themselves out as the company continues to grow. 

Shared Identity 

After the teams have been reorganized they have to start talking to each other about the on going projects, problem solving together, and creating a community. Out of this community will naturally emerge a culture, that as long as its positive, should be encouraged. Negative aspects like belittling team members should be squelched as soon as possible.

If possible, have everyone in the same room including the direct manager. Having the manager in the same room helps the spread of information, creates a better bond between team and manager, and makes it easier for the manager to see how the team is developing. One of the great things about a startup is the access to the founders in the beginning of the company, but as head count grows the management team starts to move into offices. Employees lose site of the leader and the company can start to feel less connected to the employees. 

Group projects and team activities help to build the cohesion as well. People need to understand the strengths and weaknesses of each person and created shared experiences. Team building happy hours never hurt either, but more to come on building trust later.

New Blog Focus: Building a Marketing Team

One of the great things about a seed stage startup is the relationship built among the founders and early employees. In the beginning, everyone might sit in the same room, hear the same conversations, and establish a bond that comes with the common struggles. The company is relatively transparent to every employee and communication is easy. The goal of each action is usually visible. As the company grows, new people are hired, offices are spaced out and the sense of connection, communication, and shared mission starts to break down. 

A common issue for successful startup companies is to hire people to fill a role without taking the time to teach them how their role fits into what the company does. The founders usually have the right skill set to help get the company off the ground, and they hire  someone when they need a new skill set that isn’t easy to learn or when there isn’t enough time to focus on that skill. The owner’s new hire might not have the same skill set or passion that initially made the company great and the owner needs to take the time explain how the new person’s effort fits into the value creation chain of the company.

I’m fortunate enough to work for a great company that has grown rapidly, but so quickly it didn’t have a chance to integrate the marketing team completely into the company. This blog is going to shift focus to talk about my lessons learned in working with the marketing team to create the marketing department and finding its place in the company.

VCs Killed Web 2.0

It’s Cheap to Start Web Companies 

When trying to raise money last year, I heard and read the same thing: it’s cheap to start a web company. Two people boostrapping a company could get it off the ground for $50k or less, two people full time could do it for $150k. Starting a web company is cheap, but the past five years have distorted what success means, and damaged the fitness of current companies. 

VCs Reduce Product Management Risk for Google

The VC model has served to reduce risk for large companies looking to build new products by reducing the risk of product failure (YouTube). IPOs have not been an exit possibility in nearly a decade, so startups have looked towards big companies, like Google, Yahoo or Microsoft to acquire them. In order to get bought by one of these companies, the startup company must build a product that complement’s the acquirers current strategy in some way (not that all acquisitions made sense). 

A publicly traded company would prefer buying a startup over building in house because of the need to show consistent earnings growth, the public nature of failure, and the high probability of product failure. Instead, the large company watches the market for new companies that are gaining market acceptance and then buy. The company gets the product it wanted (maybe photo-sharing), the product exists, has a user base, a good team to keep growth up, and product usage is growing fast. All of the things the company wanted, with significantly less risk. 

Business Models Make You Expensive 

Because the acquiring company has a working business model and cash, the startup does not need to worry about a business model. “When we’re acquired, we can use company X’s [insert feature/ad model] to monetize.” In fact, having a successful business model would raise valuations significantly as the startup would need to sell out and could wait for a better exit opportunity (Facebook). 

VCs, therefore, tell entrepreneurs to start web companies that are cheap and build a product that people will use, ignoring the pesky business model that will make an exit opportunity even more difficult. This is great when capital is plentiful, but the current market conditions are shifting. 

Large companies will start hoarding cash, acquisition will be put off, VCs will reduce funding, and those startups that were great startups the past five years will start to fail. Of course, a VC could provide enough capital to a company to build a product AND find a business model, but that’s expensive. 

Web 1.0

In addition to building a product that people want, the startup needs to build a product people will pay to use and the then startup has to figure out the right payment model. Given the possible combinations of right product and business model, it’s actually a tough thing to do. VCs will therefore put more money into the companies that have figured this out already (late stage, Zappos maybe), eschewing the seed and early stage. Without funding fewer companies will get started, and the ones that do will need to have a semblance of a business model, making web 2.0 look more like web 1.0. 

Of course, web companies aren’t sexy anymore, unless you’re selling green products.

A Strategic Aspect of HR

I’m reading a great book about hiring ‘A’ players for a given position, and what ‘A’ player means depends on the position. That is, the smartest, most ambitious person is probably not an ‘A’ player for a data entry job, because that person will quit. Similarly, someone without ambition and with poor interpersonal skills, might be an ‘A’ for that same position. Makes sense, and not too interesting.

 

What I haven’t read about is hiring to optimize employees for the competitive environment they face. Companies can be seen as an organism trying to grow. The fittest company grows the most. However, selection operates on many different levels: the gene level, the individual level, the group level, species level, et cetera. Companies can be viewed in a similar light. Companies should hire people that make the group fitter within the competitive environment.

 

An example in nature – a study on between group fitness was conducted with two different groups of hens kept in cages. One group of hens was bred based on how many eggs the group of hens produced. Another group was selected by looking at the hen that laid the most eggs within a group.

 

The group that maximized cage production would breed a new generation of hens from the cage that produced the most eggs – the friendly group. The individual maximized group would take and breed from the hens that produced the most eggs – the alpha group. Usually, the hens that laid the most eggs as an individual did so at the expense of the other hens within the cage.

 

After several generations, the the friendly group was producing significantly more eggs than the alpha group. In fact, the alpha group had become hyper competitive and would peck at each other, sometimes leading to the death of a hen. 

 

HR recruits a certain person, the company attracts more people like that, and eventually a certain personality trait can become entrenched. It could be risk taking, risk aversion or any number of attributes. The HR exec needs to understand the competitive landscape and the industry to ensure the culture being created is the right one for the market. 

Being Smart Doesn’t Mean You’re Right

Professor Stanovich has proven something I had just assumed – being smart doesn’t mean you’re right. Stanovich’s research is on rationality and reasoning and his last paper was about independence of cognitive ability and thinking biases. The takeaway I got: smart people are only slightly less likely to make bad decisions than the rest of us.

Entrepreneur In Training

I attended my first career fair ever, yesterday. It also happened to be one of the University of Texas McCombs School of Business, the program from which I graduated. I had never gone to one of those programs because I knew I didn’t want to be 1 of 25,000 cogs in a company, I wanted to start a company, and that when you start making a lot of money, you lose the desire to take risks. 

Yesterday was interesting, although it confirmed my decision not to attend any of those events. An opportunity I see, though, is to create an Entrepreneur In Training internship program. A lot of companies talk about the internship benefits, career path, and name recognition, but working for an early-stage startup is one of the few chances to learn how to actually start and grow a business. 

Working for a startup requires thinking about what to do and actually carrying it out. It forces people to do multiple roles, to learn about a wide variety of areas, and to be realistic about what an idea can achieve and when. These are all of the things a college student starting a company needs to do. 

An EIT program could rotate an intern through multiple areas of the company over a few months, open up a few key meetings to the intern to understand the decision making progress, and then pair the intern up with a mentor from the company for when the student strikes out on their own and tries to start a company. 

90% of new businesses fail, working for one that didn’t can show a person the blueprint for success and give a student the confidence to go off and do it.