Notes from Evergreen by Noah Flemming

Evergreen businesses look at long term sustainability.

There are 5 metrics for growth:

Acquisition,  Activation (conversion), Retention , Revenue, Referral

As a Growth Marketer – my job is to optimize these funnels to ensure maximum ROI (Return on Investment) and ROE (Return on Effort). I do this via mini experiments carried out with sufficient data points.

So according to Noah, how does a company become Evergreen?

It all comes back to the relationship between the company and the customer. Great companies go above and beyond to nurture their relationship with their customers. This is the kind of company that becomes Evergreen.

Your business can eternally provide life, growth and regeneration. Becoming Evergreen will create a better, richer and more fulfilling experience for your customers. And you’ll gain customers faster.

 

Customers should not just be rotating heads

Leaky Bucket Theory

Most businesses think that new customers are the way to go for growth.

This is quite far from the truth.

Leaky Bucket Theory is an analogy that suggests that most business operate like a leaky bucket. Your business is the bucket and your customers are the water. The holes in the bucket represent the various areas where you lose your customers. Most businesses tend to focus on adding more water instead of repairing the holes.

So what happens when you focus on having more water in a leaky bucket – you get a flood that you cannot control.

Most businesses have no idea of the cost of acquisition of customers or even lifetime value of customers. Having clarity on acquisition costs is vital to know how much you can spend on marketing.

The cost of ongoing customer engagement is nothing compared to the cost of acquiring new customers. If you want to experience dramatic growth within your organization, you must truly understand the relationship between profit, growth, longevity, customer relationships, employee empowerment and customer service.

The term customer-centric is a strategy that aligns a company’s development and delivery of its products with the current and future needs of a select set of customers in order to maximize their long-term financial value to the firm. Customer-centricity is crucial to be Evergreen.

Use data to monitor, measure and track customer consumption and usage and estimate likelihood of future profitability. Then market to ensure they receive the most value from the company.

 

The Three Cs (increasing conversion):

For an organization to thrive in our rapidly changing economy, it must embrace the Three C’s: character, community and content.

Character is the first thing that comes to customers’ minds when they think about your business. The principle of character is about defining, crafting, and presenting the character traits that you want customers to associate with your organisation. Modern brands that targets the millennials emphasizes a lot on having character – it gives a voice and personality to the brand.

Human beings are prone to seek out others who share similar interests, values and beliefs. People are attracted to brand communities because they help them find others who enjoy the same products or services. Companies that recognize this need for connection and create structures that allow communities to form have significant advantages when it comes to retaining customers, building customer loyalty, and maximizing customer value.
The same is true for repulsion marketing – pushing out people who will most likely not get your brand.
You don’t want to target everyone – if your target is everyone – its most often nobody.

Content is the core “thing” the customer receives in exchange for money. It is necessary for a successful business. Without content, there is no business. However, only having excellent content is no guarantee of success.

If you want to be Evergreen, you need all three Cs to be working together. Examples of this are great social media – with awesome character, helpful and value adding blog posts and landing pages with an attitude.

Character

To create a compelling company character, you must first develop your origin story and communicate it to your customers. Then, define your superhero. People want to do business with people and companies they like and trust, but also who fascinate them. And superheroes fascinate us. The personality of your character must be perpetuated though every piece of marketing and every bit of customer communication. Step three is to build purpose for your character’s actions. Understand your company’s purpose for doing what it does. Then, create an avatar of your character. Imagine that your company’s character and your ideal customer met today for the first time. Create a fictional conversation between them. Good examples of these: Middle Finger Project,  Eat 24 etc.

Community

Organisations that successfully build customer communities experience remarkable benefits from their efforts. It will take time and money but it is well worth it. To build a customer community, you must first develop a community strategy. Once you have defined your vision, choose your tools. The Web offers great tools, but look beyond that too. Then, cultivate your community. Put the right tools and systems in place to allow shared interests, values and beliefs to spread from one member of your community to another. Then, take a step back. Let it grow organically. Good examples of these: Xiomi, Android Community etc.

Content

Your company’s content is only one small part of your customer’s overall experience. Content is valuable, but it is important to provide an excellent customer experience too. Customers want more than just your content. They want to have an emotionally engaging experience that makes them feel good. Having a very clear customer avatar to know how your product / service best serves your customer.

Evergreen Diagnostic 

The Evergreen Diagnostic features four quadrants that represent different types of companies:

Deciduous companies lose many customers each year and are constantly trying to gain new customers. This describes the “Leaky Bucket” concept described earlier.

Barren companies have no customer relationship and because of that, no longevity. Most traditional companies operate this way – in a very transactional level.

Wilting companies can retain its customers, but they do little to establish customer relationships. Most typical companies operate in this level – with the occasional eDM’s, SMS-es, etc.

Evergreen companies have great relationships with their customers and keep them coming back. With relationship building emails, knowing exactly what customers want, doing customer proper segmentation and sending targeted and specific marketing messages to customers. Also providing as much value where possible.

Your goal should be to look at every customer transaction as an opportunity to create a long-term relationship with a lot of value.

Rethinking Loyalty (focusing on retention)

There are three distinct objectives of your loyalty program:

  • To increase customer retention and increase the frequency of purchases and the size of each transaction
  • To gain a better understanding of your customers, including actionable insights
  • To generate authentic, segmented and individualised communication and messaging

Design your loyalty program so there is a ladder that customers can climb. There should be multiple rungs that your customers can climb. This will keep your customer coming back and increase his or her emotional commitment to your brand.

Customer loyalty is created not just through a single program, but also through consistent marketing and actions. However, a good loyalty program can increase the revenues from your best customers and increase loyalty from your less-profitable customers.

To build an Evergreen Ladder of Loyalty, you’ll need to follow six steps.

Step One: Define your objectives.

Step Two: Determine what you want to learn about your customers.

Step Three: Design your loyalty program.

Step Four: Identify how you will measure success.

Step Five: Construct your program.

Step Six: Constantly surprise your customers with added perks.

 

 

Growth Hacks and The Illusive Silver Bullet…

We live in the age of instant noodles.

We look for ‘instant’ hockey stick exponential growth.
Hoping that this new widget / tool / hire / service will be the silver bullet for growth.

Its probably quite counter-intuitive for me as a Growth Marketer to call BS on that – but hey I have always been honest and the first to call out BS when I see it.

I think there are many different stages to a business – not all stages are ‘growth hack-able’ or meant to even be ‘growth hacked’.

I remember telling restaurants back when we launched foodpanda – “We are just a delivery platform – we can help in facilitating convenience and improving distribution of your food. We can’t help you if your food sucks”.

Perhaps I shouldn’t have been so blunt.

The early days of any venture is to get the basics right.
To understand your product, service and most importantly regular paying customers.
I emphasize – regular paying customers.

Not all customers are created equal unfortunately.
The ones that really matter are the ones that are regular and that would pay full price for your product / service. The rest are just noise.
If you don’t have enough of regular paying customers – you are either barking up the wrong tree or the problem that you are solving isn’t worth solving (or so your customers think).

Once you have the basics down to pat.
Its about looking at which channels bring you the most results.
Most often for entirely new products it would be offline or ancillary online.

Back when we started foodpanda – the search volume for food delivery wasn’t great.
As I recalled it was less than 1K searches per month on Google.
So it was almost like educating the market that there are other alternatives besides pizza and fast food that can be delivered.
We had to start with food bloggers and e-commerce partners – these are ancillary online partners.
Food bloggers would get us foodies who wished that the restaurant was closer to their homes / can be delivered and e-commerce folks are people comfortable parting with their cash (or credit card information) based on picture descriptions on a screen while waiting for the item to be delivered (extra difficulty when they are hungry).

The education and mindset shift took some time – the way we brought the message across wasn’t always clear – we struggled for a bit trying to communicate our value proposition. But we learnt along the way that what we were selling besides just food delivery service was convenience and time saved.

All this while trying to fix the product (last mile delivery, customer service, product features) while balancing company morale, expectations from HQ and obviously competition.

As much as others would say focus on your own race – the reality is that unless you are doing something 10X, you should never underestimate your competition.

The fancy growth hacks are more experiments based on hypothesis built on the product, UI/UX, customer experience from a proven (or at very least clearly defined) product / customer base.
Else – it will be just as good as buying a WSO and building a short game IM scheme.

Growth hacks are by no means a silver bullet – rather calculated optimizations to improve customer acquisition, activation, retention, revenue and referral.

Why Some Startups Are DOA

Some business ideas are just BAD.

Even the word bad is an understatement.
It is almost doomed to begin with.

Sure – some are uncommon successes that some might have thought they were crazy to even begin.
But I truly believe all successful startups have one thing in common.

They knew exactly who they were serving.

I don’t just use the word “KNOW EXACTLY” in passing.
But really know:

  • What their concerns were.
  • What keeps them up awake at night.
  • What makes them go “I wished they had X….”
  • What their interests were
  • Where they usually hang out
  • What are their political leanings like
  • How much they are willing to pay for a product / service
  • Why do they feel strongly over certain issues
  • Did their dog / cat really ate their homework

OK – so the last one was a stretch.

Without knowing (or at least having an idea) on who you are selling to – selling to everybody has always been a bad idea.

Your solutions would not be as targeted as they should be.
Your marketing message and value proposition would not be even remotely attractive.
Your prospect might not even feel that they need / would pay for what you are selling.

I always believe in sales or a business: You won’t make a sale when you are not selling to the right person or have the clarity of what you have to offer.

But notice – the entire thread still has elements of value creation.
Without value creation. You are not contributing to a better world and making a true difference.

So before you strut off a “really good startup idea” – would be good to first outline who you are selling to and how you can simplify / add value to their lives.
The execution usually falls in place when you get the basics right.

As Bruce Lee said

– “I fear not the man who has practiced 10,000 kicks once, but I fear the man who has practiced one kick 10,000 times.”

Startup Notes – Product Fit / Viability

I attended Infinite Venture’s Demo Day yesterday.

A few startup’s were presenting their case and requested for funding.
Without naming names – here are just a few observations and opinions that I have on starting a startup.

Before everything else – it is so vital to identify product fit.

For a moment – just forget growth hacking, forget being the next Uber, forget what they teach you in MBA.

It is so vital to identify:

  1. Is there a market for your startup? If so – quantifying the number (it can be households, users within the industry etc).
  2. Do you have a niche offer – if you are marketing to everyone – chances are nobody will be using it. Let’s take Uber – Uber caters to mid / high end consumers who don’t drive / find driving a hassle / are sick with cabs.
  3. Is the problem worth paying for? Or rather would your customers pay (and how much are they willing to pay to solve the problem?) to have the problem solved.
  4. Is your startup a pain killer or a vitamin? – i.e. Solves an immediate need vs a nice to have

Once you can correctly articulate the above and it seems possible that there would be a market that would gladly pay for the service / product. You would need to ask yourself:

  1. Is this easy to scale? To grow – would I need to incur a higher cost to hire more people? Or can I use technology to automate?
  2. What is the barrier to entry like? – what’s so special about my product / service that is difficult to emulate. If it’s easy to start something – can big corporates just do it and move much faster with more capital?
  3. Can this be grown to other countries within the region? – sure hyperlocal is cool – but from what I observed – most investors are looking for something that is easily to replicate in other countries.
  4. Are margins good enough? If not – what is the tipping point for you to start breaking even / profit.
  5. Is it labor intensive?
  6. What is your acquisition cost per customer and lifetime value per customer?
  7. What is your customer retention strategy like? – and no, discounts isn’t the answer – the product / service must serve a real purpose besides just solely relying on discounts.

 

I met an investor a few months back and he offered me a very good piece of advice. He said (and I am paraphrasing here) – “With new technology, it’s almost unlimited what you can do – the key thing that people are looking at is how do you monetize it – and how sustainable it would be”

Personally – I take another factor into consideration – “Is your product / service actually serving the community and the world at large? Are you actually making a difference in the lives of others?”

 

Because if all your business does is feed people with sugared drinks and junk food – regardless of profits – I personally think you are doing a disservice to the clients that you serve. Would you feed your own child what you peddle on a daily basis?

As Simon Sinek puts it – ““People don’t buy what you do; they buy why you do it. And what you do simply proves what you believe”