I’ve taken a bold step, I’ve turned off all notifications on my phone, apart from phone calls and text messages - you know, like in the early 2000s when a phone was just a phone? I’ve not done this so I can be all hipster and jump back in to the dark ages, I’ve done this because 99% of the notifications are not important and can wait until I get to them on my schedule.
Since the advent of the smart phone we have rapidly become more and more connected. Twitter, Facebook, Email, Instagram etc, the list is endless and it is growing daily. Each new app or service wants to notify us when something happens, and who can blame them? Competition for our attention is fierce and interrupting us is a good way of keeping us on their service.
The problem with this is that it takes our time, and schedule, out of the equation. This makes us beholden not only to these services but to the people who caused that notification to occur.
The reason these notifications work so well is that each interruption from a social network brings with it a little hit of dopamine caused by an ancient part of our brain looking for social acceptance and inclusion - it was safer to be part of a tribe when mammoths roamed the world and evolution hasn’t turned that switch off yet. This isn’t relevant anymore and in fact detracts from our day.
What I started to notice though, is that very few of these notifications (with the exception of email) would actually change the course of my day. Most of them I would simple acknowledge and move on - often trying to remember what I was supposed to be doing and getting back in to it. So, if they’re are not important, then why let myself be interrupted at all?
It’s been 2 months since I went down to notification zero and I’ve noticed a few things:
The most interesting one is number four, now that I’m not getting a notification of every email, I need to make a conscious effort to check my inbox. This means I manually check it more often than I used to but because I can deal with 10 emails at once rather than one at a time I can delete, reply and sort far more effectively than before - bulk tasks are always quicker.
My takeaway from this is that going to notification zero has improved my day and I’ve realised that if something truly important comes up that needs my attention - someone will phone me, email was never supposed to be an instant messaging platform, don’t let become one.
One of the hardest things to do when selling a product is determining how much you should charge for it. It can make or break your business and, once set, can be very difficult to increase without annoying a range of existing and/or future customers.
Some would say that the best way to calculate a fair price is to total up the cost of the parts, a portion of the business overheads per product sold, any distribution costs and then add 35%.
Another way is to look at how much your competition charges and then price yourself slightly above or below depending on how you want to position yourself in the market.
These might sound like sensible ways to calculate the price you should charge for your product, but they miss out the most important part of the whole equation, your customer. If your currently thinking about how much to charge for your product then this will help.
Ultimately, it doesn’t matter how much you think you product should sell for. It matters how much your customer is willing to pay for it, and that has nothing to do with your supply chain or competition.
What matters the most to your customer is how much value they perceive is in your product. Value, in their case, isn’t measured by the cost of the plastic, fabric or electronic parts. It is instead related to both the perceived impact that your product will have on their life, and their reason for wanting it.
Let’s take the example of healthy eating and look at the mail order snack service Graze. Graze mails 4 small pots of healthy snacks to your door as often as you like. Each box is £3.89 (May 2013) and so they are a fairly expensive snacks compared to what can be purchased in the shops. But, consider what Graze is really selling you
These 3 reasons make a little box of seeds and nuts much more than simply a snack, they make it a whole life changing experience and help justify the price premium.
Think about the value you are adding yo your customers life, I bet it’s more than you initial think.
When choosing a price to charge, don’t think about what your product is to you, think about what it is to your customer and charge appropriately. You may be higher than some like, but if your product is solving a real problem then most will think you are either spot on or, even better, a little bit less than they expected.
Before you set a price, speak to your potential customers and ask them what they will pay. Make sure you are explaining the product correctly, that they realise the problem you are solving and they will respond with a reasonable price, not just the cheapest they can think of! In all likelihood, the price you determine from this process will be a little less than what the market will in fact withstand so start a bit higher and, if you feel it is necessary, reduce it after a few months.
The best products and services are designed to ease a pain. What people often forget though is that most products introduce a pain of their own, adoption pain. Adoption pain is the number one reason why your product may not be getting the traction you think it should.
There are two halves to this, lets look at both in turn.
The first is that we can actually go for a long time, putting up with minor inconveniences before we look for a way to fix them. When we do something on a regular basis we develop habits designed to speed things up for ourselves. Once these habits are formed they stick like glue and changing them can take a monumental effort.
To persuade someone to abandon their habits is quite a task, you are essentially having to say “Hey, you know that way you’ve been cleaning your car? Well, it’s wrong and our way is better”. People need to see moving to your product as a completely smooth transition, because even minor inconveniences can derail their purchase. Make sure that your product is super simple to adopt and looks like the next natural evolution of what they are already doing.
Just how smooth this transition has to be depends on the problem you are solving. If the problem is minor, like how to cook an egg, then it needs to be pretty much plug and play with minimal instruction. If the problem is a big deal, like their chair gives them terrible back ache, then your adoption path can have some hurdles along the way (high price, long delivery, self assembly etc).
The second, is the most common reason for abandoning product and is why people have lofts and garages full of stuff they stopped using. Once people have committed to your product they are still in a trial mode, they don’t realise this but they still need to integrate your product into their life. This is when they truly find out if their need for you product is greater than their need to be rid of the problem it claims to solve.
A good rule of thumb here is to establish how much interruption your product causes on a scale of 1 to 10, 1 being nothing and 10 being more than once an hour. An interruption is anything where the customer has to think about or acknowledge your product, both positive and negative.
Now think about the problem and rate that on a scale of 1 to 10 for interruptions as well. If your product’s number is higher than the problem’s number then you’re going to have a low adoption rate as your product, in the initial adoption phase at least, introduces more pain that it solves.
When developing a product it is important to make sure that it doesn’t detract from your customer’s life, it needs to make their life better or they simply won’t use it.
Good products solve problems. Great products solve problems that people didn’t even know they had. Great products however, come with even greater problems of their own.
With a known problem the market is most likely already established, with an unknown problem it is not. You are going to have to do the leg work to establish that market because people aren’t already looking for your product.
So, you have a choice to make. Do you make a product that people are already looking for? Or, do you make a product that no one knows they need yet and trust that your marketing efforts will pay off?
The first step in tackling an unknown problem market is to first define exactly what the problem is you are solving, then split it into two halves. The first is the cause, the second is the primary symptom. Chances are, your customer will actually be aware of the symptom of their problem but not the cause. It is the symptom we need to use as the marketing hook.
Let’s split the problem that our product, the Radfan, solves into these 2 parts:
The cause is the part the people don’t realise, and this makes our marketing job difficult because people aren’t naturally searching for a product like the Radfan. So, we need to address their primary concern, warmth, before we tell them what the cause is and how the Radfan helps improve their radiators. Establishing a new market can be as much an educational exercise as it is a marketing one.
If, on the other hand, your idea has lots of direct competition and there is an established market, then chances are people are already searching for a product like yours. In this case the heavy lifting of building demand has already been done for you but now you have to stand out again seasoned veterans.
Establishing the market has the benefit of first mover advantage but, if you get some traction, you can be sure that others will jump in to benefit off your hard work.
Photo Credit: productwiki - Dyson Ball
Today I received an email from a web shop I really like. I’ve spent a few hundred with them over the past couple of years and they sell products I am interested in buying. The market they serve is the hobbyist electronics market, which, as you can imagine, is pretty niche! As a result they are in the enviable position of being able to send emails tailored specifically to their potential customer’s needs.
To me, email marketing is the most important form of online marketing because the recipient has to make a decision. They either read it or delete it. It can’t simply be ignored or worse, never seen like on Facebook or Twitter. Email subscribers are the low hanging fruit of potential customers, we know who you are, we’ve probably purchased from you before and we are pretty easy to convert into a sale.
This is the body of the email they sent me.
As you can see it is 4 items from their catalogue with images, prices and links to buy. Pretty unremarkable, but since it probably provides them with industry standard click through rates, they think it is serving them very well.
As a potential customer I’m sorry to report that their email fails to get me to visit their shop at all. This is because they have fallen into the trap of replicating old fashioned mass marketing offline behaviours online.
With the sort of niche market they have, click through rates should be much higher than the industry average as they have the opportunity of solving one of my biggest problems, and they are missing it.
The problem I’m talking about is ideation. I’m not very good at coming up with small, fun, achievable electronics project ideas. I don’t have the time to sit and think about them and I don’t have any day-to-day problems that a small electronics project could solve.
So I would really appreciate some ideas. An email with two ideas in it that linked to a couple of their products so that I can jump right in and decide if it’s a project I would like. Essentially, overcoming the barrier of coming up with my own idea and, therefore, having to decide what to buy. If they want to really optimise then maybe even send me to a pre populated shopping cart page with these items in it.
It doesn’t need to be a full project plan, just a few lines sketching out a rough idea that sounds interesting and is just enough information to get me over the starting hurdle.
You see, the problem with the current email is that it is about the sender. It’s about their latest products rather than about me, the purchaser. My problem is not “I wish I knew what their latest products are this month”, my problem is “I’d really love a fun side project but I just can’t think of any and work is so busy right now that …“.
When selling to a customer, in all forms, it should be about them and their problems. It doesn’t matter that this is a relatively passive form of marketing, just because I have opted in to receive doesn’t mean I have opted in to buy, they still need to persuade me to do that and the best way is to solve a problem I have.
I won’t buy every month, heck, I may not even buy one of the listed products at all, ever. I am however, much more likely to click and visit the site. On top of that, it builds good will. If I look forward to receiving their email I am much more likely to go to them when I do need something rather than one of their competitors.
Email marketing has been hugely successful for us at Radfan because we try to send useful, interesting content to our subscribers. We have open rates over 75% and click through rates well over 30% on all our emails, which go out to several thousand people at a time.
Don’t waste the opportunity to deliver something to my inbox, it’s the one form of online marketing where I actually have to make a decision. I either have to read or delete, make sure I want to read.
When we started working on Radfan we made one very fundamental decision that is now irreversibly built in to our brand and guiding principles. That decision was a very simple one:
People don’t buy to save money.
In our case it would have been all too easy to follow the trend and build a business plan around selling a product that could save people X% on their central heating bill and so they should buy a Radfan.
We could have made that choice and we would have been wrong, very very wrong.
It turns out that we are not as rational as we like to think. Humans appeared a few millennia ago, and for 98% of the time between then and now have lived a hand to mouth, hunter gather existence where money played no factor whatsoever.
There are two primary reasons that I believe make it a near certainty that when selling to average Joe public you shouldn’t sell based on monetary savings.
Dan Gilbert explains in his excellent TED talk that we are rubbish at making decisions. A Dutchman, Bernoulli, came up with a formula in the 1700s that should have made decision making easy for us, it is:
Expected Value = Odds of Gain x Value of Gain
This is very simple and works well for basic games of chance. Applying it to the real world is difficult though because we are terrible at determining accurate odds, and the fact that the “Value of Gain” changes with the context.
Our determination of odds mainly comes from our memories. For example, we don’t hear much in the news about people dying from flu but we do about people dying from plane crashes. Therefore, we fear dying from a plane crash far more than we do flu, even though the real numbers show that we are far more likely to die from flu.
Time reduces value. Don’t believe me? Answer this question:
Would you like £50 now, or £60 in 1 month?
Most people don’t want to wait 30 days for the extra £10 and will take the £50 upfront, in the process passing up an annual interest rate of over 200%. We are impatient and prefer instant gratification. Your product needs to save a lot of money instantly to get the kind of reaction you want.
So, what has this got to do with saving money? Well, when you propose to someone that spending £100 on your product will save them £5 per month you are asking them to calculate the overall expected value for something where the break even point won’t be felt for 20 months! This means someone has to wait 20 months before they actually save any money. Given the time frame involved it also becomes difficult to calculate the odds of this pay off ever materialising.
As a result the Expected Value is perceived to be very low and so purchasing based only on saving money is very difficult.
Everyone knows that if you insulate your loft and switch energy provider you can save money. Insulating a loft can save you around 10% on your annual heating bill, roughly £150 per year. Switching energy provider could save between 5 − 10 %, roughly £75.
In total there is £225 worth of annual savings for the taking, and most people don’t take them, why? Surely that wasted energy and money is a pain point for them that both of these solutions can solve?
They are, but both introduce a pain of their own. Loft insulation requires them to empty their loft, pay for insulation, installation and then repack their loft. For many people this is a hassle, and a pain, that is simply not worth the £150 saving.
They are basically making the decision that they are happy to PAY £150 per year to avoid this pain.
The value of these two potential savings is further eroded when we consider how small the saving seems compared to the amount still being spent. £150 is a reasonable sum of money and would buy most of an iPad Mini, yet when put side by side with the £1,500 being spent on an energy bill it doesn’t seem like so much. As a result, the value of that £150 seems lower than it really is.
The pain your product introduces, whatever it is, needs to be so small and insignificant compared to the amount of money it will save them that it probably isn’t a very profitable way for you to make money. Changing your value proposition and increasing your prices will likely create a much more profitable business.
It is true that whole consumer industries exist on making people spend £X to save £Y, but in most cases the reason for the bulk of the sales is not as a direct consequence of the saved money.
The eco market is full of products that save money by reducing energy consumption. This is a thriving market and one that markets based on energy saving, but not energy saving to save money. No, energy saving to save the planet, which in turn means saving our grand children from a barren world of famine and wars over resources. I exaggerate, but you get the idea.
The surface reason may seem (or even be) one of saving money and energy, but the deep routed reason is for a feeling of “doing the right thing”, also known as “saving to polar bears”.
Ultimately, saving someone money and energy is a great thing. However, make sure that the greater pain you are solving is more than simply numbers based.
To bring it back to Radfan and our early decision, we decided that people buy warmth and comfort before they buy energy and money savings. We set out to make a product that can deliver on both fronts and the feedback from customers is that we were right. Emails from people saying they can now take there jumper off in their living room for the first time in years make me extremely happy and if they are saving some energy by not using an electric heater, or keeping their thermostat setting just a bit lower, then that’s even better.
The exception to this could be when selling business to business. Showing a company that their profits will increase because you can reduce their server load by 15% is going to get a good response, because companies are driven by financial decisions in a way that individuals are not.
There is a caveat even to this though. It is still a human making the final decision, what do they get out of reducing server costs by 15%? A pay rise? A bonus? A promotion even?! These are human, emotional things and are ultimately the driving force behind the sale.
Picture the start up life for a second. Based on what you’ve read I should think the thoughts that run through your mind focus on things like young guys coding in coffee shops, million dollar valuations, branded hoodies, flip flops, incredible design, conferences and Facebook.
What you probably don’t picture is what I call The Slog. This is the hard work that takes up 80% of time between the stuff above. The Slog comes in many forms and it appears time and time again throughout the life of a start up.
The Slog lays the first seeds of doubt that keep you awake in the initial months and makes that first investment rejection all the more acute. The Slog is a supplier letting you down 2 days before the deadline and not refunding you the upfront payment they made you make because “you’re a risk to do business with”.
The Slog is the period of time when you once again have to stop paying salary because you have no traction and no money. It is the time you find a problem and head in to the office at 10 pm, even though you’ve already been there for 10 hours that day … and it’s a Friday.
The Slog is that first complaint from a customer, it’s the embarrassment that something you put out there had a fault. The Slog makes you forget that it’s less than 0.05% of the units shipped and really isn’t a make or break situation … it makes you care too much.
The Slog throws stuff in your way and makes you just keep plodding on.
But, it’s also the thing that makes the highs so much higher than they really are. It makes you want to frame a letter from a person thanking you for great customer service.
It makes you appreciate the support of your family and those who do believe in and help you.
It makes finishing a manufacturing run feel all the sweeter because you can still remember when you thought that moment would never come.
The Slog is the unsexy, dark side of running a start up. It makes us appreciate the dull bits for what they are, vital and important times when the work gets done. It makes sure we appreciate the highs, and doesn’t let us forget the hard work put in, to get to them.
Next time The Slog abates, take the time to appreciate the moment … they don’t come nearly often enough.
We’ve just had a bonkers couple of months at Radfan, with launching, selling out, getting more stock and then selling out again in 3 hours it’s been quite a ride. One of the biggest challenges we’ve faced is customer service, and I thought this would be a good time to share what we’ve learnt and how we approach speaking to customers.
Firstly, you can never predict how people will react, yes it’s true that it takes a lot more for people to send a positive email than a negative one but that’s about as far as it goes.
The Radfan solves a problem that reaches across all social groups and ages. We have a rough customer profile but really it can be summed up with “those who are cold at home and don’t want to turn the heating up any higher”. As a result we get a range of customer interactions including formal letters, emails, tweets, phone calls and each one is different.
With all of them it is important to be a person, we don’t hide behind our brand and logo. When you contact us, you’re not just dealing with Radfan, you’re speaking to Simon or Roland from Radfan, founders and technical and managing director respectively.
The key differentiator we have compared to large companies is that simple fact, when you contact us you will speak to the guys that have put blood, sweat and tears into the company, went without salary for months and stayed late, night after night assembling the first 1,000 units. When something goes wrong, or right, we feel it personally because 99 times out of a 100 it is a complaint or compliment about something we have done ourselves.
This of course can be emotionally draining, especially when we’ve dealt with 4 complaints in a row but then if it wasn’t I think it would show we had stopped caring, and that is far worse. We make a product that will be mass manufactured, but that doesn’t mean that I just want to crank out rubbish and not care how the customer feels at the end of it.
Having lived with a Radfan for two whole winters, I know the incredible effect it can have on a home. If a customer isn’t feeling that benefit, or can’t enjoy it because their unit is buzzing in a way that it shouldn’t then I want to speak to them not as a company but as a person wanting to solve their problem.
When an email comes in that is rude or overly terse I go out of my way to address their issues, be humble and accept that in their case we have messed up. They do have a right to be annoyed but, from here on out, we’re going to work on this together to establish how we can make it right.
Some people will say I care to much, some will say that for £44.99 it’s not worth the emotional investment and time. To them I say rubbish. I want to delight my customers, I want to be so different to what they are used to that they can’t help but tell their friends what great customer service we gave them. My job doesn’t stop when the delivery guy picks up their Radfan, it stops when the customer wants it to stop.
The hardest bit of customer service is dealing with complaints from a source that you didn’t expect it to come from. We recently sent a stock alert email out to over 1,000 people and, based on typical e-commerce conversion rates and past sales performance, we figured we would sell out in about 1-2 weeks. We were wrong.
It took 3 hours.
At which point I had to send a follow up email to those who missed out (most of whom hadn’t even opened the first email by that point) explaining that we were once again out of stock. Some people replied to say they were disappointed but were ok and understood, but a couple really laid into us. It hurt, because we thought we were being open and transparent but ultimately these people had invested time in waiting for us to come back in stock only to then miss the boat again in a tiny window of time.
I can understand their frustration and each one received a personal response from me, with follow up if needed to help smooth over the problem. Most replied apologising and saying that they were venting their frustration in to the email, not really at me personally. Either way, it doesn’t matter, we annoyed them and it’s on us to fix it.
I guess they had forgotten a person reads the email at the other end. When you deal with a customer, or a company, always remember that there is a person, like you, at the other end.
And dealing with the nice emails? That’s the amazing part of the job, people really do send the most detailed and complimentary emails when you get it right and delight them. Rather than looking at each complaint as a just that, look at it as a second chance to delight a customer.
This start up malarky is hard enough, don’t make it harder by being above your customers.
The internet has been buzzing today with the news that Yahoo has acquired Tumblr for a billion dollars. The talk has mainly focussed on how Yahoo seem to kill every company they acquire and that Tumblr is now destined for the same fate.
So, why did they do it? Why sell?
Well, Tumblr was poorly monetized, they only generated $13 million in revenue last year which, for a company with around 44 million blogs on it’s network, is pretty poor. This, it seems, is likely down to the founder’s dislike for advertising and it’s user base being primarily teenagers looking for the next MySpace (yes, MySpace, not Facebook) and so not the sort of crowd to pay for a service they see as free.
Tumblr had taken $125 million of venture capital investment and they needed to give their investors a return, Microsoft and Google don’t need to massively expand their content base so spending the sort of money needed to give those investors a decent return was not going to happen. So, Tumblr turned to the one web giant that needs content and is going through some changes at the moment, Yahoo.
Yahoo needs eyeballs, eyeballs come from content and Tumblr has got that by the bucket load. It also has a user base made up mainly of teenagers who are highly susceptible advertising and marketing which can help bring Tumblr’s revenues inline with the sort of valuation they just put on it. To me this seems like a no brainer to Yahoo and, given that they were backed into a venture capital sided shrinking box, probably a no brainer to Tumblr as well.
The outcome looks like this: investors get their money back, Yahoo get a new source of revenue and, this is the important one, David Karp, Tumblr CEO, walks away with a cool $275 million … not bad for a high school drop out who focussed on code and product development whist building his 175 person company!
Some ideas are so out there, so unique that the line “We have no competition” seems appropriate for the founders to say. Sadly, for those founders, it’s never true.
There. Is. Always. Competition, and you need to know how you’re going to stand out against it.
Competition comes in many forms and with the rise of the always on society this has never been truer. So, lets take a look at some types of competition that your new widget has.
In its most simplistic form, competition is another company doing what you do. Obvious examples include Samsung Galaxy Vs Apple iPhone and Boeing Vs Airbus. This exists in any sector that has been around for more than a couple of years, first mover advantage doesn’t last very long and soon others will jump in to capitalise on the market that the initial product has found.
When launching a business into an existing market your competitors will be both a benefit and a draw back. The main benefit is for idea validation, if someone else is already making money in the space then it’s a pretty sure bet that you could as well.
The primary drawback is that now you have companies with an established customer base and brand to deal with. Any new idea into the sector will need to differentiate itself well enough to grab market share and fend off competition reaction.
We have one direct competitor with Radfan and we decided that rather than trying to compete head to head, we would position ourselves as the premium alternative with clear and distinct differences between the two.
This is competition that operates in the same problem space as you. For instance, in our case, the Radfan makes people warmer and this can be achieved in a number of other ways, people could simply put a jumper on, install wall insulation or use electric heaters.
The Radfan has to offer appear as a compelling alternative than better serves the customer’s needs, putting on a jumper still leaves cold extremities, insulation is expensive and a hassle to install and electric heaters can become a large ongoing cost. The Radfan solves all of these.
To work out where your indirect competition is, take one step back from your solution and ask “How are my customers already solving this?”.
Customers have a finite amount of money and can choose to spend it on a number of things other than your new product. £100 goes a long way toward a nice family meal out instead of the great new counter top water filter you’ve come up with.
It’s the job of a company’s marketing to get across why parting with their hard earned money with you is better than buying a new shirt or pair of jeans.
There are a set number of hours in a day and our always on smart phone lifestyles mean that there is very little time left to go around once someone has spent most of it on Facebook, Twitter, BBC news, chatting with family, watching TV, and replying to emails.
Unless your product is one that someone would naturally come across in their day to day lives and have an awareness that they actually need, then you are going to have to fight with all those other distractions to get their attention in the first place. Something, which, in today’s hyper connected, always on world, is easier said that done.
You could generalise and say that everything is your competition and what we are really fighting for is a tiny sliver of people’s attention and decision making abilities.
If you can think of other areas of competition I’ve missed I’d love to hear your thoughts in the comments.