Today’s featured guest post is by Seth Berman. In this post he writes about how to focus on acquiring your first 100 customers so you can be en-route to 1M+ users. Seth has done it before, growing BabyCenter to over millions of users around the world. Here are some other accomplishments that make Seth pretty great:
- Director of Global Marketing at BabyCenter, the #1 mobile and web pregnancy and parenting destination worldwide, with a monthly audience of 34 million users.
- At BabyCenter, Seth is accountable for user growth, email marketing with 1.5 billion opt-in emails annually, product marketing, app store optimization for mobile apps that have been downloaded 9 million times, and SEO for a site that dominates in the pregnancy and parenting industry.
- Seth is a mentor at 500 Startups.
After helping dozens of early stage startups with business strategy and marketing, I’m repeatedly amazed with how complicated the founders and early employees can make things for themselves.
One of the biggest advantages for a startup is the opportunity to focus in ways that incumbents can not. At the same time, the siren calls of opportunity from all directions are often difficult to resist for ambitious founders who know their products can change the world.
1. Strength is Always Specific
The great mystery isn’t that people do things badly but that they occasionally do a few things well. The only thing that is universal is incompetence. Strength is always specific!
This Peter Drucker quote is especially useful for startups, as it’s absolutely required that you narrow your focus to the intersection of market opportunity and your strengths. Typically the market opportunity is large, but you must focus first on a niche within the larger market.
For example, HealthyOut, a subscription healthy meal delivery program startup that I’ve mentored, is going after the huge $12 billion diet and the $600 billion restaurant markets. Early on, HealthyOut contemplated a number of strategies, but they’re focusing first on the niche market of delivering healthy and personalized restaurant meals to your door. It launched its service in New York City, which has the richest delivery culture of any city in the United States, and on the strength of its proprietary data strategy, which aggregates restaurant menu and nutrition data. Since choosing and executing on its focus, HealthyOut launched at TechCrunch Disrupt and won the NYC BigApps competition.
Another example is Uber. Its founding team was clear on the market opportunity presented by the “horrible taxi problem in San Francisco”. Beyond building great products, the team’s unique strengths were its connectedness to the San Francisco startup scene and its long list of angel investors. This network provided built-in distribution and marketing for Uber, especially in its first market of San Francisco. And, unlike most mobile apps, every Uber user was a paying customer from the beginning.
Uber wasn’t worried about missing out on other cities or ride types in the short-term. Instead, it was focused on creating and winning the market for on-demand black cars in San Francisco. Three years later, Uber is in 35 cities and 14 countries offering a range of options including taxis, hybrids, black cars, and SUVs. When you win in one place, you’ll have the experience, brand awareness, and momentum you need to kick ass and take names when you move into the next part of the market.
As Peter Drucker also said,
nobody ever commented…that the great violinist Jascha Heifetz probably couldn’t play the trumpet very well
2. Use A Tagline As A Rallying Cry
You’ll be surprised how difficult it is to say what you do in one sentence or phrase, which may be why startups so often skip this step. Just because the tagline may change later isn’t a reason to skip it now. You wouldn’t wait to start building your product until you have all the answers, would you? Similarly, not only shouldn’t you wait to nail your tag line until you’ve got a minimum viable product, but also you should create your tagline before you develop your product. You should do this in order to use your tagline as a way to measure progress towards your minimum viable product, prioritize new features, and describe your company to prospective investors.
TaskRabbit was started when its founder needed something at the store but didn’t have time to get it. With that focus, its tagline is “Your deliveries, done”. Not only does it communicate clearly to potential users, TaskRabbits, and investors, but it also helps the TaskRabbit team prioritize its work. While its marketplace now includes many tasks beyond deliveries, errands and deliveries are still the core of TaskRabbit and likely the way most users first try the service.
Some other great tagline examples are:
- YouTube: Broadcast yourself
- New York Times: All the News That’s Fit to Print
- BOSE: Better Sound Through Research
- British Airways: To Fly. To Serve.
Each of these not only communicates exactly what the product is, but does so in very few words and with a particular voice. YouTube is all about the user and her content, New York Times is objective and unsensational; BOSE is streamlined and scientific; British Airways is an enhanced flying experience at a premium. Each of the taglines communicates what the product is in the company’s voice.
If you haven’t already, get your team together to write your tag line. Focus on the “What”, and make your tagline more narrow than you’d like. Be clear about what you will do better than anyone else in the fewest words possible, and say it with a point of view that’s consistent with the personality of your company.
3. Energy Goes Where Attention Flows
This quote from the ancient Hawaiian spiritual tradition of Huna could not be more true for startup metrics.
Startup Metrics for Pirates is organized around the customer lifecycle: acquisition, activation, retention, referral, and revenue, and includes marketing, product, and founder/CEO metrics.
For marketing, the key question is what channels to use and to whom to market. Dave suggests that startups design and test multiple channels, select and focus on those with high volume, high conversion, and low cost, measure conversion throughout the conversion funnel, and segment and select channels and customers by revenue.
For product, the key question is how to choose what to build. He emphasizes using metrics to choose features for conversion improvement, with 80% focus on existing feature optimization and 20% on new feature development. And for the founder/CEO, the key question is which metrics to watch. Dave advocates for tracking 5-10 conversion steps in the customer lifecycle, focusing on conversion improvement, and iterating over time.
The One Metric That Matters (OMTM), on the other hand, is organized around the business model and company stage. It is the single number that you care the most about at the current stage of your startup. Accordingly, it will change as your startup matures, but it will always measure the riskiest area of your business.
Like Startup Metrics for Pirates, OMTM inspires experimentation to improve the metric, but it’s not necessarily a conversion measure. The five rules of a good OMTM are:
- it’s a rate or ratio
- comparative to other time periods, sites, or segments
- incredibly simple and easy to understand
- makes your predictions more accurate
- will significantly change your behavior
I like and use both approaches, but in the spirit of focus, I recommend OMTM for early stage startups focused primarily on product. As you add sales and marketing teams and define your customer lifecycle, you’ll eventually need to measure more than one metric at a time. And, when that happens, you should migrate to Startup Metrics for Pirates, and use OMTM for the founder/CEO metric.
If You Chase Two Rabbits, Both Will Escape
Being focused helps you avoid the chaos that characterizes so many startups by giving your team:
- clear marching orders
- measuring the results
- course correcting (when needed)
Getting your first 100 customers, or your first 1M, isn’t easy. But, if you follow the approaches I outlined above, you will get more traction, attract more investors, and make more of the right decisions along the way.
Talk with Seth Berman about marketing, customer acquisition, or finding your product-market fit on Clarity.Tags: customer acquisition, marketing, signups