Sell, Sell, Sell! (Digital Channel)

We are now on the 12th installment of our Lean Innovation series and it is time to get out of the building for the 3rd time in the process to answer another set of questions that will test the validity of our product and market.

The steps for the Physical and Digital channels are significantly different, so we will cover them in separate blogs. If you are pursuing an innovation or new product or service in the digital channel, you are in the right place. We covered the Physical channel last week.

(In case you are not an Eddie Murphy fan, the scene above is from Trading Places where the Dukes have just failed to Sell, Sell, Sell soon enough and lost everything.)

This phase of Customer Validation is a “test” sales process. Real sales will be made, but full scale revenue does not happen until the Customer Creation phase. The principal aim of this phase of Customer Validation is to answer a long list of questions that include:

  • Are customer’s enthusiastic about the product’s value proposition?
  • Does the company understand its customer segments and their needs?
  • Do customers truly value the product’s features? Are any key features missing?
  • Is the product pricing right?
  • Can the product be sold at a reasonable cost?

Testing in this phase consists of simple pass/fail tests based on the hypotheses in your business model. This are yes/no questions only. Either you pass or fail. There is no middle ground. Question examples include:

  • Did 2 out of 5 acquired users activate?
  • Did $100 spent on AdWords generate 50 clicks to your site?
  • Did 4 out of 10 users pass your free trial offer to five friends?

There are 4 steps to this phase of the process. We’ll provide a brief overview of each.

  1. Prepare Optimization Plans/Tools – Optimization is about squeezing more out of each of the “get, keep and grow” steps. Things like reducing your customer acquisition cost from $1.00 to $.85 or increasing user activations from 6% to 10%. Before you start you’ll need a great looking hi-fidelity MVP (Minimum Viable Product), your acquire plan and tools, your activate plan and tools and a dashboard to monitor your customer’s behaviors. You’ll use tools like A/B testing, usability testing and heat maps to name a few!
  2. Optimize Getting More Customers – For some websites, 98% of visitors never return to that site. That means that 98% of all the time and money you spent to get potential customers to your site could be wasted. This is an area that must be optimized. This step involves optimizing each of your “get” programs that you have done to date. Start with the cheapest and most effective programs you have. How can they be scaled or improved? Then start trying new incentives, deals and discounts. The options are endless, keep each test separate and distinct so you can measure its effectiveness.
  3. Optimize “Keep” and “Grow” – It costs 10x more to get a new customer than to keep and grow and existing one. That is why startups are so difficult. Getting the first customers is extremely hard. Once you’ve got them, it is a lot easier and cheaper to keep them and grow the amount they spend with you. Test and measure each of your customer retention programs and test new ones. There are tons of options: loyalty programs, surveys, check-in calls and how you respond to customer complaints. Aim to increase the number of participants, how long they remain a customer and how much they spend.
  4. Test Sell Channel Partners – You need partners to drive traffic to your website. Those partners may provide links, banner ads or just reference your content. Deals with traffic partners are tough to get in the beginning when you don’t have much of a list or website traffic to offer in exchange. Expect to pay up. Either up front or as a percentage of revenue generated.

I hope these steps will help you dramatically increase your sales and profits!

Next week we’ll cover how to control the public’s perception of your product or service as we dive into product and customer positioning.

As always, I’ve done my best to summarize the main principles in this blog but pick up a copy of “The Startup Owner’s Manual” by Steve Blank and Bob Dorf to dive deeper.

Thank you for being a part of our values driven community!

Image courtesy of http://www.businessinsider.com/trading-places-frozen-concentrated-orange-juice-trade-explained-2013-7

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