Startups need to understand their core product value

The Lean Startup teaches us to roll out MVPs (Minimum Viable Products) as soon as possible and to iterate based on customer/user feedback until we find something that people want. That is a great methodology, however how often do startup founders really understand exactly why users are using their product.  Founders don’t spend time identifying what their users are gaining from their product and what their core product value is. The answers to these questions are far too often skimmed over and missed in exchange for optimization of users, revenue, k-factors or even new product/feature creations. Understanding exactly where you fit in the market, what value you are offering to users and how they are responding to it are important metrics to be measuring.

It is often very difficult to measure true product or market fit. How do you definitively identify why users are using your product as opposed to a competitor’s? How do you find out what users are gaining by using/purchasing your product? The key here is to truly understand your users by implementing surveys, customer cohort analysis and even speaking to users directly.

The first thing you need to determine is who you should be talking to. You want to find out who your most engaged customers are and why they are so engaged. To do this you can ask them this question:

How would you feel if you could no longer use “this product”?

  1. Very disappointed
  2. Somewhat disappointed
  3. Not disappointed
  4. N/A – I no longer use it

For this purpose you are interested in the people who select “Very disappointed”. This means for these users, your company and product is doing something right and they are gaining real value from what you are offering.

Once you have run this survey and identified who your most engaged users are, now it’s time to identify why they are engaged and what is engaging them. Segment your users to only the users who selected “Very disappointed” and get them to answer this question:

What is the primary benefit you received from “this product”?

You can start with an open ended question where users enter in their answer. As soon as you see some trends turn them into multiple choice answers and change the format of the question so your data will be a lot more meaningful. This will provide you with your “must have experience” and “aha moment”.

Once you have identified what people love about your product you can then go into why that benefit is so important to them. Ask your users this question:

Why did you select that benefit as your favourite? 

Leave this question open ended and the answers you’ll get back will provide you with huge insight into what you should be optimizing. It will tell you what type of users you should be optimizing for and what product changes you should be making to ensure you improve and maintain the “aha moment”. 

Never promote your best salesperson

Company and organization leaders in all industries far too often choose their “best salesperson” for the manager role. In this instance the “best salesperson” refers to the best employee in terms of efficiency, productivity and output. This is not just specifically applicable to sales teams, it refers to other disciplines also, such as promoting the best designers to design managers or promoting the best engineers to engineering managers. The logic and thinking behind this is that because they are great at selling or performing in their current job, they’ll also be a great manager. Unfortunately, this is seldom the case and can end in disaster.

Scott Hudson, Vice President-Sales and Marketing at HR Chally says, “85% of sales superstars fail in sales management.” - Source: Dave Stein

The problem with promoting the best employee is two fold. Firstly, the skills that make the best “salesperson” are different to the skills required to be a good leader. Secondly, you lose your most productive employee by promoting them to a managerial role. So what’s happening is you’re losing your best employee and gaining a bad manager. It is quite possibly the worst outcome for an organization and can cause a lot of problems.

“The characteristics of a good salesperson are money motivated, large ego, and a bit selfish,” says Greta Schulz, founder and CEO of Schulz Sales Consulting. “These are the opposite of what a sales manager should be.”

When looking at employees, they are measured on productivity, efficiency and their own personal output. On the other hand, managers need to have strong people management skills and be able to motivate people to achieve targets. They are measured on team performances and on their ability to motivate their staff to succeed.

Typically there are three misalignments that make promoting your best salesperson to a manager a bad idea. They are:

  • Transition from peer to superior – This can destroy a team if not managed properly. When the best sales person gets promoted to a managerial position they are making the transition from co-worker or friend to manager/supervisor. This can be difficult for both the person being promoted and the team as a whole. If this transition isn’t managed and dealt with by both parties problems can arise.
  • Difference in performance measurement – For employees their performance is usually measured on personal achievements and output. This changes once someone get promoted to a managerial role. Their performance is measured on the team’s output and how they motivate the team to perform. This requires a change in focus from individual sales and performance to concentrating on getting the most out of the team as a whole. This can be difficult for someone who is used to always focusing on their own performance.
  • Difference in compensation – Top sales people get rewarded with large commissions because they are able to bring in the large sale numbers and big deals. When they get promoted to a manager postion often their commission and compensation structure is based on the teams performance as a whole. At times a manager’s commission could be less than that of the best sales person. This could demotivate the newly promoted manager and cause the team to suffer as a whole.

At times as a leader, the best salespeople in your team will come to you asking for promotions to manager positions. You want to ensure you are able to handle these situations properly as you want to keep your best salespeople motivated while at the same time promote the right people to managers. Here are two ways to deal with this:

  • Explain to them clearly what the manager role entails and how it requires a very different set of skills compared to the skills that make a great sales person. This alone at times is enough to make some people realize they may not be the best fit.
  • Provide dual career paths which is explained in an article in the Harvard Business Review Blog.The article quotes Sandy Cantwell, Vice President of Sales Operations of Carinal Health “This enables our sales organization to keep many of the best and brightest salespeople who are most valuable as individual contributors. You can succeed by becoming a manager or by becoming a ‘super salesperson.’ We have a formal career road map for both management and individual contributor roles. Our top sales role, the Strategic Account Vice President, is roughly equivalent in level to a Regional Vice President on the managerial side.”

Organization leaders need to remember that it is important to identify who your best sales people are and also understand that the best sales people don’t always make the best managers.  

Employees leave managers, not companies

Today I found out one of my good friends left their position at a well known technology company that many people would “kill” to work for. I asked him why he left, expecting an answer like “I needed more of a challenge”, or “I outgrew the position and there was no where for me to grow”, but instead he said “I couldn’t work with my boss”.

As he said this I thought about all the people leaving their positions because they simply couldn’t work with their manager. The work was stimulating, the team was great but their manager was unbearable to work with. In these situations, what seems to happen is companies lose good employees on a regular basis and all the managers sit around a conference table trying to address employee attrition, developing strategies for employee retention.

Employee retention is a real problem that all managers face. The key to being able to keep the good employees is not so much the salary you offer them or even the actual work, it is more about how you manage them and how they feel working under you as their manager. Do they feel valued within your team? Do you provide them with timely feedback? Do they feel your support as a manager leading their team or company?

Abraham Maslow was an American psychologist who was best known for creating Maslow’s hierarchy of needs which can be seen below.

Source: Diana Vanbrabant

As a manager we are able to affect three levels of needs within this hierarchy – safety, love & belonging and esteem. These 3 levels represents different elements within the workplace. The first level - safety refers to job security, career progression as well as health benefits and perhaps even gym membership. How do your employees feel about their job? Are they constantly afraid of cuts due to the recession? Do they know that as a manager you care about their wellbeing as well as their work?

The next level is love and belonging. People want to feel as if they are making a difference and are part of something bigger. As a manager how you approach giving out tasks, mentoring employees and interacting with them show how much you value their work. It is your duty as a manager to show employees how their work is making a difference and is part of a much larger plan. The worst thing for an employee is for them to think they are just another cog in a machine.

The last level is esteem. This refers to confidence and respect. It is important to manage your staff in terms of how they feel towards the work and to their peers and managers. Respect within the workplace is extremely important and can be the difference between keeping a good employee or losing them. Training and development when necessary is a good way to boost confidence and equip staff with the right skills. Investing in your staff to help them upskill benefits both the company and the employees. Zig Ziglar once said that there was only one thing worse than training (or growing) your staff and having them leave, and that is not training or developing them and having them stay.

A Florida State University (FSU) professor and two of his doctoral students have conducted a study which highlights the impacts of an abusive or poor manager/boss. They surveyed over 700 people who work in a variety of jobs and asked for their opinions of supervisor treatment on the job.

The study revealed these results:

39%: Their supervisor failed to keep promises
37%: Their supervisor failed to give credit when due
31%: Their supervisor gave them the “silent treatment” in the past year.
27%: Their supervisor made negative comments about them to other employees or managers.
24%: Their supervisor invaded their privacy.
23%: Their supervisor blames others to cover up mistakes or minimize embarrassment

Source: Florida State University

These points act as a good checklist to see how you are managing your staff because at the end of the day employees leave managers and bosses, not companies!

—-

7th Feb 2013 – This article made it to #1 on Hacker News. Here is the thread so you can see the discussion that went on - http://news.ycombinator.com/item?id=5176140

Social Commerce

I was talking to one of my friends the other day who is quite heavily involved in the startup scene. He was talking about social commerce and how he believes it just doesn’t work. He labeled people who influence other people’s buying decisions as taste makers rather than social connections. An example he gave me was if he was looking to purchase some good quality headphones he would not look at his social graph for suggestions or recommendations but would rather seek the opinion and thoughts of one particular person because he trusted their opinion about headphones. He saw this as seeking advice and following a taste maker rather than social commerce.

I on the other hand disagree that social commerce doesn’t work. I do agree that you put weight on different people’s recommendations and that different people can influence you in different ways. Social commerce has been a space that a lot of people have ventured into. It seems to be an area that should be “the next big thing” but just hasn’t taken off yet. In my opinion the reason for this is because no one has really sat down and thought about what social commerce really is. There are a lot of companies that facilitate having your very own store inside of Facebook on your own Facebook fan page. This would include beetailer, payvment and many others. This isn’t social commerce at all. It is just online commerce. These services allow you to create an online store on one of your Facebook fan page tabs. There isn’t anything social about it at all. Pinterest is a new player that has grown tremendously. Again it isn’t really that social. You simply scroll through pages and pages of stuff people pin and repin if you like it and possible buy it. This is more of a social wishlist which is close, but it’s not social shopping.

I think the closest thing to social commerce is Facebook connect. This sounds strange but let me explain it to you with an example. When I first came across Udemy I thought it seemed interesting and clicked sign up to check it out. I was not taken to a registration page with fields such as username, email, password etc but instead taken to a page with a big “Connect with your Facebook account” button. What was powerful though was since I was logged into Facebook I could see under the button the profile photos of about a dozen of my friends that are already registered with Udemy. This gave me strong social proof and prompted me to hit that connect with Facebook button which I did. I think successful social commerce will take this same principal. When online shopping and looking to purchase something you should be able to see your friends that have purchased that same item before. It’s very powerful when comparing two different expresso machines and seeing 3 profile photos of your friends next to one of them telling you that they have bought that one.

Here is an example of this on Quora.

In the offline world when you are looking to buy something, for example a new BBQ or a new TV one of the first things you do is ask your friends what they bought. I think social commerce will work in the same way allowing people to see what their friends bought.

Mobile Payments in Australia – CBA Kaching

Today CBA released their much anticipated mobile payments iPhone app Kaching. CBA have a strong technology team and the leading bank in Australia in terms of mobile payments. Their new app allows similar functionality to Google Wallet in that it uses NFC (Near Field Communication) technology to pay with the phone using paypass (linked to a CBA card). The only problem is that the iPhone 4s or any of it’s predecessors don’t have a NFC chip so in order to use the Kaching app in this way you’ll need to purchase a special iCarte case which is NFC enabled.

The app also allows mobile peer to peer payment. You can pay bills via bPay, pay friends via facebook and pay friends via email or mobile number. To my understanding how this works is if the recipient is a Kaching user it will simply add the funds to the user’s Kaching nominated bank account. If the recipient is not a Kaching user the funds will be transferred to a holding account and the recipient will need a unique code to access the funds. This code is given to the recipient by the person sending the money.  Once the recipient has the code they can transfer the funds to any bank account in Australia. So in essence Kaching, really does two things:

  1. NFC payments
  2. Pay people via facebook, email or phone (instead of memorising people’s account number and BSB number)

I think CBA are doing great things in terms of technology with their social campaigns and mobile initiatives. Kaching is a cool app and will definitely be new technology for a lot of Australian users however I don’t think Kaching is disruptive or innovative enough to make mobile payments mainstream in Australia. I say this for a few reasons:

  1. Kaching doesn’t allow you to link other non CBA credit cards to the app to allow NFC payment (for obvious reasons).
  2. Kaching should be or at least should also be an Android app. A lot of mobile phones that support the Android software have NFC chips built in and would allow CBA users a much more frictionless experience with NFC payments. iPhone users at this stage need to purchase the iCarte. I think CBA created Kaching hoping that the latest iPhone 4s/5 would have a NFC chip.
  3. It is a hassle for payment recipients without Kaching to access their funds. This is a similar issue with PYGG – there is no incentive for people to request others to pay them via PYGG or Kaching. Non Kaching users who get paid via Kaching peer to  peer are unable to use those funds to pay for anything unless they withdraw it. PYGG users who are sent money are currently not able pay for things in a retail environment. They can just transfer money among themselves. PayPal users on the other hand have much more of an incentive to ask others to pay them via PayPal. PayPal payment recipients also pay for goods and services using PayPal so the money can be conveniently used.

Here are some possible solutions in my opinion (may not have CBA’s best interests but would facilitate the growth and success of mobile payments):

  1. Allow users to link any credit or debit card to allow NFC payment
  2. Have the app across both android and ios devices (which I believe they are working on)
  3. Allow peer to peer payments to be sent to a prepaid card which can be used via NFC

I do think this is a good step for CBA as they are securing themselves as market leaders in mobile payments in Australia. Overall great innovation and a great app from CBA.

How To Market Successfully at Expos

I have exhibited and been to many trade-shows and expos. I have studied how they work, the behaviour of both attendees and exhibitors and have come up with some tips on how to successfully promote your business by exhibiting at trade shows. Firstly the attendees are coming to trade shows and expos to be sold so it is ok to wear your salesman hat in this situation. Go out and really sell your product or service as these people are hear because they “want” to hear about it. Secondly the other exhibitors could be a potential customers or clients to market to. Spend some time speaking with them, find out about what they do and tell them what you do.

I have come up with 5 tips to successfully promote your business at expos:

1) Run a competition in exchange for business cards
This is a great way to attract people to your stand. I exhibited at a recent technology expo in Sydney and we gave away an iPad. We had a huge 27″ monitor with a static image fed from my laptop which read “Leave us your business card to win an iPad”, accompanied by an image of an iPad. This acted well in capturing people’s attention which then gave us time to speak to them. This obviously also give us leads to follow up on which is very important to any business.


2) Have staff who know your product/service well and engage with the attendees with enthusiasm and confidence
There is nothing worst than having prospective customer or client at your stand talking to someone who can’t answer their questions with confidence putting your business in good light. You need to hire enthusiastic staff who are willing to engage with people walking past your stand. Get them to hand out flyers and speak to as many people as they can explaining what you do and how you can help them. I feel that this is more important than having fancy furniture and lights in your stand. You and your staff need to be manning your stand and always “hustling”. Make the most out of your time at the expo and engage with as many people as you can.

3) Speak at the event and drive people back to your booth
When negotiating with the expo organizers try to always get yourself a speaking opportunity. This is a great way to reach a large crowd to tell them about your business and how you can help them. Try to hype up your presentation and get as many people as you can listening to you. We exhibited at a recent event and gave away free promotional T-shirts to anyone listening to our CEO speak. This attracted a sea of people which in turn attracted even more. Once you have your huge crowd be sure to direct them to your stand for more information and get your staff to engage with as many people as they can. The attendees listening to your presentation can be seen as more qualified leads as something in your presentation must have interested them. You staff should be there engaging with them and trying to direct people to your stand.

4) Offer an incentive for attendees to take action immediately
Depending on your business it may be a good idea to offer an incentive for attendees to take action right there on the spot. This will help maximize the ROI from exhibiting as you are giving the attendees a limited time frame to be able to take advantage of a special offer. For example if you run a web design company you can have an offer where anyone who signs up for a website at the expo will receive an hour of SEO consultation for free, valued at $125. Offers like theses encourages people to take action and you as exhibitors will also be seen to be giving more away.


5) Follow up with emails and phone calls
It is very important to follow up with all the leads you gained from the event. This will remind them of who you are and what you do and give them another chance to engage in your services or purchase your products. You can follow your leads up via a carefully crafted email sequence perhaps followed by phone calls. The follow up strategy will change depending on your resources and type of business however it is very important to to have one.

These are a few tips to help you to maximize your level of success at expos and trade shows. A lot of the time they can be very expensive and can be a waste of time and money if you don’t go in with a plan of what you want to achieve and how you are going to achieve it.

I hope you have found these points useful. Would love to hear your thoughts and perhaps experiences  with expos and trade shows.

Success with Referral Businesses

Lately I have been reading a great book about referral marketing and business. The concept reminds me of social networking and works with the same fundamentals.
These are five critical skills you need to build a successful referral business both online and offline.
1)Adopt a Referral Mindset
You must adopt a referral mindset and understand that referrals will be your main way for acquiring new business.  Once you truly understand and adopt this way of thinking you everything you do in your business will be to promote your goal of getting more high quality clients.
2)Enhance Your Referability
You must serve your clients and customers extremely well.  The most important thing for you to remember is that your client’s satisfaction is crucial as their way of saying “thank you” is to come back for more business or refer you more business.  Your main business mission should be to keep your clients happy and continue to get them to say “thank you”.
3)Prospect For Referrals
Clients aren’t made equal. As a business owner basing your business around referrals you need to be able to scope out client and see how they will be able to benefit you in the future on not just in that single transaction. Many business people are excellent at serving clients but that is just not enough you need to nurture your relationships to build continuous flows of referral prospects both online and offline.
4)Network Strategically
Having a business based on referrals does not mean that you can only get referrals from satisfied clients. Many referrals will come from strong relationships that you build both within and outside your business. If you can network strategically you will be able to reap the benefits again and again without traditional advertising or marketing costs.
5)Target Niche Markets
Just like any Internet business it is always great to narrow your market and become the “best” within your industry. If you can dominate your industry, referral marketing will be the most effective and easiest way to build a massively successful business.
I hope these 5 skills will be able to help you out to build a business that will have more clients thank you can handle. I would love to hear your thoughts and comments.

Lately I have been reading a great book about referral marketing and business. The concept reminds me of social networking and works with the same fundamentals.

These are five critical skills you need to build a successful referral business both online and offline.

1)Adopt a Referral Mindset

You must adopt a referral mindset and understand that referrals will be your main way for acquiring new business.  Once you truly understand and adopt this way of thinking you everything you do in your business will be to promote your goal of getting more high quality clients.

2)Enhance Your Referability

You must serve your clients and customers extremely well.  The most important thing for you to remember is that your client’s satisfaction is crucial as their way of saying “thank you” is to come back for more business or refer you more business.  Your main business mission should be to keep your clients happy and continue to get them to say “thank you”.

3)Prospect For Referrals

Clients aren’t made equal. As a business owner basing your business around referrals you need to be able to scope out client and see how they will be able to benefit you in the future on not just in that single transaction. Many business people are excellent at serving clients but that is just not enough you need to nurture your relationships to build continuous flows of referral prospects both online and offline.

4)Network Strategically

Having a business based on referrals does not mean that you can only get referrals from satisfied clients. Many referrals will come from strong relationships that you build both within and outside your business. If you can network strategically you will be able to reap the benefits again and again without traditional advertising or marketing costs.

5)Target Niche Markets

Just like any Internet business it is always great to narrow your market and become the “best” within your industry. If you can dominate your industry, referral marketing will be the most effective and easiest way to build a massively successful business.

I hope these 5 skills will be able to help you out to build a business that will have more clients thank you can handle. I would love to hear your thoughts and comments.

Why People Don’t Succeed?

I’ve been thinking lately about all the gurus out there that are on the speaking circuit and sell their product from stage. I’m talking about people who are in the speaking arena within the personal development, internet marketing, business, property and other high demand industries. These people all have success stories and have achieved a level of success within their lives. Many of them are highly qualified to teach you and to pass their knowledge onto you. Usually after their presentation they often have a course to sell you which is often priced at a few thousand dollars. These courses are the “complete and comprehensive how tos” in whatever industry they are in.

Many frequent seminar goers have become immune to these sells and often never purchase anything on the day as they understand the process of selling from stage and the hype that is generated within the room. On the other hand many people do get caught up in the hype and spend thousand of dollars in hope this course will make them more money, make them more happy or give them more freedom just like the speaker promised.

As you may have noticed the two paragraphs I just wrote give you a a connotation that I feel that many of the speakers on the the speaking circuit are scammers selling you dud products. My opinion is quite the contrary. I have been and still go to my fair share of seminars and talks and have even been involved in running some myself. I understand how it all works and how money and sales are made. I know most of these people on the circuit have great stories and experienced great success. They may exaggerate aspects in order to further capture you but no doubt many do walk the talk. Their products are often solid and contain great value in the content that is contained. The information is usually great and if implemented can give people great results.

The question and issue I have been pondering on is if these speakers walk the talk (which I believe many do) and if their products are solid and really good value (which I also believe many are) then why do so many of the people who purchase these products see next to no results and get no where. It hit me when the company that I work for ran a positive cashflow property seminar. The seminar was great and the vibe was electric. One of my friends purchased a $3500 positive cashflow property course. The event was about 2 months ago and at the event my friend told me to collect the product for him. To this day I still have his product in my garage. I have asked him numerous times if he wants it but he keeps telling me that he has no space and he will make some space first.

So this makes it very clear why no results have occurred. The box is still unopened. So in this case it have nothing to do with the speaker or the product but simply the lack of urgency from the consumer. This led to to think about this issue further and really think why so little people take action after seminars and in life generally. I came to the conclusion that people often settle for less. As humans we settle for the comfortable and it is only two people in this world that succeed and take action. They are:

1) People who are forced to. They are perhaps backed into a corner financially and really need to “HUSTLE” as Gary Vaynerchuk would say to get the cranks moving. These people are put in a position that changes their entire perspective and they realize that something drastic needs to be done to turn things around. They begin “Hustling” to the top.

2) People who’s want for the desired result exceeds their willingness to continue the comfort they experience in their day to day life. Their why to work that extra bit and to put things into action is very strong and crushes their willingness to simply be content with their current situation. They may have great jobs and a great life but they are simply not willing to settle for that. They have a hunger to succeed and make something of themselves or create something. This hunger can’t be taught but can be created. Once you have it you will be on fire but once loss you will be as useful as a screendoor in a submarine.

The more I thought about these two types of people the more I realized this doesn’t just apply to taking action after seminars and talks. This applies to freedom, business, health and every aspect of anyone’s life. I truly feel these are the only two types of people that are able to succeed and take action in their lives, whether that be financially, socially, health-wise or even with your family . You need to really work and at most times it won’t be easy. You can’t sit on the couch and play Nintendo or watch TV, you need to be out in the trenches working your ass off to get what you want.