How To Create Rapid Revenue Growth For Your Company
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Written by Steve Glaveski, Founder & CEO of Collective Campus
Hi HypeNATION,
My name is Steve Glaveski and I am Founder & CEO of Collective Campus in Melbourne, Australia. I recently authored the book Employee to Entrepreneur: How To Earn Your Freedom And Do Work That Matters.
My conversation on Startup Hypeman: The Podcast focused on how startups can create rapid revenue growth. To expand on the topic I’d like to share how to set yourself up for this growth through proper ideation and concept design.
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Evolutionary biology teaches us that people who adapt to changing circumstances succeed in passing on their genes, and it’s no different for entrepreneurs and companies that are navigating the fast changing landscape they find themselves in today.
As a startup founder, solopreneur or small business owner, your resources are likely to be scarce, so being dilligent about how you spend your time and money is paramount. ‘I just know this will work’ or ‘I think this is a good idea’ and statements to that effect are famous last words for many a failed entrepreneur.
Former World Series of Poker champion Annie Duke knows a thing or two about making good decisions, and in her bestselling book, Thinking in Bets, she says that ‘Your intuition is generally not being challenged by people who think that another answer might be right, because it’s generally just running on its own so it’s not held accountable. Complementing what you think with customer-driven data and real-world opinions is an absolute must.
In a world where technologies, business models and customer habits are changing fast, the assumptions underpinning our proposed ideas, business models, marketing strategies and so on are likely to be flawed. Now if you’re listening to this show, you’re probably not the type of person that likes to jump to conclusions, waste time and money and gloat that you’re “crazy busy”. You’re serious about making the most of your time, and creating impact with a product that makes money not only today but well into the future and to do that you’ll need to become adept at experimentation.
If it’s a business idea you’re experimenting with, you might like to use a tool like Ash Maurya’s lean canvas or simply ask yourself questions such as:
1. What’s the problem you’re solving?
2. How does your solution solve this problem?
3. Who will use your product (not ‘everyone’)?
4. Which channels will you use to get the product in the customers’ hands?
5. How will you promote your offer?
6. What will it cost to do all this?
7. How will you make more money than you spend?
Answering such questions will give you a better feel for what your make or break assumptions are.
For example, take Uber’s business model and backtrack to 2009. UBER had a number of assumptions that underpinned its success. For example, people will use smartphones and have access to the internet, they’ll be happy to pay through their phones or they prefer not to use taxis and so on. But there is one leap of faith assumption underpinning Uber’s success above all else...
Trust.
Trust that the person picking me up isn’t a serial killer, or that the person I’m picking up isn’t going to pull a 1960s Robert De Niro mafioso-inspired move from the back seat! Without trust, Uber’s entire business model falls down faster than Apollo Creed in Rocky IV (*cough* sorry Creed fans).
When it comes to determining your make or break assumptions, it’s easy to overdo it; don’t.
• Limit your assumptions to those that have the greatest impact.
• Avoid paralysis by analysis.
• Focus on the riskiest assumptions only.
• Focus on what you don’t know instead of falling into the trap of con rming what you already do
know.
You’ll then want to prioritise your assumptions so you test the most important ones first.
How?
First, determine A: how impactful the assumption will be out of 10 if it turns out to be true/false (with 10 being high impact).
Next, determine B: how certain you are that the assumption is true out of 10 (with 10 being absolutely positive).
Finally, determine C - is this something that matters today, that you can test today, or is it a consideration for the future? Rate this out of 5, with 5 being future oriented and 1 being today.
Once you’ve determined A, B and C, simply divide A by B and then divide the result by C to get D. The higher D is, the higher the priority. This forces you to not only focus on the most impactful assumptions, but also on those that you can actually test today.
For example, if I rate an assumption 8 for impact, 4 for certainty and 1 for time, the result would simply be 8 divided by 4 = 2, I’d take that 2 and divided it by time, which was 1, and end up with 2.
Once you’ve prioritised your assumptions, you’ll want to then determine how you’ll test your assumptions with some form of prototype. Prototypes help you separate fact from fiction as quickly, cheaply and effectively as possible.
You’ll want to avoid your own New Coke moment and not invest bags of money and time on ideas grounded in untested assumptions.
You’ve heard of ROI right? Well, you’ll want to again prioritise your choice of prototype based on something I call LOI - what’s the L stand for? Learning on Investment.
And the equation is simple. How likely am I to get the learning I need by using this prototype out of 10 divided by what’s the cost in terms of time and money out of 10. For example, I’d rate a simple Facebook ad used to test an idea very low, but a functional prototype developed using PHP with offshore developers much higher. Again, you’ll want to prioritise by the higher resulting number as this is where you’re more likely to get the value you’re after.
Strategy in the business game shares so much with sports and military strategy. What’s key is shortening your feedback loop by increasing the rate at which you test, learn and adapt to changing circumstances on the battlefield. Effective prototyping helps you do that.
So what might some prototypes be?
Here’s 5:
1 - Targeted ads on Facebook, Google, LinkedIn or any similar platform can help to quickly attract target customers to your o er and determine, based on click rate, how compelling your offer is. You’ll end up paying anywhere from 10 cents per click up to $10 per click, and in a number of hours or days you can generate thousands or even tens of thousands of views.
2. Landing pages
When someone clicks on your ad, they hit your landing page — or you can use Facebook’s built-in lead collection tool. If diverting clicks to a landing page, provide additional information on your offer. Your metric again is going to be clicks or sign-ups but could extend to your site’s bounce rate or the amount of time a user spends on the page. Platforms such as LeadPages, Squarespace or the super-simple Launchrock can have you up and running in minutes.
3. Concierge prototypes
Think Zappos, the online shoe company acquired by Amazon in 2017 for US$850 million. When they started out, they had an online store with a range of shoes in it. But when a customer bought something, they literally went down to the local shoe store, bought the shoes, packaged them up and sent them themselves. They didn’t own any inventory or have a legitimate supply chain. They were purely testing genuine customer appetite in one of the cheapest, best and quickest ways possible.
4. Explainer video
When Dropbox was getting started, they developed a smoke- and-mirrors video demonstrating what Dropbox would do, and posted this on popular online communities where their target audience was hanging out. Literally overnight Dropbox earned itself 60 000 sign-ups, and the rest is history. Search for ‘Dropbox explainer video’ on YouTube and watch the four-minute video.
5. LinkedIn and email outreach
Today you can use countless ‘growth hacking’ tools to automate your identification of and outreach to target customers. You can leverage tools that automate messaging to target executives, say on LinkedIn, to introduce them to your offer and gauge interest based on the number of people who accept and respond to your enquiry. Just don’t start your message with ‘We are a web development and SEO company’. Always make it about them! Check out tools such as MixMax for email or LinkedHelper for LinkedIn.
Other prototypes you might want to look up include mobile app prototypes, wireframes, crowdfunding platforms, 3D printed prototypes, paper prototypes and email marketing prototypes.
You’ll want to get your prototypes in front of people using myriad marketing channels, whether they be content marketing, social media, email, online forums, direct outreach or any number of marketing and growth hacking strategies. Gabriel Weinberg’s book, Traction, provides 18 marketing channels that you should consider when it comes to not only getting your product in the customer’s hand but in this case, getting your prototype in the customer’s hands so you can learn fast.
Finally, as famed management thinker Peter Drucker said, if you can measure it you can manage it. How do you define whether a test was successful or not? How do you interpret the results of customer interactions with your prototype? To do this, you can use industry benchmarks or in some cases, you might be able to quantify the number yourself based on what your financial objectives are. For example, if I’m testing a marketing channel and it’s costing me $100 to acquire a customer but each customer is only worth $50 to me, then I might want to reconsider. If I’m targeting 50% margins then success would mean a cost of customer acquisition of just $25 if I’m selling a $50 product.
The nature of rapid experimentation is best encapsulated in a story from the Korean war, the United States had inferior F86 fighter planes, while the North Vietnamese fighters flew Soviet MIG15s. On paper, the MIG15s were superior to the F86s and should have wiped the skies clean of them, but they didn’t. Top Gun Naval Fighter Weapons School training aside, there were two key reasons for this. First, the MIG pilots had limited vision (the F86s featured a relatively clear bubble canopy unlike the MIG15s with their panes and struts). Second, the MIG15’s throttle was only semi-hydraulic and required lots of physical exertion to control (pilots did weights in training to control the throttle, whereas the F86’s throttle was fully hydraulic and therefore allowed pilots to transition faster between maneuvers).
The outcome was that the American pilots had a much shorter feedback loop, and as a result they were able to decide and act on that information faster owing to their fully hydraulic throttle - they ended up winning the battle in the skies ten to one.
When it comes to testing new business ideas or testing new ideas for your existing business....Be the F86.
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Well that’s it for my guest post, I hope you enjoyed that. I’ve packed insights like these and many, many more into my brand new book Employee to Entrepreneur: How to Earn Your Freedom and Do Work That Matters, which hit bookstores globally on January 9. To download your absolutely free book bonus bundle, which includes a treasure trove of techniques and tools to help you ramp up your productivity, build your pipeline and radically increase your chances of success, visit www.employeetoentrepreneur.io.
Listen to more on creating rapid revenue growth in my episode with RajNATION on Startup Hypeman: The Podcast.
Steve