Hi, I'm Isaac.

I'm a consultant and advisor  for social enterprises - using business to change the world.

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Dear Katia

Dear Katia

Sophisticated and unsophisticated customers.png

Dear Katia,
It was great to learn more about your new cosmetics business; your passion for product design is a real strength. It sounds like you have quite a few options ahead of you, which probably feels exciting and daunting. Fortunately there are some tools and questions that can make sense of your choices, and help you navigate the decisions that will shape your brand. 

It sounds like you’re in “information gathering mode” when it comes to partners and distribution channels, and you don’t have to make a decision on the spot.
Instead, you want to understand your options in greater detail.
For each option (e.g. selling in department stores vs boutiques vs your website), the three big questions are:

1.     How does this channel affect my positioning?
What does this channel say about my brand, my values and my pricing?

2.     How many customers can this channel realistically reach?
How much attention do these customers pay?

3.     What margin do we make through this channel?
What’s the percentage and the expected total dollar figure?

This will give you a better sense of the pros and cons of each option, and helps to clarify the trade-offs you’re facing, such as:
·      Lots of customers in a crowded showroom vs a smaller number of customers on a beautiful landing page
·      Stockists with knowledgeable staff vs stockists with many locations
·      Making a smaller margin in order to attract loyal customers.

Trade-offs are the essence of strategy – you can have whatever is most important to you, if you’re willing to forego a lot of other nice-to-haves.
Without a table that describes these pros and cons, it will be difficult to make a decision.

I suspect you have two distinct types of customer, and it’s worth tailoring your marketing to suit each of them. Most businesses have these two customers – sophisticated (they’ve bought this type of product before) and unsophisticated (they have never bought this type of product before).

Sophisticated customers speak the language, they get the shorthand terminology, and they know what they do/don’t like about their current suppliers.  You can cut to the chase with a sophisticated customer, but you also have to present an offer that’s much more compelling than staying with their current brand.

Unsophisticated customers don’t quite know what to look for, they’re learning as well as shopping. You’ll need to educate these customers before you hit them with your selling points, but the good news is you have less competition with other rival brands.

It’s worth thinking about each customer and asking:

·      What does this person look like?

·      What are they in the market for?

·      Where do they naturally shop?

·      What are they typing into Google?

·      What’s their budget?

·      How do they measure “good value”?

·      What do they consider to be risky/less risky?

Once you have some answers to these questions, you can start designing two distinct customer journeys, where you outline how you’ll attract, communicate, deliver and retain each type of customer over the years. I find it easiest to use a tool like The 5 E’s Of Customer Journey, visually drawing out the key moments and customer mood for each of the five stages. This process reveals the hidden opportunities and traps for attracting future customers, and will spark new ideas for delighting your audience. 

Testing an empty box.png

These tools and frameworks are great for generating new ideas, but the most important step at this stage of the process is to run a real-world test. If nothing else, I hope we can philosophically agree to the benefits of real-world testing – the following train of thought has helped me in the past:
Everything you’ve done so far is a guess.
These guesses are either spot on, dead wrong or mixed.
If they’re spot on, you want to confirm this ASAP since it will give you confidence and some evidence to show your partners/stockists/investors.
If they’re dead wrong, you want to see this ASAP since it will save you an incredible amount of money, time and attention, which you can reinvest in the next version of the idea.
If they’re mixed, you want to zoom in on which guesses are accurate and which are faulty, keep the elements that are working and change the ones that aren’t, again saving a lot of money, time and attention.
All scenarios are good for you, so long as you confirm which scenario you’re in today.
The thing to fear is misdiagnosis through fear and inaction – assuming that your guesses are correct when the market can tell you a different story. Misdiagnosis cuts the other way too – perhaps customers are willing to pay more than you thought, or see additional benefits to the product that you hadn’t considered?

The way to design a test is around this question:
What will prove to you that these assumptions are accurate?
The key words here are “to you” and “assumptions”. Naming assumptions forces you to acknowledge where you’re making guesses. It’s not about proving this to me or a partner or an investor – this is about proving the model to yourself, since you’re currently the one investing so much time and thought into the business.
Fortunately, the internet is full of great ideas for running different types of test, like surveys, landing pages, crowdfunding campaigns, pop ups, customer discovery interviews, Google ads, trackable links and promo codes that highlight how customers think and act. 

There are two types of tests that will reduce your risk and help you better understand your market.
You can run tests with an empty box (e.g. without the customer actually using the product), as these tests show you how customers perceive your benefits and Value Propositions.
What draws their attention? What do they read first? What do they look for?
Having a great product is only half of the battle, since it can only be experienced by the customers who decide it’s worth a punt.
Testing with an empty box gives us insights into how to persuade more customers to take a chance and try the product for themselves, either as a free sample or to buy it on the spot.

You can also test the product and its active ingredients, gathering feedback on how customers use it and how they measure its efficacy. Most importantly you can measure how many people re-order the product – this is the most honest review.
My suggestion is to run both types of test, since they tell you different (and equally valuable) things.

Purpose of cosmetics.png

One area I’d be keen to test is how prospective customers perceive your product.
You have a new name for your product’s category, which might not be the term customers use to describe what the product does for them. This is really common for founders, because you understand your point of innovation so much more clearly than your customers do. The risk is that your terminology comes across as jargon, and unless a customer can tell themselves a story about what the product is, what it does and how it will make their life better, it’s difficult to win the sale.

For example, in 2001 Apple sensed that most people didn’t know what an MP3 player was or why they’d want one, so when they released the first iPod they described it as “1,000 songs in your pocket”. That’s an oversimplification of an MP3 player, but it was what caught people’s attention. There are lots of strengths to an MP3 player, the challenge was picking which one to lead with.

You’re in the same boat – the product has lots of strengths, which one do you lead with?

I suspect the most frustrating part of this test will be when you hearing the poor descriptions customers give this type of product, or how they overlook its brilliance. My suggestion will be to channel that frustration into action, specifically in designing your packaging and signage to help explain what you offer, how it works and how it can make their life better.

What’s becoming clear in all of this is the overwhelming amount of choices you face.
A lot of the important decisions a founder has to make revolve around sticking to your guns vs changing your mind when new information becomes available. This is tough to navigate, since the world of entrepreneurship is full of stories of founders who succeeded by sticking to their guns, and founders who succeeded by changing when new information became available. It’s hard to know which role models to follow, so we’ll need to start by defining the “non-negotiables”. These are things like your brand values and principles, and as they say “A principle isn’t a principle until it costs you money”.
What corners are you unwilling to cut?
What roads are you never going to take?
How do you want to treat your customers and your team?
Are these each important enough that you’ll sacrifice a financial gain for them?

Then we have the next layer down, which feel pretty set but might change if better options became available. These are things like your brand name, stockists, price points, logo or the design of your packaging. You’ve probably got ideas in mind, but it’s worth reminding yourself that you’d be willing to change them if a better alternative became available.
e.g. moving away from any plastic once new options arrive, partnering with different retailers if they become interested in a partnership, collaborating with great people who you haven’t met yet, or ending a partnership if the other party acts in an unconscionable manner.
When is the customer right?
Where are you willing to change your plans based on spikes in customer demand?
If you see interest from lots of customers in an unusual market, are you willing to change your plans to better serve them?
If there is far less demand in other locations/channels, are you willing to pivot and look elsewhere?
On the other hand, when do you want to change the customer’s mind?
When will you choose to be a bit less convenient, a bit more expensive or a bit harder to use in order to live your values?

Aesop Lovemark.png

One of the more interesting tasks on your plate is to draft the copy for your advertising, website and packaging – the words that talk directly to the customer. You want to start boiling it down to the least amount of words needed for the customer to “get it”. These will be used for your headlines, product descriptions and instructions. As David Ogilvy said: 

“On the average, five times as many people read the headline as read the body copy.
When you have written your headline, you have spent eighty cents out of your dollar.”
 

You also want to start drafting longer form content that explains your brand, beliefs, product, benefits and how people can join your tribe. Fortunately you already do this incredibly well in natural conversation, so this is an exercise in translating that conversation onto paper. Again, I like David Ogilvy’s suggestions:

“When you sit down to write your body copy, pretend that you are talking to the woman on your right at a dinner party. She has asked you “I am thinking of buying a new car. Which would you recommend?”
Write your copy as if you were answering that question.
Don’t beat about the bush – go straight to the point. Be specific and factual. Be enthusiastic, friendly, and memorable. Don’t be a bore. Tell the truth, but make the truth fascinating.”

Kevin Hogan has a great book called Lovemarks, which is about brands that inspire “loyalty beyond reason”. These are brands that you feel drawn to even when their competitors are cheaper or more readily available, because there’s something about the brand that you find captivating.

I could have a guess at a few of the brands that are Lovemarks for you, off the top of my head I’d say Aesop, Malin + Goetz, Tom Dixon and Diptyque fall into this category?

You can use your first-hand custom experience of these brands as a source of insight;
·      How did you first encounter them?

·      What drew you towards them?

·      How did they treat you?

·      What elements of these products make them feel special?

·      What kept you coming back?

Then you can look at the brands that are Lovemarks for other family members, friends and colleagues.
·      What are they drawn to?

·      What makes them loyal to the brand even when better/cheaper options are available?

It’s worth thinking about your goals; whether you’d rather become ubiquitous or become a Lovemark to a small portion of the market – these two strategies are quite different.
I highly recommend reading the book and seeing what jumps out at you; which case studies and adjectives resonate with your vision for your brand?

So to recap:

1.     A pros and cons table of your channel options will help make a clearer decision.

2.     Some of your customers are sophisticated buyers of cosmetics, some aren’t, and it’s worth creating personas and descriptions of each of them.

3.     Customer journey is a great opportunity for creativity; thinking up new ways of delighting your customers as they discover, evaluate, use and re-order the product.

4.     Real-world tests are confronting and incredibly valuable, since all outcomes make your business either stronger or better informed.

5.     You have two types of test to run – testing how customers interact with the empty box, as well as testing the product itself.

6.     A great thing to test would be how your customers describe your product and what it does for them. Maybe they use the same language you do, maybe they don’t?

7.     You’ll want to define your values and non-negotiables, so that we know which elements of the brand are up for discussion when new options present themselves.

8.     It’s worth drafting up different versions of your headlines, as well as body copy, since these are so important in connecting with your customers.

9.     It sounds like you’re trying to create a Lovemark brand, so I recommend reading the book and noting which case studies resonate for you.

This part of the journey can feel ambiguous and blurry, but it’s all about defining yourself, your partner options and your real-world customers.
Each of these things needs several drafts, the first ones are usually the worst, but this process makes your ideas clearer and stronger.
These tools also give you a language for talking with your network advisors, allowing each of them to contribute in their area of expertise.
Finally, this stage should feel a bit nerve racking and a bit exhilarating – you’re doing unusual things in order to create something remarkable.
Please let me know where I can help, let’s catch up again in a few weeks.
Cheers,
Isaac

Impact Models - Digging Deeper Into Root Causes

Impact Models - Digging Deeper Into Root Causes