How to Choose a Logo

I’ll be the first to admit that I’m not a graphic design expert but as a product manager I spend tons of time figuring out which web graphics will cause the desired result and which won’t.  This blog post is meant to help start  you off in the right direction when you are trying to choose a logo.

I have had to make decisions on a number of logo designs and like most customer facing design decisions I always start with the “why”.

Why are you putting a logo on the site? You might think this question is silly and overly obvious.  But it’s a good exercise to make sure you can answer this question with something more than just “because we need a logo”.

Does this logo need to do something different than other logos? What is the desired result of this logo? If you can’t answer these questions then you’re not ready to make a decision on logo design.

For example: www.schooltree.org is a new social network for school communities that I’m currently the business director of.  So why do we need a logo on the site?

Answer: to get people to remember they were on www.Schooltree.org as opposed to another site.

Our strategy is to promote the name as simply as possible.   I don’t think we should use an image as part of the logo.  As an example of websites that simply use the company name: facebook, google, linkedin, keek (I worked on this one too), path, digg, lifehacker, paypal, craigslist, ebay, wikipedia and on and on and on.

The common denominator with all of these websites is that they are simply trying to get people on them and to stay on them as often and for as long as possible. That is how they make money. Using imagery in a logo is common for websites that promote a product that is something separate from the actual website like a car or a band, etc.

When trying to cary your brand from one location to another imagery ties the product to the online display so people know they are on the right webpage in case they might have gone to a different webpage with the same name but for another product.

The purpose of our logo is to get people to remember the name ‘Schooltree.org’ and to come back to that url as much as possible. That is what we are selling.

If you want get a deeper understanding of how to design a logo here is a great book I can suggest.

Now for the engaging part of my post… If you can give me a reason to use imagery for the www.schooltree.org logo and send me a design that makes me change my mind we’ll use it and give full credit.

How Do You Go Viral?

How do you go viral? Or perhaps a better question is why do some things go viral and others don’t?

In this blog post I try to answer the question, how do you go viral?

Here are a couple points I learned recently from taking a course call Networked Life on coursera.  I’ll also draw from my experience building viral marketing campaigns and launching a couple social networks.

The ability of a virus to spread depends on the average degree of connections between nodes, or people in a population.  If you have a population where the average amount of connections per person is 1 then the virus won’t spread very far as it will just keep halting after reaching the second person.

If you have an average degree of 2 between people in the population then right away the viral reach of a contagion is much strong, much more than 2 times actually.  Then it doesn’t take much more to reach the tipping point at 3 or 4 which is a threshold where the contagion of the viral spread is complete in reaching the entire population.

Another element of the tipping point is the strength of the virus, or in a youtube video’s case, how entertaining the video is.  Meaning, if the video is really good and people like it will take a lower average degree of connections in the population to spread as would a weaker video.  Much like a bad flu that hangs around for a long time.  If you are in a more rural area with a weak flu it will die out quickly but if the virus is much stronger and makes someone sick longer there is a greater chance for that person to encounter more people while still being contagious.

On the flip side, if someone is living in a densely populated slum in India where people are basically living on top of one another, even a weak flu will make it’s way around a large percentage of the population due to the incredibly high degree of connections everyone shares.

So what the heck does all this mean?  Basically, if you want your content marketing strategy to go viral make sure you focus on these three points.

  1. Make the content awesome so that people keep on enjoying it and sharing it with their connections.   You can’t skimp on the investment here.  If it sucks, it won’t go anywhere.
  2. Make sure you’re spreading it in the networks where your target market has the highest average degree of connections.  A great example would be if you are trying to reach mommy bloggers.  You’re going to want to make twitter your priority over facebook because they are all there and they love to share good stuff.
  3. Focus on getting as many influencers sharing your viral content because they will boost the average degree of connections by having more connections than the average person.  Additionally, they can actually make your content stronger by adding their approval to it.  It’s like when a virus strain mutates into something more powerful and harder to kill.

Please share your thoughts on creating viral reach in the comment section below.  I’m always happy to learn something from my readers.  🙂

 

 

 

What is Gamification?

In this blog post I will try to answer the question, what is gamification? This is a very important question for any one who needs to motivate people to take action or to simply make a product or service more enjoyable.

Ever wondered what it is about Angry Birds that has generated over 1 billion downloads? Is there anything you can learn from that game to apply to your product to make more people like it, you bet there is. It’s called gamification.

So what is gamification? and how do I apply it to solve real world problems?

There isn’t one universal definition but in general it’s the use of game elements and game design techniques in non-game contexts.

For example, Samsung Nation is an example of a company using game elements to get more traffic and more interaction with their products.  They motivate users to write reviews, watch videos, find out more, register products they have already bought, etc. They use simple elements they took from games like leader boards, badges, points etc. They ultimately want you to buy more products and are using game elements to reach that goal.

Another great example is the Nike Plus app. It uses the accelerometer on your phone to make your experience of running more game like. It tracks your data, compares you to other runners, has goals and challenges and if you achieve those goals you earn medals and trophies. They also built in ways to connect with friends to get encouragement. So the game structure around the task of running somehow make the experience of running feel more rewarding by using their app.

A competing app also meant to get people running is Zombies Run.  But here the  app is telling you that you are being chased by a group of zombies that want to kill you and eat your brains.  So it is simply making your run more fun, which is different from Nike Plus which is using challenges and rewards.

There are even products like Keas which is a service that helps people in companies engage in activities that makes them healthier, using regular game elements.  Such as:

  • Points
  • Quests
  • Avatars
  • Social graph
  • Levels
  • Progression
  • Resource Collection

But games are not just a jumble of elements stuck together in a half hazard way, rather they use game design that is systematic, thoughtful and artistic.  All of course, for the purpose of being fun.  This involves technology, algorithms, engineering while approaching problems using concepts that relate to all games while applying them to novel situations.

Some gamification examples focus on the elements and some focus more on the game design but all require a non-game context.  Meaning, what the user is doing is game like but the purpose has a validity and intention independent of the experience of the game-like elements.

I hope this shed some light on gamification and please let me know of other good examples you have experienced in the comments below.

 

 

 

Agile, what does that have to do with software development?

Agile, what does that have to do with software development? Here’s my elevator pitch on answering that question.

Just in case ‘Agile’ is a new term for you, I’m referring to a process for planning, creating and implementing software.  In case you’re picturing a group of very limber developers that can leap from their work stations to the fridge, where their Red Bulls are located, in a single bound… no, not at all. So, Agile, what does that have to do with software development? Especially when you’re a web developer sitting on your computer pounding Red Bulls all day and night?

Agile is a new approach to developing software that challenges the traditional “Waterfall” methodology. So if you are venturing to launch an internet startup, or any new business concept for that matter, pay heed.

Something I learned recently at a Product Owner workshop in Toronto with the WFS team, is that Agile is not really a methodology.  It’s a process of learning.  And though it has been created in the world of software development, it’s foundations can really be applied to any business. Another term closely tied to Agile is Lean.  They share the same foundations and I really do suggest reading The Lean Startup by Eric Reis.

A really simple way of comparing Agile to Waterfall’s traditional style of software development kind of looks like this:

Waterfall = plan plan plan plan plan | make make make make make | test test test test.

Vs.

Agile = plan make test | plan make test | plan make test | plan make test,…

The reason why Agile has become so popular is the ‘Plan Make Test’ approach is a much shorter loop in which you are able to learn vital information from concurrent testing rather than making the whole product from top to bottom only to test it at the end of the process.

Waterfall generates far more wasted resources and often times causes business failure.  Generally even in good scenarios you have to go back and redo a lot of code to replace or change features that were not a product/market fit.

Here is a great video that shows how this process works: 

Now when someone comes up to you and says, “Agile, what does that have to do with software development?”, you’ve got a great video to show them.

This is a huge topic and I have offered a very shallow explanation of what Agile is.  A great book I recently read is Agile Software Requirements: Lean Requirements Practices For the Teams, Programs and the Enterprise by Dean Leffingwell.

I do plan on writing much more on the subject so please do check back or subscribe to my blog in the footer of this page of the page.

How To Hire And Keep Web Developers

In this blog post I write about some key lessons I’ve learned regarding how to hire and keep web developers.

 

If you are in the same position I am, you spend a lot of time hiring and keeping web developers.  If you have done this for any length of time you know just how hard it is.   I don’t think there is a tougher industry to be recruiting and leading in today.

The demand for web developers is extremely high and it just keeps growing.  I’ve tried every strategy I can think of to find talent and I’ve come up with some realizations that I’d like to share with you.

Before I move forward, I have to suggest that you read ‘Good To Great’ by Jim Collins. Pay particular attention to chapter 3 where he writes about putting the right people on the bus.

Don’t hire the smartest people you can find.  Yeah, that’s right, I said it.  The success of your business will not depend on the collective IQ if your team.  Where’s the proof?   Think about 95% of startups that fail even though they are filled to the brim with ridiculously over paid geniuses.  Of course your team members need to be smart (enough).   But, as long as the are in the  intellectual ball park you should focus your hiring decisions on personality, attitude and motivations.

Take more time than you want to.  It takes more money and more time to build something when you have to keep re-hiring in the build process.  I personally don’t make an offer unless I’ve had at least 4 calculated interactions with a candidate.  The last meeting I have is social.  I take them out for dinner, and if they are married I invite their spouse.  Some people are surprised by this but I don’t want someone whose spouse doesn’t support them working for me.  I got this idea from Dave Ramsey’s latest book ‘Entreleadership’

Test all of your candidates… all of them!  After my first interview I have them do a hand-written test of the programming languages in which they will be developing.  In addition to that, after a follow-up hour long interview I have everyone perform a whole day of coding.  We give everyone the same task so we can compare all our candidates on the same base line.   When I tell recruiters this they generally cringe but since I’m not in the business of making recruiters lives easier, I don’t really care.  Which brings me to my next point.

Be cautious with recruiting firms.  The allure of recruiters is strong and I do use them but in limited doses.  Before signing with any recruitment company I ask them for blind resumes of candidates that I will have the chance to meet if I sign with them.  Their concern is for their business, which is getting people hired.  They are not concerned about the success of your business.

Do not pay top dollar.  Sorry guys, if you want to be part of my team you’re going to have to show me that it’s not just about the money.  I do strongly advocate paying people fairly according to their market value.   Still, if you think you can win the best people by buying them you’re going to end up with turn-over.   Nothing costs more than re-hiring.  A great way to measure someone’s market value is by using Payscale.com.  Remember, if they are only in it for the money they will leave the minute someone offers them more.  Someone will always offer them more.

Treat people the way you want to be treated.  OK, this is a huge topic and it needs to be part of every interaction you have with everyone in your life.  Thus, if you want a motivated team that is loyal to the company and its mission, DO NOT say or do things that you would not like directed at yourself.  For a great podcast on this topic listen to this Entreleadership podcast titled ‘The Golden Rule In Business’.

Well I hope these tactics help you figure out how to hire and keep web developers.  The right team members make all the difference.  If you have other suggestions or insights from your own experiences please leave them in the comments below.

Happy hunting!

How To Create A WOW Experience

 

In this post I hope to shed some light on how to create a wow experience for your customers.

Many companies and business leaders talk about the concept of WOW but few, unfortunately, actually take the time to teach their customers or their staff what it means.  It really is more than just a word that sounds good and when you break it down a little you start to see how vital it really is.
One company that strives to master WOW is Zappos.  They define WOW as the following…
 

“WOW is such a short, simple word, but it really encompasses a lot of things. To WOW, you must differentiate yourself, which means doing something a little unconventional and innovative. You must do something that’s above and beyond what’s expected. And whatever you do must have an emotional impact on the receiver. We are not an average company, our service is not average, and we don’t want our people to be average. We expect every employee to deliver WOW.

Whether internally with co-workers or externally with our customers and partners, delivering WOW results in word of mouth. Our philosophy at Zappos is to WOW with service and experience, not with anything that relates directly to monetary compensation (for example, we don’t offer blanket discounts or promotions to customers).

We seek to WOW our customers, our co-workers, our vendors, our partners, and in the long run, our investors.”

 
Zappos have really hit the nail on the head with this description and I especially love how they talk about creating an internal culture of WOW.  For them, it’s not just about their customers, but they include vendors and co-workers.  Wouldn’t you love to work at a company that teaches your team members how to create WOW experiences for each other?… (now take 30 seconds to day dream about that… yeah that’s nice…)
 
So, I think this company is saying that the essence of WOW is that gap between expectation and experience.  Here is a simple process you can use to make sure that whatever you are creating strives to exceed expectations.
 
Make something you would use yourself.  
Take a look at Mint.com.  When you use this website you get the ense that the people making this amazing personal finance tool use it themselves and love it.   Their numerous accolades speak for themselves.
 
Solve a problem in an unexpected way.
The first example that comes to my mind is a great book by the guys at ’37signals’ entitled Rework.  These guys produced a business leadership book that deals with chapters a completely novel way.  That alone made me want to read it and I’m glad I did because I gained valuable ideas that I have implemented at my own workplace.
 
Excede expectations.
I would say that the master of this trait is Apple.  There is a reason that I’m writing this post on an expensive Macbook Pro and that I make all my calls from an iPhone.  I appreciate that Apple puts the time into the finishing touches like no other tech company I have seen.  It also explains why they have been setting all the trends since 2005.
 
So if you’re asking yourself, “how do I do this?” Try answering the following three  questions :

  1. What does a user expect when they encounter my product?
  2. What does failing to meet the users expectations look like?
  3. What does exceeding the users expectations look like?

For a great podcast on this subject check out MichaelHyatt.com

Well I hope this post helps shed some light on the concept of WOW, making it more that just a new trendy word in the business leadership world.  Now keep in mind, it’s probably not possible to make everything a WOW experience, but it should certainly be the norm within the main value offerings of any business.

Please let me know about any WOW experiences you have encountered in the comments below!

3 Ways To Let Your Team Members Know How To Succeed

Ask any business leaders if they believe it’s their job to make sure their team members are equipped with the necessary tools to perform their jobs, they would answer yes, of course.

So why is it that emplyees who get all the new office equipment still often feel they don’t get the support they need, while others work in much less attractive settings but are able to perform with success and enthusiasm?

Well the truth is, the tools that really help someone accomplish their work and feel motivated are the intangibles that are much harder to foster.   Thankfully, like everything else, the harder something is, the more benefit that comes.

From my experience managing teams, these are the most important 3 ways to let your team members know how to succeed.

  1. Communication.

    How are you communicating with the individual members of your team?  Do you speak to them all the same way? Have you ever considered what their personal communication needs are? Some of your team members need to be spoken to in a short and direct form, whereas others need to be suggested things in a more conversational way.

    The challenging part is finding out what ways each person operates and a very useful resource is Dan Millers website 48days.com where you can access personality assessments for your whole team. He offer tools that help you figure out exactly who you are dealing with and what their personality strengths are. This is also essential in order to put them in the positions in which they shine.  It’s about getting the right people in the right seats and communicating with them so they know how to shine.

  2. Key Result Areas.

    Do your team members know exactly what they need to do in order to win every day? If your answer is no, then you have a problem. As a business leader, one of the most important things to do is make sure your team members feel confident they know how to be successful.

    Think about it, who is more motivated, someone who is running toward a goal they can see, or someone who is running with no idea why? Every person you lead should know exactly what their KRA’s are so they can be motivated, and very importantly, accountable.  For a great explanation of KRA’s check out Dave Ramsey’s book titled Entreleadership.

  3. Regular Engagement.

    So let’s say your have your staff take personality assessments and you’ve read them over.  You’ve also sat with each one of them and detailed their Key Result Areas and each person you lead knows exactly how to win each and every day.  What do you do now? Well, now you take all this information and engage them regularly.

    I think daily engagement is probably the right amount for most roles, but of course there are cases where it might not be practical or it may even be detrimental.  The point is, it needs to be regular, and of high quality. I start every day off with a meeting with my team in which we go over what we accomplished the previous day, and we set the priorities for that day.  This keeps things moving and keeps people actively engaged in their KRA’s.

These are just a few tools/practices that help me keep my team productive and I can assure you there is much more to write on these topics.   Along with the resources I’ve mentioned above, I suggest reading books by Jim Collins.  These are mandatory readings for my team members.

 

 

5 Reasons You Should Start Tweeting

My name is Jono Landon and I’m an internet business developer in Toronto Canada and recently I felt the need to write about my top 5 reasons you should start tweeting.

Even as someone who knows a lot about social networks, until recently the real value of twitter was somewhat hidden from me.  I say “real value” because though I’ve understood twitter from a text book point of view, it wasn’t until I started to depend on it that I really got it.  And to be honest, I think there is still much for me to learn.

So what caused this new dependancy? well I happen to be launching a new niche social network here in my home town, Toronto.  Our target early adopters are mommy bloggers and once I started connecting with this unique and exciting breed online, it didn’t take long to see how twitter is the glue that holds this group together.  And well, you gota be where your market is.

The way I can best sum up Twitter, is that it’s like texting with your friends but doing it publicly.  Being that it’s public, it’s a great way to bring other interested parties into the conversation.  So when someone is searching twitter for something they need and they find your conversation about it, they find you.  If you are someone who can help them solve their problem then you’ve got a opportunity in your hands.  That opportunity could be a business lead, restaurant recommendation, up to date traffic info… you name it, people are tweeting it.

Tweeting takes some time to figure out, but there are only a few things you need to get used to.  Like reading words with symbols before them (#, @) and learning how to express lots of meaning within 140 characters. Here are my top 5 reasons you should start tweeting.

  1. It will improve your communication skills. Twitter forces you to communicate a message that is engaging within a 140 maximum character limit.  This is an exercise in being concise and clear.  I can’t think of a more valuable lesson for writers, especially copy writers.
  2. It’s a great way to meet people you relate to.  People find each other based around topics that matter to them.  Where else are there millions of people in one place looking to connect about topics at all hours of the day.  It has simply never existed before.  For example, while connecting with mommy bloggers on twitter I met @elizabethtraub, had a very enjoyable hour long phone conversation during which I learned about her talented musician daughter Emily Otteson.  I happen to also work in the music industry so this was a lot of fun.
  3. It requires virtually no investment.  Not only are there millions of people looking to connect but they are doing it in a incredibly simple, convenient, fast, and free way.
  4. It’s a lot of fun.  It’s like a puzzle, trying to get your message across in 140 characters.  When you’re forced to be concise, you start to learn which words are essential and which words encapsulate many others.  It’s a game.
  5. It will ensure you are not out to lunch with progress. Though it takes a little more labor to get into the grove then facebook does, this things isn’t going any where so you might as well at least give try and see what all the fuss is about.

I’m sure I’m going to write more about Twitter down the road as I continue to use it and see more value.  In the mean time, I hope this helps shed some light on this strange but incredibly powerful form of connecting with others.  Happy tweeting!

10 Ways To Generate More Blog Traffic

Welcome to my newest blog post, 10 Ways to Generate More Blog Traffic.  Like all my posts, they come from my research and experiences working as an online business developer in Toronto Ontario Canada.

In this blog post, I discuss how to generate more traffic to your blog. These are the same basic techniques I use to increase my traffic. You can dramatically increase your blog traffic by following these ten strategies.

Every single writer wants to be read, thats the whole point. They want to influence, entertain and grow their readership. Well it’s not simple, so don’t try to find a silver bullet and get ready to buckle down with these 10 strategies to drive more traffic to your blog. They work.

Now, before doing anything else, make sure you install some kind of analytics tool, like Google Analytics to your site so you can track what is actually happening. If you don’t have it, stop what you’re doing and go get it because if you can’t measure your blog traffic, you can’t grow your blog traffic.

  1. Write great content that people will shareIf you are not writing stuff people want to read, smarter marketing will not fix the problem. Content is king, there is no substitute for that. Great marketing actually makes a bad product die faster so make sure you aren’t spending valuable time marketing something that actually sucks. Begin by creating a killer headline that makes people want to read what you have to say. If you don’t know much about writing headlines then become a student of writing great headlines because if you can’t catch people with a headline they aren’t even going to get to your great article. Start by reading Advertising Headlines That Make You Rich by David Garfinkel.
  2. Adhere to a consistent schedule. You can’t expect to increase your traffic if you don’t blog regularly. You can’t get all excited, write a bunch of posts and then leave it for 3 months and expect to see your traffic take off. Frequency leads to visibility and that leads to traffic which then leads to business growth. Some people do it once a day and some people do it once a week… we are still talking about blogging right?. My suggestion is to start with that you can commit to doing regularly. For me, being in charge of a new tech startup and having a band that I’m promoting and having a million other ideas that I want to start, and having a wife who does deserve some attention, I just can’t do more than once a week. That said, three times a week is even better. Five times a week is best—but NOT if the quality of your content suffers.
  3. Don’t be lazy, get your own domain name. If you don’t have your own domain that you own you simply don’t look like a serious blogger. Also, it’s much easier for someone to pass along your blog to others when they can say JonoLandon.com instead of ljasdfljasdflkjsfdl.jonolandon.com/094308734250-89723460897. Also, if you don’t own your name online then buy it, even if someone owns it, just buy it for as much as you can afford. It’s your name and down the road I think that the value of that is going to grow exponentially for everyone, not just bloggers.  Not that I think they are the best by any means but I buy all my domains and do my hosting at GoDaddy just ’cause I started there a long time ago and I’m too lazy to go find a better solution.
  4. Place your blog address everywhere. It should appear virtually everywhere your name appears. You need to treat each and every impression as precious, so if there are 5 people that see your twitter profile in one day that is 5 opportunities to get their eyes on your site, and when they share your content with their friends it gets your blog in front of their faces too. Get it? What about business cards, presentation slides, facebook timeline image, printed on your shirt, tattooed on your nose… wherever you can think of put it. Of course, be tasteful.
  5. Make it easy to subscribe to your blog. You don’t want to depend on your readers to remember to come back to your blog. Instead, you want them to subscribe, so they get every new post you write. They should be able to do so by either RSS or email. (Use both.) Position these two buttons prominently so that those who want to subscribe don’t have to hunt for them. With out a subscribe button you are basically expecting people to sit with your blog open patiently waiting for you post something new. Not a good retention strategy by the way. Make sure you have an RSS feed icon with your social icons at the top right corner of your page because that is the easiest place to find it. If you are using WordPress, which you should be, there are great plugins that are super easy. Think about how cool it would be to have your blog posts automatically show up in people’s email inboxes. Well it couldn’t be much easier to do. I use a free plugin called Subscribe / Connect / Follow Widget which took me all of 2 minutes to install.
  6. Optimize your posts for SEO. In case you are very new to this SEO means Search Engine Optimization. Which means that when people go to Google and do a search for keywords that are connected to your posts topic. This doesn’t happen unless you optimize your post for SEO. Again, no other blogging platform holds a candle to WordPress which offers plugins that makes it super easy to have the added functionality to make sure your blog has every thing it needs to be found. I use two plugins for this called: All-in-One SEO Pack and the other is Scribe SEO.  The latter is paid for but worth the money.
  7. Utilize social media. Use social media to network, build relationships, and announce new blog posts. Let’s say you have a retail store, and you are standing outside the shop and wondering where all the people are. Well, did you put your store in a busy place? did you put up ads on billboards? Well for a website the one of the most important places to make sure your seen is on the social networks you like to use. Pay attention to that last part, the ones “you like to use”. People think that it matters which networks you use but I don’t think it does because they are all great and all that matters is that you love using it so you keep using it and keep getting the visibility from using it. One caveat, do NOT spam people. You have to be social not spammy. For instance, on Twitter you can and should post your articles but don’t just repeatedly annoy people with them. Rather spend more time just developing rapport with other users. Re-Tweet other articles, reply to tweets you like, share them with other people etc. It’s all about reciprocal actions.  If you’re in the Toronto area and are looking for someone to teach you about this check out Sarah Zeldman @ theemarketingmaven.com.
  8. Be part of the conversation. Make it easy for your readers to comment on your posts because people want to participate and when they do it’s great for you. I recommend the facebook comments (It’s what I use and guess what, that’s right, there’s a WordPress plugin for that). Don’t make them have to register. This only adds friction. Engage in the conversation yourself, reading your comments and replying as appropriate. The facebook comments is great because when someone comments it gets posted on the facebook feeds of their friends with a link back to your post. We call that social optimization.
  9. Comment on other blogs. As you read other people’s blog posts, leave comments. I’m not taking about spamming people with invitations to read your blog. Instead, engage in the conversations that interest you and build credibility. Make sure that you register with their commenting system if possible, so there is always a link back to your blog.
  10. Be a guest blogger. I have to admit, I don’t do this yet myself. That is primarily due to being to busy to write for myself more than once a week. There are many very successful bloggers who get their traffic almost exclusively by guest blogging on sites that get lots of traffic .

Beyond that you want to make sure you are using a good , SEO-optimized blog theme. There are hundreds on the market. I use Twenty Eleven and like it a lot.

Also, please remember that there really is no silver bullet and this takes time so be patient. Think of this like the turtle and hare, who always wins?

If you have a question or comment please email me.

What’s Your Startup’s Growth Strategy?

A couple of weeks ago someone suggested I read the book “The Lean Startup” by Eric Ries.  So I went and did just that, and I’m very happy I did. As a product management guy, this book is invaluable and does a wonderful job of clarifying essential methods for any startup to employ.

There are many activities that businesses can engage in to create new customers but there exists three main mechanisms of growth that determine the kind of activities that should be tried, tested and optimized.

Let me clarify that this post in no ways means to discuss how much value you are offering your customers. I want to zone in on the mechanism that makes businesses able to expand and continually offer their products or services to new customers.

Eric Ries does a superb job of summing them up in the following categories.

Sticky Growth: This refers to businesses that brings in new customers and grows by retaining them. They need to be focusing their attention on tracking the attrition or churn rate which is a fraction of customers in a defined period who no longer engage with the product.  If the rate of acquiring new customer is greater than the churn rate, it will grow.  An example of this would be a mobile phone service provider whose goal is for you to remain a customer for a long a possible, in contrast with a car manufacturer who is focused on selling you at least just one car.

Viral Growth: Refers to a product that creates new customers directly from the usage of current customers. Inherent in this growth strategy is that the product itself delivers the most benefit to a customer when shared with others. The most obvious example of this kind of product is a social network. The goal is to create a viral coefficient of at least 1 so that there is a continued rate of growth. Anything lower than 1 means the growth rate will slow down to an eventual halt.

Paid Growth: This refers to a business that needs to sell it’s product at least one time per customer but the cost of acquiring a new customer (CPA) is low enough that the business can afford to continue acquiring new customers while still generating profit.  So take two different companies, one sells a product for $1 and purchases sponsored links on Google Adwords with a CPA of $0.80, while the other sells a service that costs $100,000 and pays sales people a salary and purchases commercial slots on t.v. networks with a CPA of $80,000.  They both have the exact same rate of growth which is 20% of their revenue that is now left over to acquire new customers.  The CPA will be divided among different things depending on the business.  A car dealership will pay for commercials and commissions on the sales, whereas a cafe will try to plop itself in the middle of a highly trafficked tourist area where there is heavy foot traffic.  The CPA has to be deducted from the lifetime value of the customer (LTV) and the revenue will then be invested back into advertising, locations etc.

Here’s the thing about growth strategies… they are just as important as the quality and value of the product for each customer.  You can build an amazing widget but if you can’t optimize a growth strategy that continues without dumps of unsustainable advertising or offering incentives that you can’t afford to offer long term, you don’t have a winning business.

The lean approach comes in to this equation by forcing you to test the growth strategy before you purchase wear houses and fill them with your manufactured products, or lease a really expensive storefront.  You can apply the same thought to a new social network you dreamed up and spent 6 months coding.  If you haven’t yet gathered early adopters and tested whether your viral loop is functioning with at least some viral coefficient the you believe you can optimize, then you might not be ready to make the leap to hiring 2 more programmers “Facebook level salaries” just yet.

Another important factor to consider is whether you are focusing your efforts into one growth strategy or trying to accomplish multiple strategies at once.  It’s very tempting to look at your product concept and envision how it will work for this or that segment and but you should consider if you really have the resources to specialize in more than one growth strategy.   Technically speaking there are businesses that operate with more than one growth strategy but they are developed businesses that have had focused success and then developed the resources to utilize other approaches.  Having different growth mechanisms requires different operational expertise and if you are a startup then the likelihood of accommodating that is low.  A successful startup is one that found a market and created a product that offers value to them and creates a sustainable engine of growth.  That is huge success when that happens and there is no need to layer on confusion that will take away from your chances of hitting that win.