Test and Measure – To Pivot or Persevere

The goals of the Bootcamp

• At the end of the six months to have worked through the principles of the book• To apply many of them to real world situations that apply to our own businesses• To embed some functions into your activity that give you a cutting edge

This book is for:

• Start-ups• Stale businesses on the cusp of adopting new ideas• Existing businesses struggling with growing pains• Anyone who wants to learn about how to develop their business

Mantra standsFail fast & Learn faster

Let’s Refresh ourselves on some of what we have covered• Most businesses fail because they build something that no-one wants

• Failing fast means we preserve more capital and can pivot more

• The currency of start-up is learning – validated learning through a Minimum Viable Produce (MVP)

• Vision leads to steering• Ideas and assumptions are not the same – Ideas have embedded assumptions that need testing

• Finding the ‘Big Idea’ and testing it

The Goal this Morning

To go away with a set of tools and thinking to help you to decide if you should ‘pivot’ or ‘persevere’

Why this is important?

How and What to TestValue & Growth

A new mindset

Reasons why we succeed

Research Shows

Bill Gross, Idealab, The single biggest reason why startups succeed

https://www.hotjar.com/blog/the-passion-fallacy?

Value – to whom?

PEST(LE)

• Political• Economic• Social• Technological• Legal• Environmental

PESTLE - Worksheet

Political

Social

Legal

Economic

Technological

Environmental

TIMING

Customer Driven Sustainable Growth

1. Word of mouth2. Products that sell themselves3. Paid for advertising4. Repeated purchase

3-Engines of growth

Sticky Engine of Growth – focus on & measure:

1. Customer retention2. Lifetime value

3. Look after the customers you have before looking for new ones

Viral Engine of Growth – focus on & measure:

1. Value creation2. Brand and brand design

3. Match everything about your product or service to your

customers

3-Engines of growth

3-Engines of growth

Paid Engine of Growth – focus on & measure:

1. Campaign costs 2. Conversion factors

3. Returns on Investment – don’t make excuses for poorly

performing ads

What is your current engine?

Take 5 minutes and look at the worksheet

Think about your current engine of growth – does it match the aspirations of the business?

If you could change it – how would you?

Make some notes and think about some tactics

Lift-off or Fail

The ‘Runway’

Working Capital remaining divided by the monthly spend.

RESPONSE1. Cut back expenditure on costs

2. Raise more cashBoth actions result in a slowdown in

getting through theBuild-Measure-Learn

Loop

Focus on ‘Rapid Testing’

Innovation AccountingEngine of Growth

Registration rate (% of leads who become prospects)

Activation rate (% of prospects who do what you ask)

Retention rate (% of Weeks stay connected / 52)

Referral (% of existing customers who bring in new customers)

Revenue – as a % of total

Lifetime Value

Pivots take courage

Why?Is your business on the right

road?

Don’t know?Revert back to the ‘Vision’

PIVOTPlace one foot on the ground for

stability – then turn!

Types of Pivot 1. Zoom-in: A single feature becomes

the whole product. Niche and specialise

2. Zoom-out: A single feature cannot sustain a whole product. Whole product now becomes a single feature

3. Customer segment: change of customer in that the segment you originally targeted are not the ones you are serving

Types of Pivot (cont.)

4. Customer need: the original problem we were solving is now less of an issue – so we develop

5. Platform: apps become websites and vice-versa

6. Business architecture: high margin – low volume becomes low margin – high volume or vice-versa

Types of Pivot (cont.)

7. Value capture: a change in the revenue stream. A movement away from the exchange to long term access

8. Engine of growth: a change in the marketing strategy that moves us from retention to viral

9. Sales Channel: a change in the route to market. We stop selling through an agent an go direct to the customer

Types of Pivot (cont.)

10.Technology: sustaining innovation by switching the old methods in with the new ways. A new CRM system, an upgraded website etc.

3 Reasons why we don’t ‘Pivot’

1. Vanity metrics – numbers that simply confirm what we believe to be true and of value

2. Lack of a clear hypothesis for testing. We have growth, customers seem happy etc.

3. Fear that the vision we have shared might be wrong

3-signs we should ‘Pivot’

1. Gut instinct – you fess-up to that nagging doubt in the back of your mind

2. A lack of ‘traction’ – customers who don’t engage, don’t enthuse and resist paying

3. Overwhelming interest in one feature – and not the rest

Finally

To come 08 Nov 2016 – Root cause analysis – The 5-Whys13 Dec 2016 – The accelerate through innovation

Any Questions?

Back on the 8th of November