I’ve read a lot of startup or business books throughout the years but none of them could compare to “The Four Steps to the Epiphany“.
Before reading this book, creating a startup seemed to me like an extremely difficult goal to achieve. I didn’t know where to start, what to do or what to measure.
I have a scientific mindset: I like lists, clear directions and clear goals. This book has it all and it changed the way I was thinking.
Today, I still think that creating a startup is a very difficult task, but this book gave me a clear path to follow to achieve my goals.
1) How did I come up with my initial idea?
In my work, I am often in touch with ecommerce companies. Almost all of them have trouble:
- segmenting their customer base. This could be summarised in a few questions, such as: who are my loyal customers? Which ones are lapsing? Which portion should I focus on?
- acting on the customer segments that matter for the future of their business: how can I make the lapsing customers come back? Which campaigns should I send and when?
From my experience, it seems like there is no silver bullet to solve those two challenges.
I got the idea of the product I’m describing below during an ecommerce event.
It involves data (which I am passionate about), SaaS software (which is the kind of software the companies I admire have built – more on that later) and marketing (what I feel is my “thing”).
2) The Customer-Problem-Solution canvas
I’m using the customer-problem-solution canvas to describe my hypothesises and ideas about my product. This canvas is one of the very first step to follow within the Customer Discovery section of “The Four Steps to the Epiphanyâ€Â (there are 4 sections: Customer Discovery, Customer Validation, Customer Creation and Company Building).
I will go back to it when I have more “meat on the bone”.
So here it is … (drumroll please):
Our customers are medium-size ecommerce businesses. Within this segment, marketer/business analyst/data analyst, are the ones who are likely to be using and buying our product.
Our customers have trouble identifying and acting upon the portion of their customers who are about to lapse or are lapsing.
Our customers usually have business intelligence tools that run to analyse the business. Some analysis are being made on lapsing versus active customers but are very rarely translated into adequate actions. Most of the time, this consists of sending marketing campaigns to all of theirs without making the difference between their different customer groups.
Issues with current solutions:
Business intelligence tools are usually complex to manoeuvre and include a lot of metrics outside of customer analysis. They also cost a lot of money to run and one must be familiar with those tools to be able to use them efficiently.
The second issue regarding those softwares is that they do not display *what* to do after displaying different set of data. Yes, it is getting easier and easier to get data on lapsing customers but it is what our customers do with this set of data that matters.
To increase sales and save time, our customers usually send a large campaigns to all of their customers expecting lapsing customers to come back and loyal customers to purchase again. The reality is that is rarely happens and that something different is needed to reactive lapsing customers.
Alternative solution (product hypothesis):
A software that integrates with any ecommerce platform or bespoke backend. It then analyses different customer data points. The analysis leads to segmenting their customers into different groups based their activity and other factors. Based on this analysis, automated multi-channel campaigns are created to prevent their customers to churn for example. Our software integrates with our customers’ marketing tools (email marketing, mobile marketing, communication tools) and the campaigns are created within each of those.
Benefits of the alternative solution:
A slight increase or decrease of our customers’ churn rate can be the difference between losing money and making money.
Our customers have a crystal ball that allow them to act on the future before it happens.
Save time: campaigns are automated.
Save money: more active customers, decrease of churn rate.
Holistic view of their customer base: the software is channel-agnostic and allows our customers to send campaigns via email, push notification, etc¦
To access the latest version of our C-P-S canvas, please follow this link (Google Drive).
A nice way to represent the value chain between our customers, our product and the other parties involved is to draw a map of our ecosystem.
Once again, this map is only a series of assumptions. This process is explained in “The Entrepreneur’s Guide to Customer Development“.
There are five entities on this first version of our ecosystem:
- our product
- our customers
- marketing softwares: the tools that are used by our customers to communicate with their customers (email marketing, mobile marketing, social media platforms, etc…)
- third-party softwares: this includes customer service solutions, payment services, etc…
- ecommerce platforms: this includes the major ecommerce platforms such as Shopify, Magento, or OpenCart.
Each arrow represents a transfer of value (whether it is money or another currency).
To access the latest version of our ecosystem, pleaseÂ follow this linkÂ (Google Drive).
4) Risk analysis
The last part I’ve chosen to cover is what is called a risk analysis. It allows me to list all of the risks involved in building the final product.
Each risk needs to be prioritised and tested via a series of MVPs. The risk #1 needs to be tested first with the MVP #1 before moving on to the next one.
You can view my risk analysis table on Google Drive.
5) To summarise
It took a few days to translate what I was thinking into a series of assumptions. I hope you have a better understanding of the product I’m hoping to build.
I know that the majority of the assumptions I have listed in this post won’t survive a day in the real world. The C-P-S canvas, the map of our ecosystem and the risk analysis will change over time.
If you were in the same situation than me, with the idea of a product in mind, I would strongly advise you to follow the steps above. Writing everything on paper allows you to declutter your mind and clarify your thoughts.
The next steps are now to test this series of assumptions in the real world which I will explain in the next few days.