A flywheel to break the chasm

When I launched a supplements brand, I was naïve to believe that customers will love the product value and advertising will scale us to the moon. But, the cold start problem is real. We were crippled

Hola! Welcome to the updated edition of writing out of Singapore. This is Shantanu, writing about building businesses from scratch every week out of Singapore. As promised, I will focus on entrepreneurial topics moving forward, beginning with digital consumer brands. I will ofcourse take detours - life isn’t fun otherwise 😉

This week I will talk about how to get the sales and marketing engine moving when you are a new brand. It is hard to win customer trust and it takes years to build a strong bond with them. It is even harder when you are new!

But first things first, tell me this -

☃️Cold start is a real big problem.

Photo by Matthew Henry on Unsplash

To get a better sense, let’s have a look at how my career has transitioned from large platforms to startups, and why suddenly cold start is a real big problem.

#3 Myntra.com 🥻👔👖👗👙👓👟👠👡👞

Large and fast growing fashion and lifestyle marketplace. The traffic was high, upwards of 600K on normal days and over 1.2 mn on sale days. A slight change in selection, inventory and pricing could lead to a jump or drop in revenues. Our benchmark was 1% extra promotional discount would lead to average 20% increase in sale. We were accustomed to making tweaks daily to shape the revenue and margin.

#2 Styli.com 👚👖🩲👟👞

Styli was the first online brand for the Landmark Group, a massive retail and hospitality conglomerate in the Middle East. Driven by influencers, supported by retargeting, and favoured by covid lockdowns, sale volumes was growing. Pricing wasn’t a big factor. Selection and inventory were the main pain points to solve for the next stage of growth. We built a healthy mix of private label brands (profit centre) and established brands (traffic driver) to scale the platform.

#1 Zaloom and Qurio 🚢🧑‍⚕️💊💄🛒

This is the stage I have been working on since last 2 years. Initially small steps like building an ecommerce course, then building a global sourcing marketplace to now launching new consumer brands and scaling them up. What I have realised is - it is very hard to get off the ground. You need to very smart or spend unwisely to get over this initial phase.

Build a flywheel to solve the cold start

The easiest solution - list on a marketplace with a lot of relevant traffic. So, for today’s discussion sake, let’s limit to selling on online marketplaces like Shopee, Lazada and Amazon.

#1 🥇Factors behind a successful marketplace seller

For a moment, imagine yourself as a customer in a offline market with tons of shops. Where do you make a purchase? You probably look at these things -

1. Does the shop and the owner look credible?

2. How “popular” does the shop look? What are other customers saying?

3. Finally, are the products of right value?

For a marketplace seller/brand, these translate into

1. Store and product page design, including product information and benefits.

2. Listing rank, #reviews, #stocks sold, stock outs?

3. Product price in comparison to competitor brands

#2 🛞The flywheel

To start the flywheel, you need to acquire your first 100 customers, make them your champions and repeat this process. Ask these 3 questions when you are starting out.

1. Who will be your first 100 customers? (start with 10 first)

2. How are you going to make them feel special?

3. How will you scale up this initial engagement?

#3 🦾Building the flywheel

Here is a playbook to achieve this. Each item will have multiple ways to achieve the same goal - monetary and non-monetary, tangible or non-tangible.

1. Find a small circle of people who will love your product
   This is your niche. This set of customers need your product the most. For us at Xandro Labs, this niche was existing supplement users and highly ingredient aware users. In fact, one of our first 10 customers ordered in bulk after a phone. He mentioned on the call that I didn’t need to convince him about any of the ingredient we are selling. He just wanted to be sure of the quality and purity. So we updated the purity results on all our selling channels. We saw a jump in orders right away.

2. Incentivise first purchases
   Some things are now standard such as first order coupon, coupons for liking/following social media page or marketplace stores. Now brands run trial campaigns such as first month free, pay only delivery fees, subscribe to get first 1 month free. Finding the right incentive makes a big difference. It will depend on the product segment you are selling in.
   For us, we understand once customers start using our product, it forms part of their daily routine and hence they will stay longer. We are the only brand in Singapore selling Spermidine and Ca-AKG, backed by science and relatively new discoveries. For another, NMN pure powder, we are the second brand. Given this reality we can absorb a higher customer acquisition cost (said with a pinch of salt😓).

3. Collect and Incentivise reviews
   Collecting reviews is a tough process. Only 1 in 15 people leave a review after purchase. This means you must actively reach out and incentivise reviews. A few good words from your existing customers can act as significant credibility builder with your prospective customers.
   We reach out multiple times via email to collect feedback. In fact we also drop them a text after a few weeks to check their progress and collect the feedback.

4. Incentivise referrals, including friends and family purchases
   Reviews and referrals go hand in hand. As a consumer brand, we must give reason to our customers to brag about the product and share with friends and family. The reasons could be a great product, a great service and a great offer.
   Don’t be ashamed to ask them to share and refer to friends and family.

5. Spend marketing money on awareness
   Could be on social media and offline events - find where your customers are most likely to be. We chose to be on Facebook. We realise gym and training centres can be another great place. That’s something in the works.
   The ROI will be bad in first few months. The initial phase is about being in front of the customers and understanding what they like. Keep testing what works best for your audience. We learnt two things - First, quality of the product is most important. Second, numbers on social creatives matters a lot. Look at the creative below - we are improving this further with trust badges to drive more user confidence.

   

   Our first successful Facebook creative.

6. Engage your existing customers
   Connect with your existing customers and make them your champions and promoters. This cannot be done on email. You must talk to them on phone or meet in person. Meet a few customers regularly. Host offline events for them. Make them feel special.
   At a later stage, repeat this on email and send them surprise gifts. Remember, they should feel special everyday with you 😻

#4🎃Flywheel hacks - Fake it till you make it

Here are some shortcuts. Remember do this carefully. At any stage, the customer should not feel cheated. The aim should be reassure them, not scare them.

1. Giveaways on social media - The first month we gave out 1 free AirPod. It was a immense success. However, we didn’t the right kind of audience. We discontinued this.

2. List with resellers - Find popular online resellers to list with. They have high-traffic stores and can get your product ranked high fast. You can treat them as your affiliate partner. Ensure that they do not cannibalize you - hence have strong pricing guardrails in place.

3. Spend on PR - Social validation has it’s unique quirk. Companies have built large publications to improve SEO of their in house brands and initiatives. Online publications plays a large role in a brand’s success today. Do you know those “Top 10 sunscreens today” are mostly sponsored posts? Now, imagine the amount of “unsponsored” content you see on a daily basis.

4. Sales brushing - The algorithm on marketplaces places high weightage on sale volume and frequency. You could support this with consistent incentivised orders from your partners. Please tread on this carefully.

In the initial stage, the focus is to get the sales volume rolling and ensure people know about you. You gain sales, you gain reviews - you gain reputation among consumers. Customers will refer you if your reputation in strong.

I will end this part with this quote from Jim Collins in his famous book, Good to Great.

“The flywheel, when properly conceived and executed, creates both continuity and change. On the one hand, you need to stay with a flywheel long enough to get its full compounding effect. On the other hand, to keep the flywheel spinning, you need to continually renew, and improve each and every component.”

I understand this week’s post is late. Part of our MBA batch graduated this week and some of them working outside Singapore were here. We went for picnic yesterday and then another lunch today. Look at this lovely picture in Barbie and Ken theme!

Thank you so much for reading till here. Since you are here, you deserve a glimpse of Jisoo 🤭

She is sooo cute 😍

Hahah, okay bye bye now! Have an excellent week ahead 💪