Flashing Red Light

Profile Your Customer

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I first was taught to use a “customer profile” in 1993, as an entrepreneur attempting to delight CD-ROM users with high-quality content.  It was invaluable, as I’ll explain…

The exercise then was to create a group, a series if you will, of customer profiles that included demographics, psychographics, and even a “face” (clipped from a magazine) to make the profile more “real”… a methodology one of our advisers brought from Microsoft.

We found the technique invaluable, because it provided a shared vocabulary for the factors that would affect the customer’s experience of our CD-ROM.  In fact, just following the methodology itself was a way of focusing on the customer’s experience, rather than the product in and of itself.

This had the effect of reducing the internal conflict in the organization as our staff debated “what the customer really wants” — as opposed to the old “I” statements.  “Well I think it will be much more compelling if it was in green instead of blue” became “I wonder if Molly (name of one of the customer profiles) would find that compelling?”

So it shouldn’t be any surprise that my friend Jim Ewel, also from Microsoft, reminds us this month of the modern methodology for this (19 years later) with a far better name… the “Persona”…

I advise that you click through to his discussion here, which is in terms and process used in Agile Marketing.

Big Data for Small Businesses

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Two stories are provided in the November Inc magazine with “big data” and “analytics” used in small/medium-sized businesses at a cost of $1,000/mo and $50/yr respectively.

Starting to look like Moore’s Law applied to software-as-a-service, driving the cost down and the value up!

But regardless of price, the wisdom of building analytics into your business is spot-on. Consumer, or B2B, you need to be collecting data, running experiments, and looking at the results. At a minimum you can increase revenue, and possibly margin.

It is an old (and wise) insight that it is more efficient to sell to an existing customer than it is to recruit a new customer; analytics is the strategy that informs the tactics of doing exactly that.

It is also best when it is more of a lifestyle, than a diet. In other words, don’t look at this as a project (or series of projects)… it should be a core function of your business: collect data, innovate, measure.

Why Big Data Matters

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Recommended reading for all entrepreneurs… is this article on Big Data from the Harvard Business Review while most startups in the early stages don’t have ANY data to analyze, let alone enough data that you could call it “big data” and derive any meaningful insight from it…

It won’t be long before many “startups” have data stores filled with information (if you choose to collect it, even 500 customers will provide you with rich data)…

and analyzing that information, deriving insights from it, and acting on it (a three-pronged skill set that few people have… thus the article’s focus on how to find Data Scientists) will be ESSENTIAL.

I’m not talking about being competitive here, I’m talking about survival.

One retailer assumed from their extensive hands-on experience, that service person turnover was a key metric… that would determine customer satisfaction. Makes sense intuitively, eh? You want great service/counter staff, and you want them to stay.

Once they truly questioned their assumptions, re-ran their analysis and plumbed their sales per store… they determined service staff was irrelevant. Store manager turnover, however, absolutely determined if the location was profitable or not.

I’m sure my clients can relate, even though some of them have “smaller” businesses right now. Read and heed!

Doctor Heal Thyself

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I love that Norm Brodsky, long-time columnist and startup expert for Inc magazine… turned his formidable skills on himself, to diagnose the need for experiments and metrics in his own startup, the recently launched Kobeyaki.

Read this to get a taste of why (and how) they measured their new restaurant in order to establish profitability… and next they will experiment with location, in preparation for expansion.

Moore’s Law

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If you don’t know what this is, you need to know it.  Really.

Whether you’re in the technology markets, or raising grass-fed beef cow in a pasture, you need to understand the implications of this simple but powerful factor that affects what we drive, what we eat and how we live.

Gordon Moore, a kind and razor-sharp engineer published a paper in 1965 describing that integrated circuits had doubled in density every year since 1958.  “Density” in this context meant the number of components in the circuit, essentially its “capacity”.

The “Law” has stood up to the test of time, and 55 years later it has been generalized for processing speed in computers, the amount of memory in computers and consumer devices such as phones, and the number of pixels (“sharpness”) in digital cameras.

Even Moore does not believe that the exponential nature of capacity will continue to grow, and eventually it must slow.  Although he has been quoted widely on this, including recently, it hasn’t yet stopped.  This is why your iPhone from last year has already been superseded by a superior model, before your 2-year contract is up.

The salient point for us is that product development, providing services, and even the basics of transporting grass-fed beef cow to market, will be dramatically affected by the constant improvement and expanded capacity of computers.  Our markets and cost assumptions are, by definition, a moving target.

For more on the Law, and its implications read the Wikipedia entry.

By the way, I had the great pride to work with Dr. Moore at Intel, although “work with” is a generous interpretation.  He agreed to attend a few meetings with key customers that I hosted, and was gracious, self-deprecating, and very smart.  A superior individual.

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