Startup: An Insider's Guide to Launching and Running a Business by Kevin Ready Page A
Book: Startup: An Insider's Guide to Launching and Running a Business by Kevin Ready
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Authors: Kevin Ready
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note of your choices as you set out to establish yourself in the market. The whale/Eskimo dichotomy can also present itself as your business grows, as I will describe.
For example, consider the following scenario. The fictional OJC company makes bread. They bake and ship whole-wheat loaves to several small grocery chains and have experienced 2 to 3 percent growth yearly for the last ten years. OJC gets picked up in an article on healthy eating by the Los Angeles Times , which is quickly followed up by a proposal from MegaMart to provide heart-healthy wheat bread for 250 warehouse stores coast-to-coast. Great deal! That is a fantastic way to grow! It is a terrific opportunity. The knowledgeable CEO knows that saying yes entails a major risk, however.
In order to meet the demand of the additional stores, OJC will have to triple its production capacity and hire extra shift workers. This entails an outsized capital outlay, which makes the CEO nervous. What would happen if they go for it and then eight months into the arrangement, MegaMart decides to pull the contract? It could put the future of OJC in question because it may not be able to cover the loan it took out to build up its factory. Left with overcapacity and a huge debt to pay, OJC could be forced to shut the operation.
The conundrum here is this: should OJC follow fast, lopsided growth? Or maybe choose slower, diversified growth? Following the diversified route, there is less risk from any one customer picking up and leaving, but lower profit potential over the short term. Our aggressive CEO may choose to take the deal, but prioritize the quick acquisition of more sales outlets to create adiversification structure that would support the company if it were to lose the large contract.
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The Precious Slice
You advertise. If you work hard to market your product, if you spend the required time and money to put your brand and your message in front of your target audience, then something miraculous will happen: you will earn a precious slice of your customer’s attention. It will probably be a small slice.
Figure 3-1. Most recipients of your message are not going to respond in any way. By creating well-formed and appropriate messages, you can increase the rightward skew of the distribution
This little moment of attention, this precious slice of thought, when combined with the right message, is what pulls people out of the zone where they don’t know and don’t care and eases them into the first steps of becoming your customer. (This is the hook that transitions people from left to right in Figure 3-1 .) This is an opportunity. This is the opportunity that your business dependson. So what compact, well-formed, and compelling message will you put into that small, fleeting opening into your customer’s consciousness?
The precious slice demands that your message:
Be compact.
Be simple.
Be resonant to their experience.
Have a specific intention. What do you want them to do?
Perform an action, such as calling you?
Feel an emotion?
Remember your name or logo?
Learn your name?
Buy your product?
Get interested and follow up for more information?
Come into your store?
In previous years, we carried out large-scale testing of our messaging when buying online pay-per-click advertising. By using a simple performance analysis, we determined that there were significant numerical advantages to including or excluding specific words in our ad copy. Adding an individual word could increase the performance of a 20-word ad by 5 percent. This means that a one-word difference between two similar-looking ads could mean over $100,000 difference in value in just a few months. Such is the power of finding the best message. The same evaluation applies to every place where you put words or images in front of your customers. The following examples are vital:
What text and images you place in your advertising
What calls to action you use and where you place them
What
For example, consider the following scenario. The fictional OJC company makes bread. They bake and ship whole-wheat loaves to several small grocery chains and have experienced 2 to 3 percent growth yearly for the last ten years. OJC gets picked up in an article on healthy eating by the Los Angeles Times , which is quickly followed up by a proposal from MegaMart to provide heart-healthy wheat bread for 250 warehouse stores coast-to-coast. Great deal! That is a fantastic way to grow! It is a terrific opportunity. The knowledgeable CEO knows that saying yes entails a major risk, however.
In order to meet the demand of the additional stores, OJC will have to triple its production capacity and hire extra shift workers. This entails an outsized capital outlay, which makes the CEO nervous. What would happen if they go for it and then eight months into the arrangement, MegaMart decides to pull the contract? It could put the future of OJC in question because it may not be able to cover the loan it took out to build up its factory. Left with overcapacity and a huge debt to pay, OJC could be forced to shut the operation.
The conundrum here is this: should OJC follow fast, lopsided growth? Or maybe choose slower, diversified growth? Following the diversified route, there is less risk from any one customer picking up and leaving, but lower profit potential over the short term. Our aggressive CEO may choose to take the deal, but prioritize the quick acquisition of more sales outlets to create adiversification structure that would support the company if it were to lose the large contract.
_________________
The Precious Slice
You advertise. If you work hard to market your product, if you spend the required time and money to put your brand and your message in front of your target audience, then something miraculous will happen: you will earn a precious slice of your customer’s attention. It will probably be a small slice.
Figure 3-1. Most recipients of your message are not going to respond in any way. By creating well-formed and appropriate messages, you can increase the rightward skew of the distribution
This little moment of attention, this precious slice of thought, when combined with the right message, is what pulls people out of the zone where they don’t know and don’t care and eases them into the first steps of becoming your customer. (This is the hook that transitions people from left to right in Figure 3-1 .) This is an opportunity. This is the opportunity that your business dependson. So what compact, well-formed, and compelling message will you put into that small, fleeting opening into your customer’s consciousness?
The precious slice demands that your message:
Be compact.
Be simple.
Be resonant to their experience.
Have a specific intention. What do you want them to do?
Perform an action, such as calling you?
Feel an emotion?
Remember your name or logo?
Learn your name?
Buy your product?
Get interested and follow up for more information?
Come into your store?
In previous years, we carried out large-scale testing of our messaging when buying online pay-per-click advertising. By using a simple performance analysis, we determined that there were significant numerical advantages to including or excluding specific words in our ad copy. Adding an individual word could increase the performance of a 20-word ad by 5 percent. This means that a one-word difference between two similar-looking ads could mean over $100,000 difference in value in just a few months. Such is the power of finding the best message. The same evaluation applies to every place where you put words or images in front of your customers. The following examples are vital:
What text and images you place in your advertising
What calls to action you use and where you place them
What
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