Superconsumers – A Simple, Speedy, and Sustainable Path to Superior Growth

Everyone wants to grow their business – irrespective of the current size or the level of competition. This also means that growth is not easy. So, any strategy that can help grow our business is a welcome addition to all the material that we already have.

So, when I got my hands on the book – Superconsumers by Eddie Yoon, I was eager to read and understand the strategy.

I must say, that on the face of it, it doesn’t seem like much different from what all the literature around managing your most profitable customers and growing from there. However, I was pleasantly surprised by both the amount of thinking that the author has done and the different frameworks and strategies that he shares in the book.

Below is some of my notes from the book:

Why Superconsumers

A report by the auditing company KPMG and the Economist Intelligence Unit revealed that only 1 percent of 580 companies hit their forecast exactly over a three-year period, and only 22 percent were within 5 percent. On average, companies were off by 13 percent, an inaccuracy that had an estimated 6 percent impact on total shareholder value.

Super-Consumers can be your guide for simple, superior, and sustainable growth.

Who are Superconsumers:

Superconsumers are those customers who spend significantly higher than the rest of the customers and they are emotional about their purchases. Your product or service addresses a part of their life aspirations and hence they are attached to your category.

Characteristics of superconsumers:

There are five characteristics of superconsumers:

  1. High on Spend + High Engagement: They’re more than just heavy users with a new name. Unlike traditional heavy users, Super-Consumers combine big spending with high engagement and deep interest in new uses for a product.
  2. Prevalent: They exist in every business.
  3. Emotional: They’re emotionally invested. If you talk to super-consumers, you’ll learn that most have very logical reasons for their behaviour. They simply find more meaning and benefits in a given category than other customers do. In fact, just about everyone is a super-consumer of something.
  4. Easy to Find: They’re easier to find. Big data and social media enable you to identify them.
  5. Leaders: They’re willing to buy even more … and lead others to follow them.

Superconsumer Strategy:

The superconsumer strategy has four important steps, we label it the FUEL framework:

  1. Find Super-Consumers. You have to find them three ways:
    1. analytically in your data,
    2. internally within your team,
    3. personally among your family and friends.
  2. Understand Super-Consumers. There are four ways to understand them:
    1. rationally,
    2. emotionally,
    3. contextually, and
    4. Culturally
  3. Engage with Super-Consumers. You engage with 4 them in two ways:
    1. by having empathy for the heights and depths, joy and pain, of their super-consumer passion and
    2. by understanding your own role in contributing to their pain and joy.
  4. Lean into Super-Consumers.
    1. Create a community of superconsumers and and watch them riff off each other for new ideas for growth.
    2. Seek out how Super-Consumers have fun with your category. Understand the category’s challenges and chores.
    3. Look for bias, and shatter stereotypes of Super-Consumers.
    4. Look for ways that you can help your consumers a great deal but at low cost to yourself.
    5. Be generous. It’s the only way to start a real friendship.

The superconsumer strategy is simple, elegant and logical. Super-Consumers aren’t random oddballs who buy in bulk. They’re emotional buyers who base their purchase decisions on their life aspirations.

The key behind these lessons is to recognise that

  • Consumers are wonderfully complex and endlessly surprising
  • They’re humans, after all.
  • They have beliefs and preferences that are different from yours.
  • Their behaviours are complicated.
  • And most of all, they have rich emotions that even they may not fully understand.

So you need to find these consumers and listen to them. They exist in every category, and they have a lot to say and in most cases, are already saying a lot (on social media, blogs, review sites, etc).

Leveraging Super-Consumers.

The remarkable success of brands that have used this strategy to fuel their growth offer us a few great insights:

  • Consumers hire brands for a job, but super-consumers hire multiple brands for multiple jobs to solve a quest.
  • Multiple Super-Consumers near one another (be it physical or psychological proximity) create super-geos, where their passion spreads like a virus.
  • Quests enable breakthrough innovations in product offerings.
  • Super geos enable breakthrough business-model innovation. The presence of both Super-Consumers and super geos allows you to create new categories.

There are a few big differences between a job and a quest. A job is often something people have to do, whereas a quest is something people want to do.

Further Segments of customers (apart from superconsumers):

Apart from superconsumers, we can group all other customers based on the passion and-profit index as

  • Potential Super-Consumers: They are engaged with the category and have the potential to spend much more than they currently do. They need to be connected with superconsumers and will be led by them to become superconsumers themselves. Potential Super-Consumers are the clearest sign of emerging and latent demand.
  • Autopilots: They do spend more than average but dont see this as fun yet. They are also mostly loyal to a brand but may not be high on engagement.
  • Uninvolved consumers: They neither have fun with the category nor do they spend higher than average. They are probably the most price conscious as buying this category is a chore for them. They are extremely low on engagement.

To consumers, every category represents varying levels of fun and chores. If they find a category to be more fun than burdensome, then they tend to be more engaged and spend more. If they think a category is more of a hassle than a pleasure, they tend to be less engaged and buy less.

Once you have an early-warning system and precision map of how demand will evolve, make sure when making a business decision about Super-Consumers, you ask these questions:

  1. Do Super-Consumers care?
  2. Will our offering help them achieve their quest and get their job done?
  3. How much do Super-Consumers care?
  4. Will our offering make them want to use the category or pay twice as much, or do both?
  5. Is how much they care greater than the incremental price they will pay, and is that price greater than my cost to deliver?

If you can confidently answer yes to all three questions, then you should feel empowered to move forward.

Mistakes to Avoid:

One of the most common way that businesses lose out is when they stop respecting their customers and develop contempt for them. This is the case in every business that has grown. What needs to be done is to realise this and stop before it is too late.

Calibrating Your Contempt for Your Consumers:

  • How many companies have reduced the quality or size of a product but held the price the same because they believed that consumers wouldn’t notice?
  • Or which companies have made innovation decisions based on what they do well instead of what the consumer really wants?
  • The underlying, subtle contempt behind all of these decisions is that the company has more power than the consumer.

We need to understand and internalise that the primary focus of the business is to serve its customers and therein make a profit for itself.

In Conclusion:

Throughout the process, there are three clear steps that help you focus your efforts:

  1. Boil your superconsumer strategy down to as simple a statement as possible.
  2. Write your goals and principles down, and have them close by so your team can refer to them.
  3. Say them over and over again.

This is a good book to read if you have the responsibility of leading a business and realise that the best way to grow a business is by growing your customers.

The book is easy to read and has a lot of examples of how businesses, small and large have benefited from using the superconsumer strategy. I would give this book a rating of 8/10.

I had the opportunity to talk to Eddie Yoon. You can catch the entire video below:

 

The Tale of 2 Hair Stylists

24b01414-af79-4811-a1c9-dae0acf37633I would like to share with you what I have seen happen with two hair stylists in my neighbourhood.

I would call the first hair stylist one as HS1. This saloon has been around in my neighbourhood for a long time, about 15 – 16 years. The stylists who work here used to know all their customers by name. They were very good at what they did.

However, over time, the owner became cynical and took his customers for granted. All the small talk vanished and instead was replaced by a cynical look and the scorn on face.

This change happened over a period of time, slowly. I have witnessed and experienced this change first hand. They continue to be very good at what they do.

About a few months earlier, there opened another saloon – HS2. I decided to give them a try as I do with most new businesses. The stylists at this saloon were just about proficient at what they did, no where as good as the stylists from HS1.  However, they were open, warm, did a lot of small talk, asked about my family, my work and listened.

Basically, they took interest in me and my life.

So, I started visiting them more frequently. This story repeated with a lot of other people in the vicinity and today, HS2 is always full, while HS1 is just about surviving.

I still visit HS1 once in a while and they still don’t get what hit them. They are still cynical, i would argue that they are more cynical now than they were before, they are more angry at what has happened to them and their business than ever before.

Now, this is a common story in almost all businesses, what is so special about this that I am writing about them you ask?

What is special is that we see this happening all around us? Sometimes this happens to us and how we respond determines our future.

There is no right or wrong time to take a re-look at some basics of doing business, irrespective of which business you are in:

A smiling face is always better than a scornful one.

It is the simple things that matter the most. No one wants to visit a business that is run by people who are scornful or cynical, unless thats what they come to you for (startup comedians who make a living being cynical and scornful and abusive).

People already have enough problems to deal with. If you can’t alleviate some of them, at least lets not add to it.

The best way to spread happiness is by being happy. The best way to get a smile is to give a smile. Click To Tweet

Besides, smiling customers are good for business.

Taking interest in your customers’s lives is a critical strategy.

This is so basic. This is business 101. Yet, so many of us lose track of this.

We get so embroiled in our own business that we stop taking interest in our customers lives. Click To Tweet

Stopping to take interest in our customers is the surest and the fastest way to lose them at the drop of a hat.

Its not always about the best quality product/service.

It is important to have a great product or a service. However, it is not the only ingredient for a successful business.

There are countless examples of superior products and services failing when competing against far inferior products. Understand & internalise this.

Almost all purchase decisions are emotional in nature. Plan accordingly. Click To Tweet

Daniel Kahneman and other researchers have proved this beyond any doubt. So, invest in getting your customers emotionally involved in your business.

Appeal to their emotions & intellect.

Expect competition to arrive sooner or later. Build relationships with your customers so they don’t leave for your competitor at the first whim.

New Competition will arrive sooner or later. Expect it. Plan for it. Click To Tweet

Discuss and have a clear plan of actions to implement when competitors knock at your customers doors.

This also means that you need to be aware of any changes in your customers purchase decisions or customer behaviour.

Make your competitors work hard to get your customers.

Don't make it easy for your competitors to steal your customers. Make them work really hard to get… Click To Tweet.

However, some customers will leave for your competition. When this happens, instead of getting angry or frustrated or cynical, get back to focus on doing the right thing – start building up the relationships with the one’s that continue to do business with you and plan a way to get back the customers you lost..

These are simple yet powerful lessons that i learnt from the story of the two hair saloons.

What did you learn? Do you observe the changes that happen around you? Are you aware of what is causing this change and what is its impact?

Keep observing!

Why Startups Fail?

why startups fail

There are only three things that can kill a startup:

Running out of cash:

This is the biggest reason why most startups and even some of the large organisations fail. They run out of cash. Startup founders would give themselves a much better chance of success if they are able to figure out a consistent cash flow. Profitability can come later in the life of a startup, cash flow must come first. This is akin to oxygen for humans. No oxygen, no life. No cash, no startup. Cash can come from investors, customers or founders. The most sustainable of the three is the cash flow from customers.

Running out of customers:

This is another reason why many startups are unable to survive. They built something for which there are no customers.

In order to avoid this scenario, startups must define their target customers really well, identify the impact that their product will have on the lives of these customers. They also need to continue to test their products with their prospective customers. Building a product for everyone is another trap that startups fall in. Build for a small niche and then scale to other niches.

Running out of employees:

This is the least common of the three reasons but very powerful nonetheless. This happens when the team doesn’t believe in the product anymore. This happens when one or more founders don’t believe in the vision (or there is no vision to start with).

To avoid this, the founders must have a vision for the startup and constantly communicate with the team; hire slow and fire fast.

 

What Can Business Leaders Learn from Our Heart

Heart Beat
Heart Beat
Photo Credit: Gabriela Pinto

Situation: My health check and my son

Last week, I was at a hospital for the first of my regular (hopefully) health check. The doctor was checking my blood pressure and told me that it was slightly on the higher side and that i need to make sure that it doesnt go higher. 

When my 9 year old son came to know about this, he asked me the reason for high blood pressure and this lead to a discussion about the functioning of our hearts.

When I was explaining the functioning of the heart, I realized the importance of rhythms in business.

Insight: Businesses should also function like our Hearts

As business leaders, we are constantly expected to grow our businesses, Q-on-Q  and Year-On-Year. The pressure to grow is so strong that when leaders fail to deliver such growth, many a times, they are let go.

In my opinion, businesses should understand the fact that everything in this world has a rhythm that it follows, just like how the heart beats.

The heart expands and contracts on a rhythmic basis.

So should your business. As a leader, we need to ensure that we build in (intentionally) a period of contraction in our business, rhythmically.

For example, you can decide that you will grow your business for 8 quarters and then consolidate for the next 2 quarters.

How can that help

It is in the period of consolidation that you can

  • Slow down your overall activities,
  • Re-look at the current set of customers that you have
  • Re-look at your market share, your relative positioning in the market
  • Re-look at your relevance in the market
  • Scale up your business processes
  • Weed out inefficiencies that usually creeps up in a business in a high growth environment
  • Look out for new opportunities where you can win
  • Plan your next growth phase (which product, strategy and market do you want to play in)

Such a period of consolidation always happens, irrespective of whether a business plans for it or not – We might call this as market corrections.

However, if we as business leaders intentionally build this in our plans, we have a much better probability of staying relevant for a long period of time and have less volatility in our  business.

This is akin to taking a medium to long term view akin to living from quarter to quarter or year-to-year.

Now its Your Turn

Do you agree with my thoughts about this topic? Now its your turn to keep the discussion going. Looking forward to your thoughts and insights.

PBTO1: Launching “Pushing Beyond the Obvious” Podcast

I had earlier announced that I will launch my podcast shortly. Today, is the day when I would like announce the launch of “Pushing Beyond the Obvious” podcast.

This is the first episode of the podcast. In this episode, I talk about what this podcast is about and whom is it relevant for.

This podcast is relevant to you if:

  • You are an entrepreneur or a CEO
  • You are a manager responsible for sales, marketing, innovation or strategy function in your organization.

The podcast provide you insights and strategies on how to push the boundaries of the following functions:

  • Sales
  • Marketing
  • Innovation
  • Leadership
  • Entrepreneurship
  • Strategy

The format of the show will be a combination of solo episodes where I share my experience and interviews where I host successful practitioners and thought leaders in these fields.

I am extremely excited about the journey and I hope you shall all join me in the ride.

I also believe that this podcast will play an important role in your success, whatever it is that you set out to do.

If you like the episodes, please share your love by rating, writing reviews and sharing this with your friends and colleagues.

You can provide your feedback or questions by writing to me at mgr at rmukeshgupta.com.