“Never let a good crisis go to waste”-Sir Winston Churchill.
The economic crisis triggered by the pandemic has made survival a challenge for several businesses. In the US alone, nearly 100,000 small businesses have shut down permanently since March. It hasn’t spared the biggies as well. Companies like Hertz, JCPenney, Gold’s Gym, and LATAM Airlines have filed for bankruptcy. Ranked by assets alone, James Hammond, CEO of New Generation Research, says the magnitude of insolvencies this year has already surpassed that of 2008. Companies in travel and tourism, hospitality, restaurants, events, and fitness spaces bore the pandemic’s brunt. But like every dark cloud has a silver lining, for every company that threw the towel in, there were more than a handful of companies who beat the odds to survive and thrive.
As we celebrate these businesses’ tenacity and resilience, we also take a closer look to see what we can learn from their innovative pivots, ingenious thinking, and their ability to navigate change. While each of these businesses has its own unique success story, it came down to their ability to experiment with new business models, adapt to changing consumer behavior, tweak pricing strategies, and reposition the product.
Experiment with new business models
The restaurant business was probably one of the worst-hit by the pandemic. OpenTable predicts one in four restaurants that have shut down won’t reopen. COVID-19 has changed the industry landscape forcing businesses to adapt and experiment with new business models such as subscriptions.
The US-based restaurant chain Panera Bread was the first to launch a coffee subscription in March this year just before the onset of the pandemic. Some 750,000 customers have signed up for the unlimited $8.99 monthly coffee subscription, giving the chain a much-needed revenue boost during the pandemic.
“Our hypothesis is that recurring revenue based on subscription makes a lot of sense,” chief brand and concept officer Eduardo Luz told Adweek. “I believe part of our future is going to involve recurring revenue or subscription-based revenue, which is new to the restaurant world.
The British sandwich and coffee chain Pret a Manger followed suit and recently announced a £20 monthly subscription offering up to five drinks a day. The subscription service was launched after seeing its online sales increase tenfold during the pandemic. Pret notched up 16,500 subscriptions on its first day and is hopeful that incremental traffic will lead to more food purchases and higher profits.
From groceries and meal-kits to unlimited coffee, consumers are increasingly willing to sign up for new subscriptions. For companies in the restaurant business, the predictability of recurring revenue adds the much-needed resilience to their business model. It assures them of a long stint in an otherwise high mortality business.
Be a customer-first organization.
Gartner says companies that take proactive steps to address customer concerns and protect their safety and financial confidence will earn substantial reputational benefits in such volatile times. Makespace will vouch for that.
MakeSpace revolutionized the self-storage industry with a customer-first platform, powered by technology.The company had expanded from 4 markets in 2019 to 31 markets in early 2020. Then the pandemic happened.
Unlike other software companies, MakeSpace’s challenge was unique. Matthew Busel, Product Manager, MakeSpace, explains, “In our business, we send people to our customers’ homes, so for us, the coronavirus was a huge challenge. Our number one priority was to protect our customers and team. We introduced curbside pick-up where the customers leave their stuff outside and we then take if from there to ease their concerns. It would have usually taken weeks for us to launch this, but we had to react in days given the situation. We had built a lot of trust with the customers and team, and to keep the trust, we had ensured that we were putting people in safe positions all the time.”
The desire to provide customers the best possible experience made MakeSpace realize that they had to switch from our homegrown billing system to something more scalable. That’s when they decided to go with Chargebee in 2019.
Having invested in a subscription revenue infrastructure early, Makespace could rapidly expand into new markets and instantly launch its on-demand storage solutions for businesses when the offices shut down during the pandemic. Despite the initial uncertainties, MakeSpace managed to emerge stronger, seeing a 30 percent to 50 percent growth on a month-to-month basis. The company plans to expand another 20 markets by the end of the year.
Pivot don’t pause
Rise Vision provides software for digital displays. The company primarily focused on education, which formed 50% of its MRR. They have an extensive library of templates that they provide to schools. They are easy to update and ensure that content remains fresh. Whether it was digital signage for schools, businesses, warehouses, or government offices, the challenge for Rise Vision was that you had to be there to see it.
With millions staying at home, Rise Vision had to think of another way to reach consumers. So, they came up with chrome extensions. Earlier, their customers could share content to their digital signage, website, or intranet. With the chrome extension, they could now share the same content on the digital display every time they open a new tab. ‘We acted extremely fast. We just pivoted. We asked ourselves, what does this challenge make possible, and how can we take advantage of this opportunity,” says Debbie Barrafato, CFO, Rise Vision.
Within weeks, the company had identified its new product focus, reset its strategic goals, and doubled its cash runway by securing a line of credit, putting it in a position of strength, and the ability to ride out the storm.
Make data your friend
Before the pandemic struck, B2B content marketing firm, Animalz was set for growth in 2020 after streamlining its financial ops and building its middle management tier. However, once the pandemic broke out, the firm went from growth to survival mode as customers started to conserve cash. Their accounts receivable saw an increase of 5x while budget-related churn and downgrades doubled. “The stress of a decrease in revenue was a forcing function to create change across our leadership team,” Haley Bryant, COO, Animalz.
Using data from Chargebee, the company was able identify customers and prospects who had enough cash runway and were looking to invest in content. They began actively nurturing those relationships. They also focused on retaining customers offering Flexi payments and products designed for a more expansive budget.
They pushed for long-term contracts to improve their overall cash position. “The systems we have built in the last few months let us see problems and answer the big questions faster, improving our agility and responsiveness. It has put us back on track to meet our original goal for 2020,” says Haley.
Despite being thrown into the deep end, businesses have found a way to survive through business model innovations, finding new ways of working with customers, and using technology to their advantage. Every crisis is an opportunity to learn and reinvent the business.
After all, what doesn’t kill you only makes you stronger!
Here’s how fast a few dozen startups grew in Q3 2020
Earlier this week I asked startups to share their Q3 growth metrics and whether they were performing ahead or behind of their yearly goals.
Lots of companies responded. More than I could have anticipated, frankly. Instead of merely giving me a few data points to learn from, The Exchange wound up collecting sheafs of interesting data from upstart companies with big Q3 performance.
Naturally, the startups that reached out were the companies doing the best. I did not receive a single reply that described no growth, though a handful of respondents noted that they were behind in their plans.
Regardless, the data set that came together felt worthy of sharing for its specificity and breadth — and so other startup founders can learn from how some of their peer group are performing. (Kidding.)
Let’s get into the data, which has been segmented into buckets covering fintech, software and SaaS, startups focused on developers or security and a final group that includes D2C and fertility startups, among others.
Obviously, some of the following startups could land in several different groups. Don’t worry about it! The categories are relaxed. We’re here to have fun, not split hairs!
- Numerated: According to Numerated CEO Dan O’Malley, his startup that helps companies more quickly access banking products had a big Q3. “Revenue for the first three quarters of 2020 is 11X our origination 2020 plan, and 18X versus the same period in 2019,” he said in an email. What’s driving growth? Bank digitization, O’Malley says, which has “been forced to happen rapidly and dramatically” in 2020.
- BlueVine: BlueVine does banking services for SMBs; think things like checking accounts, loans and payments. The company is having a big year, sharing with TechCrunch via email that it has expanded its customer base “by 660% from Q1 2020 to” this week. That’s not a revenue metric, and it’s not Q3-specific, but as both Numerated and BlueVine cited the PPP program as a growth driver, it felt worthy of inclusion.
- Harvest Platform: A consumer-focused fintech, Harvest helps folks recover fees, track their net worth and bank. In an email, Harvest said it “grew well over 1000%+” in the third quarter and is “ahead of its 2020 plan” thanks to more folks signing up for its service and what a representative described as “economic tailwinds.” The savings and investing boom continues, it appears.
- Uniphore: Uniphore provides AI-based conversational software products to other companies used for chatting to customers and security purposes. According to Uniphore CEO Umesh Sachdev, the company grew “320% [year-over-year] in our Q2 FY21 (July-sept 2020),” or a period that matches the calendar Q3 2020. Per the executive, that result was “on par with [its] plan.” Given that growth rate, is Uniphore a seed-stage upstart? Er, no, it raised a $51 million Series C in 2019. That makes its growth metrics rather impressive as its implied revenue base from which it grew so quickly this year is larger than we’d expect from younger companies.
- Text Request: An SMS service for SMBs, Text Request grew loads in Q3, telling TechCrunch that it “billed 6x more than we did in 2019’s Q3,” far ahead of its target for doubling billings. A company director said that while “customer acquisition was roughly on par with expectations,” the value of those customers greatly expanded. I dug into the numbers and was told that the 6x figure is for total dollars billed in Q3 2020 inclusive of recurring and non-recurring incomes. For just the company’s recurring software product, growth was a healthy 56% in Q3.
- Notarize: Digital notarization startup Notarize — Boston-based, which most recently raised a $35 million Series C — is way ahead of where it expected to be, with a VP at the company telling TechCrunch that during “the first week of lockdowns, Notarize’s sales team got 3,000+ inquiries,” which it managed to turn into revenues. The same person added that the startup is “probably 5x ahead of [its] original 2020 plan,” with the substance measured being annual recurring revenue, or ARR. We’d love some hard numbers as well, but that growth pace is spicy. (Notarize also announced it grew 400% from March to July, earlier this year.)
- BurnRate.io: Acceleprise-backed Burnrate.io hasn’t raised a lot of money, but that hasn’t stopped it from growing quickly. According to co-founder and CEO Robert McLaws, BurnRate “started selling in Q4 of last year” so it did not have a pure Q3 2019 versus Q3 2020 metric to share. But the company managed to grow 3.3x from Q4 2019 to Q3 2020 per the executive, which is still great. BurnRate provides software that helps startups plan and forecast, with the company telling TechCrunch with yearly planning season coming up, it expects sales to keep growing.
- Gravy Analytics: Location data as a service! That’s what Gravy Analytics appears to do, and apparently it’s been a good run thus far in 2020. The company told TechCrunch that it has seen sales rise 80% year-to-date over 2019. This is a bit outside our Q3 scope as it’s more 2020 data, but we can be generous and still include it.
- ChartHop: TechCrunch covered ChartHop earlier this year when it raised $5 million in a round led by Andreessen Horowitz. A number of other investors took part, including Cowboy Ventures and Flybridge Capital. Per our coverage, ChartHop is a “new type of HR software that brings all the different people data together in one place.” The model is working well, with the startup reporting that since its February seed round — that $5 million event — it has grown 10x. The company recently raised a Series A. Per a rep via email, ChartHop is “on-target” for its pre-pandemic business plan, but “far ahead” of what it expected at the start of the pandemic.
- Credo: Credo is a marketplace for digital marketing talent. It’s actually a company I’ve known for a long-time, thanks to founder John Doherty. According to Doherty, Credo has “grown revenue 50% since June, while only minimally increasing burn.” Very good.
- Canva: Breaking my own rules about only including financial data, I’m including Canva because it sent over strong product data that implies strong revenue growth. Per the company, Canva’s online design service has seen “increased growth over both Q2 and Q3, with an increase of 10 million users in Q3 alone (up from 30 million users in June).” Thirty-three percent user growth, from 30 to 40 million, is impressive. And, the company added that it saw more team-based usage since the start of the pandemic, which we presume implies the buying of more expensive, group subscriptions. Next time real revenue, please, but this was still interesting.
They want to cancel their subscription? OK I don’t need them!
You are building a product and you put your hurt and soul into it. You’re rewriting the details, crafting perfect pixel design, generating leads, ads campaigns, cold outreach, and publishing on all channels.
You present a perfect demo, onboard a new subscriber, and then he churns.
At that point you get mad and start making excuses:
- “they don’t understand the product”
- “they were using it wrong anyway”
- “their business sucks”
- “I don’t need them”
But honestly, YOU DO.
I went through the same process but eventually realized that:
A subscriber that wants to cancel the service actually tells me a lot about how the product can grow.
Once you reveal churn hidden opportunities, you can take action to prevent churn and make your way to the holy grail of negative churn.
It makes sense – positive growth depends on having CAC/LTV metric, it’s as simple as that. You are already spending a lot of greens on CAC but how much are you spending to increase LTV?
Let’s say you have 1,000 subscribers paying $10 monthly subscription = $10,000 monthly revenue.
Assume your monthly churn rate is 6% so the next month you will have 940 paid subscribers and $9,400 in revenue, and the month after that – 883 paid subscribers and $8,830 in revenue.
If you run the calculation until the end of the year, you will see that on month 12 your monthly revenue is $4,760. Let’s see what happens to your LTV if you lower your churn rate from 6% to 1%: In the first month you will have the same $10,000, but at the end of the year your revenue will be $8,860.
Your LTV went from $4.76 to $8.86 -> that’s a 86% increase!
The article is written with love by me, the founder of Churndler.
Your analytics should tell you everything.
Tools like Google Analytics are incredibly valuable for businesses. Once you’re setup, you’ll have everything you need to analyze your performance data properly. Instead, many companies have realized that their analytics tools have introduced a lot of unexpected problems.
They’re not getting the kind of value they need.
That’s the good news. Most companies think their data is clean; that they’re making good decisions with the data they have. Most of these companies are wrong; they just don’t know it yet. This is why companies need analytics consulting. They don’t know what they don’t know.
Today, I’ll show you how to find the right analytics consultant for your business.
4 Ways an Analytics Consultant Can Help Grow Your Business
Many companies make the wrong assumptions. Using a tool like Google Analytics, clients think all they have to do is drop the tracking code into their web pages, log into their account, and begin analyzing their data. It sounds easy, but it often isn’t.
There’s more to it than that.
This is why you need an analytics consultant. With the right consultant, you’ll have the education you need to grow your business. You’ll be able to pull insights out of your data using a variety of methods. Each of these strategies is important because they have a cumulative effect on your business.
Here are four ways analytics consulting can help you grow your business.
1. Exclude spam traffic via bots, scrapers, and spiders
How much of your traffic comes from real visitors? How much of it comes from bots, scrapers, and spiders? According to Imperva, almost half of all internet traffic is non-human. In 2014, Google introduced an obscure setting that enables you to filter out bots and spiders listed in IAB’s Interactional Spiders and Bots list. This low-key setting is buried in Google Analytics, but it’s incredibly important; many small businesses still aren’t aware of this setting.
You’ll also need help to filter out referral spam.
Referral spam is basically fake website hits; these bots, scrapers, and spiders land in your site. Site owners send their spam to your site. They hope you’ll see these referrals in your Google Analytics account, clickthrough, and visit their site.
This junk traffic poisons your data.
It gives you false readings based on inaccurate data. Your site may be more or less profitable, depending on your visits-to-spam ratio on your site. This isn’t something many businesses watch for in their analytics reports.
A good analytics consultant will consistently filter the variations of spam traffic (e.g., direct spam traffic, referral spam traffic, etc.) out of your reports, so you get a clear picture of your marketing performance.
2. Help you analyze your data properly
A lot of companies don’t know how to analyze their data properly. According to Forrester, between 60 and 73 percent of a company’s analytics data goes unused. Companies collect lots of data on customer activity, but they aren’t using it, why?
There are lots of reasons.
- Companies don’t know what they have
- Companies aren’t aware of the value of their data
- They don’t know how to evaluate or analyze their data
- Their data isn’t available to those who can use it
- There’s too much data to go through and not enough time to use it
Think about it.
Right now, your company has valuable data about your customers. This is data you can use to attract more customers, lower expenses, grow faster, jump ahead of competitors, etc.
If you’re unaware of the data, you can’t use it.
A good analytics consultant will help you analyze your data properly, showing you what you have and how you can use it to grow your business.
3. Identify the list of problems you’re trying to fix
Your data isn’t as valuable without context.
If you know the problem you’re trying to solve, you have a pretty good idea of the answers you’re looking for in your data.
That’s the problem though.
A lot of companies treat their analytics tools as a technology issue. They focus their attention on the obvious issues like hardware or software. They rarely treat their analytics as a question and answer tool. That’s exactly what it is, though.
Target had the right idea when they started their analysis with a problem/question.
Remember the story?
“If we wanted to figure out if a customer is pregnant, even if she didn’t want us to know, can you do that?” It’s a creepy story that shows the power of questions and problems. A great analytics consultant will help you discover the issues you’re trying to solve and the questions that need answers.
4. Focus your attention on the metrics that explain why
Analytics tells you what happened — what visitors did when they arrived on your site, the ads they responded to, what they read most often, etc. It doesn’t tell you why visitors do the things they do. Understanding what is important, but it’s more important to understand why something happens.
Focusing on the right metrics is the answer.
The right analytics consultant will help you answer the “what” — basically looking in the rearview mirror. But they’ll also help you look ahead; They’ll dig deeper, showing you the why behind visitor and customer behaviors.
Your analytics consultant should provide you with the education and support you need to squeeze more value out of your data.
How to Get Started With an Analytics Consultant
Avinash Kaushik has a three-step framework he uses to help analytics consultants support their clients. He calls it Data Capture. Data Reporting. Data Analysis. The nice part about this framework is the fact that it’s easy for both clients and consultants.
Consultants can use each of these buckets to analyze your goals, objectives, and the results they want to accomplish with each.
You’re basically goal setting with this framework.
Here’s a closer look at each of these three buckets and the goals for each of these.
- Data Capture: Work in this bucket is focused on audits or updating data capture methods (e.g., updating, editing, or customizing tags). This step is especially important because it determines the quality of what comes afterward. If you’ve done a good job with your data capture methods, you’ll have accurate data and reporting you can use for your analysis.
- Data Reporting: Your consultant sets up the reports you need on the intervals required. Your consultants help you identify the reports you’ll need, and they provide you with the reports you need regularly.
- Data Analysis: This is what Avinash calls an open-ended assignment, but it’s one you’ve provided to your consultant. You’re asking them to answer specific questions for you — your consultant should be able to show you what to measure, what your data is saying, what to do based on your data, and why you should do it.
Here’s what this means for you.
You’ll want to find an analytics consultant or agency that can handle all three steps in this framework. This also means you’ll need a clear idea of problems you’re dealing with ahead of time.
Measuring the ROI of Analytics Consulting Services
Many companies don’t understand analytics.
If you don’t understand analytics, that’s okay; you just need to know whether you’re generating a return on your analytics investment. According to Nucleus Research, analytics returns $13.01 for every $1 invested.
This obviously much easier if your consultant is focused on the data analysis bucket. Suppose they’ve made several data-driven improvements to your site over three to six months. Their recommendations have lead to an increase in revenue, profit, or a return on investment for you. They should be able to verify your return on investment using the worksheet I’ve linked above.
The good news is the fact that analytics, as a discipline, is data-driven.
Checklist For Finding the Right Analytics Consultant
Choosing the right analytics consultant requires a very different set of skills. If you’re working with an independent analytics consultant, you’ll need to approach this in one of two ways.
- Choose a consultant with all of the skills needed to perform across all three buckets (data capture, reporting, analysis).
- Choose an agency with analysts and implementation specialists needed to generate the results you need.
Here’s a list of the skills needed for each of the three roles in your buckets. Avinash breaks these skills down in detail in his web analytics consulting framework post.
Here’s a quick summary.
- For the data capture bucket, your consultant should have the skills of an implementation specialist. They’re experienced with tag managers; they understand data dimensioning and working knowledge of tracking variables.
- With the data reporting bucket, your consultant should be familiar with report creation in your analytics platform; they should also have a master list of the custom reports you’ll need for various options. It’s also ideal if your consultant has a working knowledge of his own set of customizations.
- For the data analysis bucket, your consultant should be a web analyst. Your consultant should be comfortable with advanced statistics and analytical techniques. They should be experienced in descriptive, diagnostic, predictive, and prescriptive analytics.
If you’re working with an independent consultant, they should be an industry veteran with the skills I’ve listed above. If you’re working with an agency, they should have employees with the skills for each bucket. If you have implementation specialists, you can handle data capture and possibly reporting.
Just make sure they’re a fit for that role.
Many companies aren’t familiar with analytics consulting. They’re not entirely sure how analytics impacts their organization. That’s okay, as long as the ROI is there.
Using a tool like Google Analytics, many companies assume that all they need to do is customize the tracking code, drop it onto their web pages, log into their account, and begin analyzing their data. It should be that easy, but it isn’t.
There’s more to it than that.
With most companies, their analytics data goes unused, they collect lots of data on customer activity, but they don’t know how to squeeze value out of their data. Analytics consulting can help you evaluate your performance data properly. Choose the right team, and your data will tell you what you need to know.
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