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Building Blocks (and customer love)
I had lunch with a friend and entrepreneur, Spencer Fry from Carbonmade, and over a great burger we discussed the importance of not only giving your customer a voice in the product development process, but making sure you are listening to the best customers. He wrote about our conversation on his blog today and got some great comments. I am adding my sneakerheadVC view here and hope to get a couple comments as well.
Early adopters tend to be taste-makers. They like to try new stuff, but they also like to introduce people to the new stuff they are using. This group is fanatical, they are loud and the way they use the product and the features they request are typically not market appropriate. They will love you and hate you all at once. It is a teenage crush, you should listen and learn but you should not create new building blocks for them.
I believe the customers that should drive your product development are the second wave, brought in by the early adopters. These customers are savvy, they will become loyal or churn through your service based purely on their experience, and while their feedback can be harder to illicit, it is also a much better leading indicator of where you should go. This is your first true love, embrace it and make it last as long as you can.
This love grows with focus and attention to the details of why you fell in love in the first place. Be true to this consumer and discover other verticals that they will love but that also make them love your first product, building block number one, more. At AND 1 the best example of this was the MixTape.
As a basketball footwear and apparel company, producing a Streetball video and placing one foot firmly in the entertainment world could have been a distraction. Instead, this new vertical generated significant revenue, expanded our audience and made our core consumer love us even more deeply.
Our decision to enter the kids market also resulted in significant revenue and expanded our audience, but it made our core consumer question our brand. We thought if we could capture the consumer earlier, we could extend the relationship and become a bigger company. Instead, we found that the larger our presence was in kids, the less passionate our adult consumer became –We became a brand to grow out of, not into.
The experience in the slip-on market bridged these two extremes. Our first few SKUs were very successful and exploded into a $50M business with close to $25M going straight to the bottom line. Our performance business grew as well and we watched our customers engaging with the brand on and off the court for the first time as revenue in footwear crossed the $180M level. We tried to grow the slip-on line by adding SKUs and deciding to highlight the product in our marketing efforts. The result was a bigger slip-on business, and for some time the overall business grew as well, peaking at $200M. However, this also drove a shift in brand perception and as the sales volume continued to shift from performance to slip-ons, it was only a matter of time before the top line numbers began to fall as well. We had turned our back on the core customer in order to chase a fashion customer. We cheated on our true love and paid the price.
It is key to understand both who your best customers are and why they are valuable to you. Once you know this, it will become clear how you can pursue Spencer’s building blocks approach to expanding your offering and also maintain your focus, increase your conversion rates and expand the customers who love you with the new alternatives.