Tag: business

Starting a new business – continuous improvement

This is a post about my learning of continuous improvement on our startup.

This week, I’ll share about the continuous improvement we’ve done on our startup and what I learn from it.

Previously, I shared that after updating our landing page for demand validation, we saw the conversion rate doubled and we were quite satisfied with the improvement. Next is to wait until we had enough conversion to move on to the next step. For a while, I was indulging in the “success”, naively of course 😉

I grew up with this Chinese idiom stuck in my head: 学如逆水行舟，不进则退. It translates literally to “Learning is like rowing a boat upstream, if you don’t keep pushing forward, you’ll fall behind”. I’m also a DevOps advocate, for which continuous improvement is part of the trade. Though for a while, it didn’t occur to me that I need to continuously improve our ads, not until I stumble across the “Experiment” feature of Google Ads. ¯\_(ツ)_/¯

That reminds me of what I saw in our company’s weekly updates, what A/B test was done, its result, and what change was done to improve further. That’s a strong reminder that I also need to continuously improve our business. I’ll go into the why shortly, let’s look at the what for now.

Google Ads Experiment

Google Ads Experiment is a guided and automated step that can also be done manually. I’ve tried both approaches, the limitation of either method is the deciding factor on which to use.

For an experiment, Google Ads can be instructed to apply draft changes that are performing better than before. Those changes can be anything from keywords down to ads wording. The limitation, only one experiment is allowed at a time, but experiments can be queued, making this a useful feature for ongoing improvements.

When done manually, we can either create new Ads Group or Campaign and compare the results ourselves. I went with this to do our branding test because we have 7 brand names to test. Although it’s still possible to use Experiment but testing each brand sequentially might include seasonality bias in the data. We wanted a more accurate data from this test.

Improvement

I set up to run the branding test for 4 weeks, and there’s one week left. I’ll share the result next week. But now we can already observe the improvement from some of the more favorable brands.

The graph includes data 1 week before we started the branding test to provide a before and after comparison

Our CTR grew from 1.16% to 2.76%. That’s the average of all 7 brands. Our top brand actually fetches more than 5% of CTR and we’re just hitting the industry average according to Instapage. 

Our conversion rate goes from 3.36% up to 5.24% and it’s better than the industry average of 4.40%. Our top brand managed to push the number further to 6.19%. I’m really satisfied with the result. But it’s not the time to be complacent.

Why

Although the experiments in this post were about demand validation and branding test, continuous improvement applies to all areas of the business, or any business for that matter.

Every business, no matter who runs it, faces ongoing change. The only constant of business is change. The only constant in life is change.

Mark Cuban
https://www.forbes.com/sites/forbesbusinesscouncil/2021/03/30/embracing-the-one-constant-in-business-change/

The world is changing constantly so are consumers’ needs. Looking at the closing of Speedy Video after 3 decades, while consumers’ needs have changed they continue to serve them the same way. On the contrary, the company I worked in, it’s 10 years old and they never stop improving their customers’ satisfaction, which is why they’re one of the top 3 of their industry right now. 

Changes can also come from the environment, the competitive environment in this case. We’re expecting strong competition after we launch, either from existing players or new ones who saw the same opportunity that we saw. We’re now in the training pool learning our way, hoping that one day we can swim alongside the big players in the competition pool. Without continuous improvement, we’ll be out of the game in no time 😉

What’s Next

In the next post I’ll wrap up branding test and share more about biases in business decision and what we can do about it.

Starting a new business

This post is about my foray to start a new business with 2 friends following the lean startups’ methodology and what I learn from it.

This post is about my foray to start a new business with 2 friends following the lean startups’ methodology and what I learn from it.

Recently a very entrepreneurial mentor of mine called to talk about a business idea. This is quite a common type of call I get from him. I see him as a visionary person and someone who can spot a business opportunity from miles away. Most of his business ideas are anything but traditional.

Most of the ideas we discussed are just ideas. Having a business idea doesn’t always mean it will result in a sustainable business. But sometimes through our discussion, some of the ideas spark new insight into other opportunities. This is one that he managed to convince me there’s a real demand for us to supply to. He also convinced a close friend to join us. This partner is an subject-matter-export for the product that we’re trying to create.

Starting Up

Most of the businesses that my mentor started, require him to be on the ground understanding all the intricate details involved and evolving that into what they are today iteratively. But for this new business, it’s going to be 100% online, which is where I can contribute technically. I’ve also worked in a startup going through product-market-fit as well as having read The Lean Startup, or so I thought 🙂

In the first meeting, I was tasked to set the technical direction and ideas on where to “start”. We agreed that it’s a risk if no one needed our product. So that’s the biggest risk that we need to validate before we invest in building the product. Initially, I proposed doing market research to affirm our business idea. Although I’ve read The Lean Startup, I never get to apply the principle of demand validation at the earliest stage. I was lost, but luckily I knew a close friend, Yazid, a design thinking guru who had done this for his highly demanded WagyuBox . He explained how he applied the principle from the book and provided me some ideas to test the demand of our product without actually having the product first!

Demand Validation

So I went ahead and set up demand validation by using Google Ads. Crafting a brief description of what the product is, and then point to a landing page that I whipped up from some free template. On the landing page was a simple form asking for the visitors’ email, for those who want an update when our business is ready to serve.

I didn’t waste too much time setting up the best-looking landing page, but I was also worried if anyone is really going to provide us their email. After 5 days and 95 clicks, I finally saw 1 email in the log! I was so happy that it actually worked. I’ve never been so anxious about my work before 😅

When toying around with the ad’s wording and keyword selection, I noticed some interesting cause and effect. The ad is configured to maximize clicks, and we pay each click by the price Google bids the ad automatically for us. With the “right” keyword, I can surely attract a lot of clicks, but at the end of the day, are those visitors our target audience? Not all visitors equal interested customers. They might have been duped by the “right” keyword, a.k.a click-bait. In the end, I find having an ad with genuine intention provides the best value for money. Why pay someone to come to visit your shop knowing they never going to buy anything. 

Over 4 weeks of experimentation, we managed to attain an average CTR(click-through rate) of 1.59%. For the keyword that’s closest to our product, we managed to achieve a CTR of 5.82%, which we believe it’s pretty impressive. But we also needed keywords of our competitor name in it, to widen our reach, hence an overall lower CTR. As for conversion rate, which represents those with true interest, it averages at 1.61%.

“If you’re not embarrassed by your first release, you probably spent too much time on it.”

Reid Hoffman

After 2 weeks of the ad run, we hired a product designer to update the design of our landing page, and the conversion rate went up to 3.26%. About double, which was our initial ballpark guestimate. That also proves I never belong in the design department 😉

What’s Next

We’ve nailed the keyword and wording on the ad, and most importantly, we’ve validated the demand with just a small amount of ads fee. From those emails we’ve collected, we want to engage with the users to help tweak our product offering to more closely meet their needs. But we have yet to register a company and decided on our branding. So that’s what we’re going to do first.

While waiting for the ads to run, we’ve come up with a list of brand names that make sense for our product, but that’s just our opinion. Why not let the user decides? I’m going to set up multiple ads each with a brand from our list, and we’ll measure the effectiveness of them while removing our personal opinion from the equation! That’s for the next part of this series. 

Take away

Nowadays with the aids of online marketing tools, starting a new business especially with lean startups methodology can help reduce the risk greatly. Knowing whether there’s a real demand for the product/service that we want to sell is really important to ensure a successful business before we invest in building the actual product.