Activate and Retain Users Before Scaling
Originally published as part of, “The Day Before Digital Transformation” by Phil Perkins and Cheryl Smith
Another common mistake made by new digital leaders is investing significant capital into customer acquisition before demonstrating that early adopters of their technology are engaged. Investing to bring customers to a digital experience that confuses them will result in them leaving uninspired or unhappy and is a waste of time, money, and precious brand value. Before scaling, organizations must first validate that their product or service can activate and retain users, deliver successful user outcomes, and build invested value for users that make it difficult for them to stop using the solution. If these are done properly, it will inspire users to become a powerful growth engine when they tell their network and sell on your behalf.
On their own channels, successful digital leaders get products into the hands of select users to test before introducing them widely, and continuously optimize the experience until users consistently achieve the desired outcome. Delivering value to users early and often within a simple experience with minimal features that ‘just work’ results in higher success rates than building feature factories that attempt to cover every possible use case for every possible user in a major release. When you build an experience for everyone, it will usually not serve the needs of anyone. Successful digital leaders never stop improving their offerings based on learning what customers do, not what they say.
This allows the organization to put the 80-20 rule into play again. Organizations should think about targeting 80% of spending on product or service development (albeit at substantially lower development costs and timeframes than in the past) and 20% on customer acquisition. As the offerings mature and scale, it will eventually shift closer to a 50/50 split with closer to 20% of revenue spent on development and closer to 20% spent on customer growth.