Posts in category: Entrepreneurship

After learning how to develop a product that perfectly meets the customers’ needs in our 3rd session with the FAIP 2021 cohort; in week 4 we dived into understanding how to acquire the customers and keep them coming back to buy more products over time. The goal of this session was to help the participating startups to develop practical sales strategies with ease of execution within their target markets.

In addition, we helped the participating startups critically analyze their cost of acquiring their customers and establish their customer acquisition cost (CAC) ratios.

To simply the customer acquisition process, we explored the six components of the marketing funnel and their application to the startups participating in FAIP 2021. The marketing funnel is a representation of the target buyers journey from when they are simply prospects to when they are converted into paying customers.

The process starts with the startup creating awareness about their products through different channels including social media, affiliate marketing, listing on online marketplaces, content marketing and in mainstream advertising among others. At this stage the goal is to attract as many customers as possible into your marketing funnel by placing your products before their eyes as frequently as time and financial resources can allow.

Once your products are known by the target customers in the markets where you intentionally create awareness; a fraction of those who get to know about your products will express their interest in them by starting to seek more information about them. At this second stage in the marketing funnel, the focus of the startup is to track those expressing their interest in their products; and supply them with more content to reaffirm the value they will get from the products.

The end goal is to build trust with the prospective customers by ensuring they easily find answers to all their initial queries about the products you are offering.

The third step in the marketing funnel is the consideration stage. At this stage, the prospective customers have consumed substantial information about your products and they have developed a deeper interest in them; but they have not made the purchase decision yet. For the startup, this is the time to narrow down the marketing efforts to specific customer segments or individual customers; and provide them with customized content via emails and other channels. The prospects who get to the consideration stage are deemed to be qualified leads that can be pursued further; with a high likelihood of conversion into paying customers.

From the consideration stage, the prospective customers move to the fourth stage – the intent stage. This is where they express their intention to buy your products by requesting for quotations, placing items in the cart in online stores or by responding to surveys sent out by your business. At this stage, the startup focus is on demonstrating their value proposition in order to keep the prospect in the marketing funnel and push them further down.

Just before the prospective customers make their final decision on whether to buy from you or not; they will evaluate your value proposition  and compare it with other alternatives they are considering. This is the fifth stage where the startup should focus on making obvious the features and utility value derived from their products by their customers that make them stand out from the rest. It is at this point where additional value such as after sales services is offered to the prospective customers to make the deal sweeter and win them over.

The sixth and final step in the marketing funnel is purchase stage. This is when the prospective customer finally decides to buy your products. At this point you have successfully converted the prospective customers to paying customers; and you deliver the value proposition promised to them and any other after sales services.

After the purchase, you move on to the next phase which is customer retention. Here the focus is to ensure your paying customers are happy with your products; and they keep coming back to buy more over a prolonged  period of time. Building effective customer relationships with your buyers will establish brand loyalty from them and help keep your cost of acquiring new customers in check. This will ultimately boost your revenues and increase your profit margins over time.

At the end of week 4 session, founders participating in the FAIP 2021 cohort had to go back and develop a detailed marketing strategy for their startups and establish what their historical and projected customer acquisition costs (CAC) are. With this understanding of unit economics, the startups are now equipped with the requisite skills and tools to acquire and retain customers based on facts and figures that also help them in their long-term growth planning.

Week 2 of FAIP 2021 was focused on understanding the customer needs from their perspectives; and co-developing solutions that best solve customer problems or meet their needs using design thinking methodologies. To build up on the lessons from session 2, we further delved into lean start up methodologies in week 3. The goal of our third session was to help the founders to learn how to implement the design thinking process in a quick and efficient manner using minimum resources possible.

Lean startup is a method of building startups and managing their growth through continuous experimenting, testing and iterating on the products developed based on feedback gathered from the end users. The methodology was introduced by Eric Ries an American entrepreneur, blogger, and author of The Lean Startup. The methodology is premised on the concept of avoiding wasting time and resources building products with features that customers do not need or care about.

Early stage stage businesses in the developing economies are in most cases resource constrained; hence efficient use of their time and the meagre resources at their disposal is very important when at the seed stage. Efficient resource allocation is therefore a core skill that founders need to learn at this stage; and our third session with the FAIP 2021 startups was focused on building this mindset and capacity for the founders.

The objective of the lean startup methodologies session was to remove the notion of creating perfect products from the onset; and focus the minds of the founders on a continuous improvement journey where customer feedback charts the next course of action. To achieve this, we linked the design thinking principles learnt in the second session with the lean startup techniques to arrive at a streamlined 3 step process of build, measure and learn.

Our startups had in the previous week gone through the design thinking process of empathizing with their customers, defining their customers’ problems and ideating on possible solutions. The last two stages in the design thinking process of prototyping and testing then naturally blended with the lean startup techniques of build, measure and learn.

Under the first stage of lean startup – the build stage, participants in FAIP 2021 used the feedback they had from their customers to work on incremental improvements in their products and services to meet their customers’ needs . The focus here is to have minimal tweaks using minimal resources and expending a small budget; then test them with a few customers to get their feedback on the same before a large scale roll out.

With feedback coming in from customers after the small tweaks made on their products, the startups then continuously keep track of the insights gathered from the customer feedback. This is the second stage of lean startup methodology; the measuring stage.

Measuring helps the startups to identify product features that need to be refined, those to remove and improvements required on their products in order to meet their customers’ needs. As they use their customers’ feedback to inform product development decision making, the startups are in effect continuously learning as per the third stage of lean startup.

Just like the design thinking process which is continuous as the business grows, startups participating in FAIP 2021 will continue to deploy the lean startup techniques learnt in week 3; in order to keep them aligned with their customers’ needs and maintain their competitive advantages.

In our first week of FAIP 2021, we delved into Business Model Evaluation & Polishing for the participating startups. The goal was to re-orient the founders to their customers and the specific problems their customers face and want solved. We used the business model canvas as a business planning tool to condense their business models into one page that can be reviewed frequently and updated conveniently at any time.

With the founders having the right orientation to entrepreneurship, we sought to take them back through the journey of determining the right problems to solve for their customers and how to develop the perfect solutions to those problems. The goal for our second session was to help the founders think critically about the problems they are solving or the needs they are meeting; by focusing on the problem or need from their customer perspectives.

The objective of this process was to understand the problem or need their customers have and immerse themselves into their customers’ psychological processes of trying to solve the problems or meet their needs. Ultimately, we wanted our founders to have a deep understanding of what solutions would work best for their customers.

In addition, we wanted them to figure our how to deliver perfect solutions to their target customers in a manner that is faster, more convenient and affordable; as compared to other solutions that their customers already have for the problems they are trying to solve for them.

To help our founders go through the process practically, we introduced them into the design thinking methodology of problem solving and took them through each of the 5 steps involved in it. Design thinking is the process of creative problem solving by putting the customers at the center stage and getting to understand their pains, wants and wishes; then co-developing suitable solutions with them. The methodology has 5 main steps which include; empathizing, defining, ideating, prototyping  and testing.

In the empathizing stage, we commissioned the founders to go back to their customers and find out from them what their actual problems or needs are. The objective here was to compel the founders to put aside their assumptions about the customer needs; and go gather primary insights from the target end users of their solutions. The founders needed to have an open mind when going to gather customer insights from their target market segments in order to collect useful feedback that will help them to improve their solutions, and meet the customer needs more effectively.

After meeting with their customers and gathering feedback directly from them, the founders came back to analyze all the information they had received to determine what exactly was the core problem that their target customers were facing. This is the second step in design thinking which is referred to as the defining stage.

In this second step, the goal was to help the founders to step back and figure out the underlying problem or need that their customers have without making reference to the current solutions they were offering them. The focus here is to be as accurate as possible in defining the problem in the words of the customers themselves based on their feedback from the empathizing stage.

With the customer problems and needs clearly defined, our mentors guided the founders through a process of free thinking to conceptualize as many solutions as possible to the problem statement defined in step two above. This exercise was meant to allow the startups to think broadly beyond their current solutions and identify alternative ways of solving the defined problems.

This marked the third step in design thinking methodology called the ideation stage. The output here was the startups coming up with ways they can improve on their current solutions to meet the needs of their target customers more effectively.

Armed with a deep understanding of their customers problems, a clearly defined problem statement and practical recommendations on how to improve their solutions to meet their customers needs, our founders are now working on the 4th and 5th steps in the design thinking process.

Currently, the startups participating in FAIP 2021 are working on small incremental improvements on their products and services to meet their customers’ needs as per the recommendations from their customers themselves. This is the fourth step in the design thinking process; also referred to as the prototyping stage.

As they make the improvements on their solutions, the startups are also testing the new improved solutions with a section of their customers to get more feedback. With the additional feedback, they will keep tweaking their solutions in the Japanese spirit of Kaizen (continuous improvement). Ultimately, they will achieve better results and be the preferred solution providers for their target customers. This is the 5th and last step in the design thinking process; which is also referred to as the testing stage.

Fie_Labs Agri-Incubation Programme (FAIP) was designed with a practical approach to entrepreneurship and innovation in mind. Our goal is to ensure that we support start ups that are solving real world problems or those that seek to provide products that are meeting existing and growing market needs.

To this end, FAIP is structured in a sequential manner to allow the participating start ups to immerse themselves into the rudiments of entrepreneurship & innovation from the first week.  In the end, the founders will have polished their business models and identified their sweet spot in the markets they serve where they have a perfect product-market-fit.

In our first week, our objective was to help the founders take a critical look at their start ups, evaluate their business models and establish if they are pursuing sustainable paths to scale. We introduced the foundational concepts of entrepreneurship and innovation; where problem solving or meeting a need in the society is always the starting point.

We then delved deeper into understanding what problem each start up was solving or what need their business model seeks to meet. Probing further on the problems and needs, we sought to clearly define the people facing the problems or having the needs the start ups seek to solve or meet.

Having defined the target customers for each start up, we then explored how they were/are solving their problems previously/currently without the solutions that our founders are proposing or offering to them. The objective of this exercise was to clearly define what alternatives are out there for the target customers from both direct and indirect competitors.

Next we dived into the solutions that each start up is offering to its target customers; and defined the unique value proposition that they are offering in comparison to their direct and indirect competitors. We further probed how each start up goes about ensuring that their target customers are aware of their value proposition; and how how they make their solutions accessible to their target customers.

When still focused on the customers, we established the various strategies that each start up can explore to strengthen the relationship with their customers to increase their customer satisfaction and retention rates.

Later we mapped out the operational framework for each start up; and identified the key activities that they must do in order to effectively and efficiently deliver their value proposition to their target customers. We explored their operational frameworks from an inputs, processing and outputs perspective; and for each stage we also identified and quantified the resources needed to execute the activities therein.

In addition, we explored how the start ups can deliver their value proposition most efficiently by collaborating with other stakeholders in their value chains and building synergies from the partnerships. For this segment we mapped out the key stakeholders that the start ups need to work with as they grow and scale their operations.

As we came to a close of our first week, we looked into the funding required to deliver the value proposition to the target customers and then broke them down into customized cost structures for each start up for ease of tracking and recording.

Finally, we assessed how the start ups get paid for the value they deliver to their customers. The focus here was to identify and separate the end consumer of the value and the person or organization paying for the solution. We also broke down the sources of revenues into separate streams for each start up for further analysis of their profitability down the road when we shall be taking a deep dive into financial planning and management.

FAIP 2021 Week 1 was obviously a heavily loaded one; but it had to be for us to lay a strong foundation for us to build on in the subsequent 11 weeks of the programme. With a deep understanding of their business models, the founders are now ready to dissect all other aspects of their start ups in details as they prepare to scale.