How to Shape Human Behavior

27 important takeaways from this video:

00:01:13 Take all advice as directionally good guidance, meaning that it will lead you in the right way, but every business and situation is different, so don’t assume that what worked for someone else will automatically work for you.

00:01:26 To launch a startup you need to have a lot of compressed time in your schedule (1-2 days uninterrupted) where you can really dedicate yourself to its success.

00:02:35 A typical amature and failed approach to starting a business is:

00:03:20 When you launch your company, you really should initially launch on a major website such as through Tech Crunch to get your brand and product in front of a ton of new people who can then become customers or reveal ways to improve your business.

00:03:43 You should be able to describe the problem you are trying to solve in one sentence:

• What is it?
• How does it relate to you?
• Verity others have it.

00:05:44 Popular advice for disrupting an industry is to have absolutely NO experience going into the industry, that way you see everything with fresh eyes. But a more practical approach would be to begin as a cog in the industry and conduct research by learning until you become a sort of expert.

20-30 years experience in an industry probably isn’t the best time to launch a startup in the industry because you’ll be set in your ways, but a few months or years into the industry you should:

• Understand the industry best practices
• Know what makes a product successful or unsuccessful
• Know everything about every competitor in the industry
• Develop enough of an expertise in the industry that people trust you
• Create a network within the industry to get your business running

[EDITOR’S NOTE: In my interview, Derek Sivers, author and entrepreneur talks about the benefits of becoming a semi-expert.]

00:09:58 Next you should identify all relevant customer segments and the products they are using and know what they all have in common that you can build your business on, but then also optimize your product for one specific customer segment so you can focus your marketing efforts on making that niche customer segment loyal before expanding.

00:10:40 Before you write any line of code or begin creating your product you should storyboard the ideal user experience to solving your problem from the first point of contact through to after-sales support.

00:11:52 Having done all that, now you create your Version 1: Minimum viable product. Viable is extremely important here because many startups simply launch a product with one special feature. Ideally your product or service should have the smallest feature-set possible that solves the problem you’re trying to solve and that people are willing to pay for.

00:12:48 Alongside your minimum viable product you should also have your product positioning down, that way you can clearly and concisely explain to potential customers precisely what your product is and what problem it solves.

You should be able to fit your product positioning into one sentence. This one line is paramount to the success of your pitch and catching the person’s attention.

[EDITOR’S NOTE: For more information on exactly how important your pitch introduction is, watch the video How Can I Introduce My Pitch So Investors Want To Invest In My Brand?

A really good book on the art of pitching and introductions, read the book The Jelly Effect by Andy Bounds.]

00:14:08 You are now ready to find and get user feedback from your first few users. Start with the people in your immediate circle who already know and trust you.

Going from zero to one to three to four first customers you will likely have to get out from behind your desk and actually meet people face-to-face on the street where your target customers usually go.

[EDITOR’S NOTE: In the video How To Start A Startup: The Importance Of Finding Your Idea and Product, Sam Altmann explains that Pinterest found it’s first users because the owner Ben Silverman walking up to people in coffee shops and asking them to use his product, and pre-setting all the browser settings at the Apple store products to have Pinterest as it’s homepage.]

00:17:50 Rule number one in getting customer feedback is having an easy way for customers to contact you: a phone number with voicemail service, surveys, an email address, a contact form…

In general, people only respond if they really love you or they really hate you, So you want to get the person to a point where they feel comfortable talking straight-forward with you about the strenghs and weaknesses of your product, but be beware of the honesty curve as people tell you what they think you want to hear about your product or service.

For FREE products, the closer that person is to you, the less honest they will be and the more ‘white lies’ they will tell, or the more they will avoid critiquing your product or service.

The farther away from you they are, such as strangers you cross on the street, won’t really care about you and are likely to answer your questions half-heartedly.

For PAID products, the closer they are to you, the more likely your close friends and connects are to lie about their satisfaction with your product, however the farther away  that person is to you, the more honest you can expect their feedback to because they have put money into your product, and so expect improvement.

Meaning, you get more reliable feedback from paying customers than from free users, so if you’re offering a product that you eventually plan on selling, you want to get to that point as quickly as possible.

[EDITOR’S NOTE: For more information on how to conduct consumer research and listening to users, read my interview with Peter Spear, Brand Listener and Strategist.]

00:20:00 Customer retention is one of the best ways to track how well your product or service is doing: how many new customers came in the door today? How many came back the following day? The day after that… etc.

As your business grows, you will pay more attention to monthly retention rather than daily retention. But obtaining this information is slow and time consuming, and a problem when you are still in the product development and refinement phase.

A quicker way is to pay close attention to customer ratings – how many star reviews are they giving you on the app store, on your website, in your surveys, etc.

Your reviews and customer retention should be going up over time. If your customer retention isn’t really moving up or down, then you should probably return to learning more about your customer demographic and what new features you could add to attract more people and make your current customers want to share you.

00:24:38 Process is very important; especially as you scale and grow. So do things manually before you automate them. By manually doing it yourself you understand how best you can automate what needs to be automated.

Automate too quickly and you may lose control of your branding and customer relationship as well as knowing the best and most effeciency questions to ask and points to address in the automated process.

For example, if you’re accepting job candidates, conducting a hundred face-to-face job interviews will give you a list of the top 10 most reliable questions for determining whether or not the person is a high potential candidate, whereas simply automating your questions from the start you’ll never realize that you’re asking the wrong questions.

[EDITOR’S NOTE: For more information on the recruting process, watch the video Human Resources Management: Attracting and Selecting The Best Candidates.]

 00:26:32 Temporary brokeness is much better than permanent paralysis. During the minimum viable product launch and refinement stage, perfection is irrelevant until you have found your product that people are willing to pay for and share with their network. It is during your growth stage that you start worrying about perfecting your product or service.

00:27:19 So you’ve gotten honest and reliable feedback from a lot of users; avoid the temptation of going home and simply making all the modifications the users told you to and then showing the users your modifications the next day.

Instead, get to the bottom of why users are asking you to build a particular feature. Their feedback could be a symptom of a larger, unrelated problem, or a smaller problem such as a lack of understanding of how to correctly use your product.

Piling on a bunch of additional requested features could in fact be hiding the main problem altogether.

00:28:21 No matter when you launch, if you have a really good idea, someone is going to steal it. It’s inevitable and unavoidable. Unless you’re building something that requires tens of millions of dollars to start, there is no point in waiting around and keeping it secret until the last minute.

00:29:40 Don’t spend all your time and money advertising across multiple channels; focus on only one channel at a time. For example, spend 200€ and one week advertising EXCLUSIVELY on Facebook, gather the results, and then move on. Doing so you are more able to test that channel and determine whether or not it is the correct channel to continue focusing on.

00:30:46 Once you identify channels and strategies that work, continually repeat them.

[EDITOR’S NOTE: In his book Permission Marketing, Seth Godin clearly illustrates this saying that the only people who should be allowed to tell you when to change marketing techniques should be your accountants; when the sales start slipping, it’s time to change tactics.]

Over time, you should periodically revisit to your originally failed channels and try again, this time with your lessons learned. It’s possible that at that point in time your marketing on that channel failed was because your brief moment of channel-testing may have coincidentally coincided with a large marketing push by a more financially-backed competitor, which may no longer be the case.

00:33:00 Sustainability is the key to growth, and your objective should be to maximize ROI with your marketing spending so that as little money that is put into marketing as possible is lost or wasted.

00:34:00 Sticky growth happens as long as you keep deliving a good and addictive experience; then your customers will want to keep using you. This can be measured using a:

• Customer Lifetime Value (CLV) analysis: the net revenue a customer brings into the door for you over a certain amount of time: 3 months, 6 months, etc.
• Retention Cohort Analysis: The percentage change over time between two measurements: For example the number of first time website visits and the month, or the amount of page visits for men versus the amount of page visits for women.

[EDITOR’S NOTE: For more information on SEO and measuring rates and statistics, read my interview with Benjamin Descazal, Data Consultant for KBMG.]

00:38:52 Viral growth also requires a superb and addictive experience, but also include something that makes them want to share your product with their friends. Additionally, you need an easy way for those people who want to talk about you to talk about you.

00:39:10 Customer touchpoints are where are your users learn that they can refer other people once they arrive on your website or application:

• At the top of each page?
• On a popup?
• Hidden at the bottom of each page?
• Right after the person signs up?
• After the person has had a chance to use your product?

00:40:40 Program mechanics include offers such as: “Get one of your friends to spend 5€ and we’ll give you 3€!”

00:41:21 A user finding your website and sharing it with all his or her friends isn’t the same user journey as the friend of that user who will click on the friend’s share and find your website. You must account for this, such as by having them land on a page that says ‘Hey, Your friend <insert name here> suggested you check us out!’

00:46:36 Pivoting. Have a growth plan when you start out, and at an early stage you should always be growing, but once you realize that you cannot grow, or that despite building out all these great features and getting user feedback people just aren’t paying or sticking around, or the business model economics doesn’t work, then you need to be able to accept it and move on or adapt your existing idea.

00:50:18 There is always a switchover cost of convincing customers to use your product instead of what they’re already familiar with and trust. Focus on finding the moments where your product is very much better, or very much differenciated from what their existing solution. Once those consumers start realizing all the little advantages you offer, they will eventually turn into big advantages, and the consumer may eventually abandon their current solution for yours.

[EDITOR’S NOTE: In my interview with Bérénice Goales, Client Services Director for Wunderman, she tells the story of how Free was able to disrupupt the cell phone market and convince consumers to break long-term contracts with their current providers to sign up for Free’s offer.]