Thursday, February 27, 2014

Who Moved My Cheese? How the Superconsumer & Rapid Experimentation Drive Revenue

Testing and learning with your passionate brand loyalists can open up new product insights and increase revenue.  Rapid Experimentation provides a framework for engaging with your superconsumers to learn and drive innovation and revenue.

So what is a "superconsumer" and how do you unleash their power?

Superconsumers are different than high volume/heavy users.  The super consumer combines big spending with high brand engagement. 

Here’s an example:

A recent article published in the Harvard Business Review highlights how Kraft's Velveeta Cheese brand leveraged the power of their superconsumers.  The Velveeta superconsumers were the people using the cheese product beyond the twice a year super bowl  fiesta nacho dip and holiday time cheesy beef on toast.  They were in forums sharing recipes and new uses for the product (a secret ingredient for brownies??).  They were also clamoring for new line extensions. 

By focusing on the insights and behaviors of this narrow segment- about 10% of the product’s customer base but making up 30%-70% of the product’s revenue – Kraft was able to get lift in sales as well as valuable input into what the line extensions should be.

This is an excellent case study for the role that Rapid Experimentation plays in your product development.

Rapid Experimentation is based on the Lean Start-up framework of running small experiments with a subset of your customers to gain broader insights into where to spend your investments.  It starts with forming a Hypothesis about what you think the customer needs/wants and determine the minimally viable product (MVP) to build to test that theory and capture data.  The data is analyzed and your learning’s help inform your go to market strategy.  For a relatively small investment your hypothesis is either validated or disproved.  Giving you insight into making a pivot or stay the course.

The goal with Rapid Experimentation is to uncover the hidden needs that even your customers don’t know they have.  Asking people what they want often leads to lies.  Not intentional lies but when asked, people tend to tell you what you want to hear or agree with what they think sounds like a good idea.  It’s not until they touch, feel, interact, (or not), with a product that we get a true sense for what the needs are key.  

The superconsumer is an example of the ideal testing ground.  They are tolerant and honored to be part of the process.  They also tend to be influencers that broadcast their opinions to their networks.

By continuing to increase engagement with the superconsumer you can get validated learning’s about what the customer truly wants before investing too heavily in what you think the mass market wants.  And because this group could count as a significant share of your revenue you are giving VIP treatment and co-developing a product they will likely continue to buy, buy more of, and influence their networks to try. 

Case in point – by simply moving the cheese from the aisle to the refrigerator case (a no-cost MVP to test) and observing superconsumer behavior (the test group), a new world of recipes emerged with the move and gave Kraft valuable insights into what types of line extensions to focus on.   Further fueling revenue growth as the superconsumers will gobble up these extensions that were tailored to the way they use the product.

So how does this apply to your business?  Who are your superconsumers?  Identifying them can be easier than you think – have you checked your social media chatter or mined your existing data yet?

In today’s environment a company cannot afford not to innovate to drive growth.  Your business is either growing or dying.  Even the most traditional brands and companies are taking a fresh look at how to drive growth while staying true to their core.  Luxury heritage brand Moet Hennesy is thinking differently to drive growth: Moet Chandon is selling champagne in vending machines and making India the new hot spot for their sparkling beverage.

I bet you didn’t think cheese could get any more interesting?  Kraft seized the opportunity to listen to it’s VIP customers and creating new growth in a category that had been flat.