Crisis is a time for businesses to refocus. We’ve seen companies go back to their core product, abandon fruitless projects, and lean on what they know and do best, because they have had to. We have also seen an increase in people wanting to start their own businesses. This new energy is here to stay.
Staying True to your Core Business
Many businesses all over the world have been incredibly impacted by the pandemic and have been forced to change or resort back to their original business models. Take Airbnb for example. The travel industry has been hit particularly hard during, which meant Airbnb has had to stop pursuing various growth strategies and focus on their core offering.
That was in May. Now Airbnb, having successfully and drastically adapted to the new reality, is preparing for an IPO. They’ve shown profitability again in the Q3 2020. Resorting back to the core business: connecting those who wanted to go somewhere and those who had a place to stay has helped. They managed to identify the new consumers’ need (to be away from civilisation) and bring back their financial performance, as well as investors’ trust.
It is hard to know whether Airbnb would have had traction catering with the luxury segment or adding hotels to their offering because of the current situation. However, during this period, staying true to their niche that they know better than anyone else, they got their business back on track.
Airbnb found itself amid one of the most struggling industries, but what about the ones that actually benefited from the crisis? E-commerce, grocery delivery, and fintech have driven more first-time customers than ever. New players in the field emerge every day. Yet the trend for segmentation seems to manifest itself here, too.
Instead of placing multiple bets everyone focuses on what they do best. And to answer that question you mainly have to focus on who you primarily serve.
Take neobanks, for example. They might seem like a niche product already, yet there’s further segmentation happening in the field. We see some dedicated to the enterprise segment while others focus on financing companies at an early cycle that traditional banks have overlooked.
Karat, a US-based neobank, targets content creators. They realised there’s an undercovered segment of influencers and people who mostly make money off online platforms. Their customers often had no credit history or even social security number to access bank services. Instead, they had thousands of followers, sponsorship deals, and a dire need to manage the money. By achieving some sweet deals with real influencers, Karat firmly positioned themselves as an expert in a niche that never previously existed.
At Neat, we know our core focus lies in servicing entrepreneurs. We come from this environment ourselves, and commit to developing solutions that move them forward. It’s by identifying your strengths and developing dominance in the field that we can all move the industry forward.
There are non-core things that you thought were nice to have. And then there are things that you have to do, even though it doesn’t do much for your business.
We see companies everywhere shaking off the distractions of ‘not-my-business’ obligations. A big example is administrative chores. Small to medium sized businesses spend an average 120 days a year on various administrative tasks. Surprisingly, it’s one of the most time-consuming business activities, and it has little to do with the business itself. Sparing 30% of your time is huge. No wonder we see startups outsourcing accounting, payroll, government reporting, and anything that has to do with preparing documents that don’t directly support growth.
For many who have to travel to an office, commuting can be time consuming, but being more digital frees up about 20 hours a month previously spent on commutes. Papers are gone, too, and the digital signature market is expected to grow by 28%. And having a digital office means no rent and a distributed team, hiring the best talent regardless of the geography.
Growing your strengths
So you know what you’re best at and you’re not distracted by anything insignificant. Great. Time to dive into our core business. This is the perfect opportunity to strengthen your customers’ loyalty and grow your share of their wallet.
It is important however to remember that customers have changed, too. They have become more demanding and feel confident in the market with plenty of providers to choose from. They now expect an enterprise-level expertise with consumer level service from providers, and know they can get it. How do you meet their standards?
The answer truly is as simple as it can be - you have to ask. The importance of communicating to your customer community has never been higher, especially for smaller businesses. By having your customers actively contribute to shaping the product, you make them invested into the platform success as well.
Monzo is probably best known for successfully creating a community around its challenger bank. By including customers to hackathons or inviting them to discuss features or bugs on the user forum, Monzo ensured changes were fueled by demand, and made product updates feel like personal victories. They also run programs on inclusivity and vulnerable customer group support. For example, they encourage customers to share if mental health affects their finances, and offer a block on gambling expenses for those who struggle with it.
By inviting your customers to help shape your strategic growth you can ensure they stay with you to see it become reality.
Calibrate your laser focus
So you feel like your company could do with a bit of focus. First, decide what you’re best at. What is your product-market fit? What is the core purpose of your company? Who are the customers that support your existence?
Next, look at how you can build on what you already have.
Focus on your strengths
Evaluate projects and determine whether you want to continue investing in them. Will that be part of your company in the future? Does it provide sustainability to the company today? Or is it there cause you they are a necessity, performing unexciting duties that are not contributing to the revenues?
Streamline your systems
We often talk about the build vs buy model and as a fintech we truly live by it. Look to partners, see what they specialise in and what they can deliver for you. Technology can help streamline some of those time consuming processes. It ultimately speeds things up and saves money.
Improve your practices
Invest time and resources into understanding the customers and their journey. Find ways to make impactful improvements, increasing loyalty and referral traffic. Eliminate the small hiccups that separated you from being truly great at what you do.