Ang Lee’s Academy award winner Life of Pi shows the protagonist Pi Patel’s magical journey on a lifeboat where he attempts to discover himself. The excitement of Pi Patel’s adventures was not unlike the exhilaration that start-up promoters felt at a boot camp conducted for the second cohort of BII’s FI Lab, at the IIM Ahmedabad campus. The atmosphere of the four-day boot camp could be summed up in two words — enthusiastic and intense. The boot camp brought in a confluence of ideas from multiple start-ups, was packed with elements that gave start-ups moments of self-discovery and prodded—at least many of them—to get back to the drawing board.
Most of the nine start-ups in this cohort were different from the ones in cohort 1. The start-ups in this cohort had tested their product market fit with customers who had paid for their products and services. Some participating start-ups who had graduated from the first cohort were willing to tweak and change their solutions as long as they could find an answer to the rhetoric, “show me the money”, as heard in the film Jerry Maguire. With their product and pricing in place and having completed market-testing, the teams wanted to validate it further, and scale-up to the next level. Various boot camp sessions were designed to help the start-ups introspect and redefine their growth and acceleration needs.
Begin by understanding the customer: Low and middle income (LMI) segments
Great companies do not just offer products—they solve problems that matter. For the start-ups, the first step to doing that was to understand who they are speaking to. Now while the definition of an LMI segment looks simple on paper, several factors are “unknown” and demand deeper insight.
The session on understanding the financial lives of LMIs helped participants to know the segment better, identify characteristics, and create meaningful solutions to problems. They worked on market selection, market size, and salient features. At times, these in-depth activities brought them back to the drawing board. Eventually, they were able to comprehend the nuances of a large market and the prudence needed to pick a precise segment.
Find the value proposition of the offering: Build a brand around the buyer
Customers select solutions based on affordability, accessibility, awareness, and acceptability. Hence, identifying the right customer segments and fixing the right value proposition is a critical challenge.
The boot camp included sessions on value creation for the customers, helping the start-ups ponder on building a “brand”. Customer Perceived Value Advantage (CPVA) was introduced as a concept to explain that the success of an offering largely depends on how customers believe it can satisfy their wants and needs. When a company develops its brand and markets its products, the customers determine how to interpret and react to marketing messages.
In the exercise on customer centricity, the start-ups were asked to draw their customer journey maps and see where their respective customers fit. These maps helped start-ups stand in the shoes of their customers, and experience their own offerings as a customer would. They could see clearly when, where and how interventions were needed so as to retain customers across stages. There were conclusive insights such as “a brand is a representation of what the customer is looking for” and “start-ups have to sell a solution and not a product”.
The start-ups understood that they needed to think like a customer while designing customer strategies. They realized that customer goals and company goals were different. With an enhanced understanding of customer awareness, consideration, decision, delivery, and loyalty, this was an eye-opener for start-ups that earlier struggled to detail out their CPVA.
Courtesy: Dilbert by Scott Adams
Win the markets: Using right marketing strategy and pricing as weapons
The boot camp session on marketing strategies and communication (marcom) helped start-ups that were using social media for marketing. These sessions covered marketing strategies, while focusing on the importance of having repeat customers – and how this was an important goal of having the right marcom.
Products pricing: Pricing is crucial as it represents the start-up’s assessment of the value that customers see in their offering and are willing to pay for it. For start-ups that ride on aggregators, right pricing with the right channel partners is essential for rapid growth. Most start-ups had already priced their products, yet were seeking the sweet spot. Some start-ups had also experienced the decoy effect, where consumers change preferences between two options when presented with a third option that is asymmetrically dominated. For start-ups that ride on aggregators, getting the pricing right with the channel partners was a key aspect. Finding the right type of channel partners are essential for rapid growth.
Go-to-market (GTM) strategies: In this cohort, some start-ups had no GTMs, and others needed sharpening. A few start-ups had demonstrated the working of their business model with a robust GTM strategy. The boot camp discussed the “blue ocean strategy”[1]which referred to the simultaneous pursuit of differentiation and low cost to open up a new market space and create new demand. The boot camp shared how start-ups can create and capture uncontested market spaces—called “blue oceans”, making the competition irrelevant. These specific sessions opened new possible strategies to enter unknown waters.
The boot camp concluded with entrepreneurs intending to make a difference in the lives of the underserved. They all echoed what Will Smith says in the iconic film, The Pursuit of Happyness, “if you want something, go get it. Period”.
This FI Lab will be helping the start-ups with all that they need to go and get it!
[1] Introduced by W. Chan Kim and Renée Mauborgne in their best-selling book of the same name
Boot camp image credit – Centre for Innovation Incubation and Entrepreneurship (CIIE), IIM Ahmedabad
Co-founders Arjun (CEO) and Adriel (COO), graduated from Texas A&M University with expertise in investing, structuring, and operations. They got early exposure to solutions, thought leaders, and professors who championed the idea of serving the consumers at the bottom of the socioeconomic pyramid. However, it is when they saw firsthand how access to financial services could enable development in rural emerging markets—and how the rise of the rural consumer is the next big opportunity-that the idea of Jai Kisan was born.
