10 months, an increase of hackers how to save electricity supplier giant this bankruptcy

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Cover photo design | Holly Zebian | Seino good depth of 2026 text: 7625 words | 10 minutes to read the full note · “growth hacker” · Commercial paper thinking freshness: ★★★★★ + Taste: Mushroom soup monarch invites you notes, first thought: how to convert low-value users to high-value users?How to use the customer lifecycle marketing strategies to achieve explosive growth in revenue?Truman did what key actions let Karma Road back to life?US Tide brand electricity supplier giant Kama road due to over-expansion, the unfortunate bankruptcy.Veteran CMO carry the banner of electricity providers, with data-driven to achieve a reversal of the Jedi.Now, we take a learning experience at the lessons of failure and growth.First, the giant fall in mid-1999, 25-year-old Greg Saier Ke (Greg Selkirk) do not realize that he is about to change the trend of the US industry.This ADHD, graffiti and hip-hop-loving young man and unhappy life, a very popular major in anthropology major in college, was kind enough parents live in Boston house.This year, the Internet bubble of unprecedented prosperity, he suddenly realized that to do something.So he drew all his friends, at home, in the basement of the establishment of a platform for electronic business: Karma Road..Greg’s mind is simple: to provide a convenient channel, so that all young people can buy cool clothes – even if there are not Tide brand store, you can also order online.At that time, “I buy something from the site,” still a relatively rare thing.Greg’s business model is very simple, locally sourced street fashions, the information linked to the website and then mailed to the customer’s orders.Karma Road founder Greg Saier Ke did not think this business is four thousand years – until 29 years old, he told his wife in the basement shipments.However, long respected for “marginal culture”, let Karma road to fame in hip-hop, DJ, skateboards, and other circles.Kama road has grown into a heyday in 2007, annual revenues are doubling, even hip-hop superstar Kanye West have their thumbs site.2013, Kama road finally reach the summit – turnover exceeded 1.27 billion US dollars, far throw off other electricity providers Tide brand, stable industry first, became the nation’s largest Tide brand marketing platform.2014, Karma Road is ranked 134 in the “Internet Retail 500”.However, the seemingly behind a prosperous, it is $ 100 million of bank debt.Karma Kingdom street road has shown a harbinger of collapse.Karma Road official website since 2008, never received venture capital financing Greg received a large vests and other private equity firms, with money to burn.Greg was carried away by the honor began expanding rapidly, has established a PLNDR (lightning fast business), Brick Harbor (skateboard electricity supplier), MissKL (female high tide card), Boylston Trading Co., Ltd. (male high tide brand) and other independent niche stations.More people can not understand that, in spite of his objections executives, planning a TV show called KarmaloopTV, to further strengthen its position in the fashion industry.On the other hand, the company’s publicity respected hip-hop culture, allowing employees to drink it in the office, play music, dogs.But worse, it finally evolved into everyone always partying, smoking marijuana – As CEO, Greg has no knowledge.Slowly, the company makes money rate has been far behind the rate of the burn.As a result, all the way Kama expansion plans ended in failure, only KarmaloopTV it burned $ 14 million, the program did not even been on the line.Peace and prosperity under the chaotic management of employees, but also allow the company to stand the test of adversity.Investors gradually lost confidence on the road Kama, the company is no new money.In order to repay the loan, Kama road had to take a large cut prices to clear inventory, many high-end brands often see more than a 40% discount!Unexpectedly, this warrior arm not only did not restore income, but also aroused the dissatisfaction of many brands, have to withdraw Karma Road.The end of 2014, Kama Road backs against the wall, we decided to adopt less costly drop – modes of transportation (ie, straight hair models, they do not hoard goods, after the customer orders shipped directly from the brands).In theory, this model has great hope to save the game, turn around.Never expected, due to the logistics and customer service can not keep up, customers often do not arrive income, not back money.Oh, great, old customers are disappointed, condemning, Kama road to customers and businesses at both ends offend again.By 2015, the situation is completely out of control, turnover has shrunk to half way Kama original.All have failed rescue operation, had released information to acquire Kama Road Kanye West did not sound.Greg ambitions are ending this –Karmaloop officially declared bankrupt.Karma Road has thus gained a very awkward “honor”: the largest bankruptcy in US history, the electricity supplier, is only owed to suppliers of the purchase price up to $ 19 million!Greg also because I owed $ 5 million, has lawsuits.Finally, private equity investments vest over Kama way to spend $ 13 million, bought the former giant mess —- turnover forced to sell their own month!Second, the new government took office took over the vest, the first thing is to kick Greg the CEO, and quickly invited the fashion industry veteran Shisai Si Hubble (Saisihabo) in charge of the power of the company.However, as a company’s appliance business, the importance of marketing of natural Needless to say —- Kama needed a way to force the CMO, to help them through the mud.Soon, vest enlisted an excellent candidates: the protagonist of the story Trudeau · Sanoko Qi (Drew Sanocki).He is also a legend in the retail electricity supplier industry: In 2003, Truman set up his own public platform design, sell high-end furniture in the form of a pure transport aircraft, and in the first year did millions of dollars in revenue.In 2011, when Karma Road also thrive when Trudeau will be their high-priced company was sold to a private company.Since then, he decided to take a back seat to financial freedom, became a private partner —- primarily responsible for evaluating retail electricity supplier projects, as well as the investment adviser.He has a deep insight into retail marketing.In the beginning of the establishment of a common design, he is acutely aware of the search engine will be the entrance of Internet traffic, started to build a search engine optimization of an automated system, successfully seized the initiative.The face of competitors chase, he even hired a comedy writer to write instructions for their products —- Each bid up to hundreds of dollars!These high-quality content playing colleagues by surprise.In the vest kind invitation, Truman decided to accept this challenge, stepped in as CMO Karma Road.Karma has a top road has been marketing capabilities.10 years ago, “growth hacker” concept not yet born, Greg began to try Policies “0 cost index growth”.Then print media also occupy the market right to speak, but Kama road has created a lot of street artists, hip-hop music interview, and dissemination via blog, e-mail push, etc., almost no money to get a large number of users, camp income soared.However, Truman began when the company started business, Karma Road is losing nearly a million dollars a month.He found that the main reason for the company encountered difficulties is to misunderstand “growth hacker” system: focusing on user acquisition, retention and realization without attention – a large number of users and too little water, not creating any value to the company.After 2008, he took a large investment, VC urgent desire to see results.So, Greg decided to cut corners: spend money flow.As previously mentioned, whether it is to do a television program or open a new branch brand, is to occupy the flow inlet.In addition, Karma Road also invest a lot of manpower and resources to do Google’s Adwords, public relations, offline store, print, etc..This time, no one realized that in fact never vanity traffic revenue.However, due to too much force, the money burned, the company began liabilities.Banks also hurried to pay back the money every day, Kama road was forced to find ways to improve the retention and promote the realization.However, impatient Greg altogether across the board: using discounts as a means of active users, directly promote the retention and realization.In fact, this is completely wrong, because a discount to attract users spending power is not necessarily high, low lifetime value.It makes an ideal retention should not deteriorate further, revenues obtained simply not worth the investment in advertising, suppliers also offended.Finally, in order to save money, improve cash part of the profits, it decided to adopt the Kama road transport mode straight hair.However, this is the opposite – a large number of high-value loss of old customers, originally fixed source of income but also brutally impact.This allows Karmloop caught in a vicious circle: continue to burn, low-quality new customers is increasing, high-quality customers in reducing the growing deficit.Truman realized that, in order to reverse the situation, it is necessary for more high-value customers and retain them, and ultimately allow them to bring in enough revenue.Third, the user gets to face a mess, a problem encountered is that Truman: high-value customers come from?1.The conversion of low value to users it is clear that the most practical solution is to convert low-value users prior to high-value users (or filter out potential high-value users).To this end, he tried his own practice for many years, “network policy mix”, which is divided into three steps: ① high value customer behavior data modeling; ② find the deviation of the actual data and the ideal data (ie, “mixed network” ); ③ centralized marketing time and effort to correct these deviations.Trudeau himself cited an example: He would go every Friday a company called slow-burning gym to gym, he is the ideal customer, “every Friday to fitness” is the so-called Standard Model.But after a few months, he did not want to go.There are three possible reasons: they had found another better gym that price is too high (more likely low) own lazy (the possibility of relatively high) “Stop going to the gym” is called the deviation (mixed network).Slow burn noticed this case, the beginning of a series of marketing activities: to remind him that restraint lazy, and gave him coupons!He received a coupon, and ashamed of their own laziness, then came back to the gym – deviation, and it was corrected.The core of this theory is that companies should not be put on the same marketing costs for all users, but to find those “mixed network” discourage ordinary users to become high-value users, and then put maximum effort to solve this obstacle.From the first day of entry, he spent a whole month trading data to study the Kama road for nearly 10 years, and were analyzed using the RFM model.According to his theory, we must first identify these “high-value” user behavior, and then continue to encourage these behaviors, you can put the user into a low-value high-value users..He created two simple user stratification: Whale: repeatedly re-purchase, high spending, rarely return.On behalf of high-value, high LTV user layer.Minnow: buy only once, just to buy cheaper goods, and the high rate of return.On behalf of low-quality, low LTV user level, if you count the cost of all kinds, in fact, in this hierarchical company to lose money.Trudeau surprised to find, “whale” who account for only 1.3% of visits, but contributed 43% of revenue!These historical data to make road problems exposed Karma: minnow too much and too little whale, so he had been losing money.Next, is looking for “whales” who were sex – and he would very much like to know how these high-value users how long it took to complete the second purchase.Trudeau analysis of recent orders in two simple steps: ① selected by the user to meet all the “whale” feature; ② to calculate the number of days the average interval between the first and second purchase.The results shown below, the green indicator bar that is Duluth wants to observe.X-axis represents the time interval length, Y on behalf of the week how many users spend this interval to re-purchase He found that 80% of the cases, if a user wants to order twice, they will be completed within 30 days after the first order The second single.Yes, this is Truman found “mixed network” – most of the ‘minnows’ and no re-purchase behavior within the 30-day period.Data analysis of previous shows that if a single user in the first world, but there is no follow-up single second 30 days, more and more unlikely that he would become a “whale” of the.However, if they got a single (with the ideal user behavior) within 30, then there is a great opportunity to become a “whale”.Kama way to do is to use reasonable and marketing these “minnows” user layer to communicate and guide them to the world in 30 second order, and gradually get them into a ‘whale’.According to the analysis of the previous step, he developed two marketing strategies: in 30 days – the user has the opportunity to complete a secondary re-purchase – to sell the original price to the user (high-margin) product after 30 days – more and more difficult to complete secondary user re-purchase – to stimulate the user with a large discount (low-profit) see here, it is not difficult to understand why the Kama way why would a loss: within 30 days since the user will have a great probability of re-purchase, why should they give benefits it?Do not pay attention to the refinement of the cost of operations is disastrous.As a first action CMO, Duluth is: no longer send coupons to users within a 30-day cycle.On the other hand, more than 30 days, the chance is still available user multiplexing with time decays.Thus, Truman coupon to set a gradient: the longer the interval, the greater the discount amount.Therefore, the complete process is: ① first purchase if the user is within the 30-day period, then gave him a push original price of goods; ② not been re-buy after 30 days, the user pushes a 10% discount voucher; ③ If more than 45 day, the user pushes a 20% discount voucher; ④ If more than 60 days, will be pushing 30% discount coupons; ⑤ If you had a complex purchase behavior at any stage, it will not trigger a subsequent concessions; ⑥ time period and the discount amount will be adjusted according to feedback data.Planning Well, how do the marketing push information to customers?In overseas markets, the status of the e-mail equivalent to the domestic public number, and Kama Road With more than ten years of accumulation have millions of e-mail subscribers – Trudeau decided to take advantage of these inherent advantages, will e-mail as a marketing the main battlefield.With the help of the team, he set up an automated mail system based CRM software and Klaviyo.When the Mail achieved good results, the marketing team to quickly update activities to targeted advertising homepage, Facebook, and even greeting cards in the mail.2.Social media is now part of a potential “minnow” has been able to be transformed into “whales” of the.However, compared to the previous losses, the current revenue growth is not enough.Social media is the fashion industry of vital importance, therefore, the next Trudeau began looking for a new social media channels to further acquire high-value customers.First of Instagram.According to information received from inside Shopify Trudeau, in all more than a million dollars in revenue Shopify store, 90 per cent are dependent Instagram to do marketing.Therefore, Trudeau also wanted to try him in Karma Road.He selected a team from a very energetic young man, responsible for the operation of platforms such as Instagram, continue to seek opportunities for cooperation KOL.For example, the call to play my sister had 4.3 million fans followed the macro Youtube.Before the collapse of the company, Greg’s KarmaloopTV project took a lot of original videos are on YouTube’s channel.But now that money, this channel is certainly not going to open it up.So, Truman gave up the idea of the original video, instead of using the power of KOL.On the Youtube, there are many red network known as “porter”: they are often taken out of the box of Tide brand evaluation, explain clothing outfit.Naturally, these networks must be a fan of red Karma precise way the customer.Truman immediately arrange team to win a large number of vehicles, the sale of the Kama road signs to them to review products, and jointly organized raffle with them.Instagram concerned, send a message Tide brand!The flower is the trend of the sector arm brother celebrities Fourth, activate retain high-value subscriber growth is only the beginning.Next, there are more important step: activate and retain them.At this time, Truman application lifecycle marketing strategy, that is, at the right time, the right message to the right people.After analysis, he built up a customer’s lifecycle processes: you can see, any customer will experience the novice period, active period to the loss of three stages with automated e-mail system, e-mail marketing through Truman let each customer’s life cycle.From the get customers started, 5-6 mail campaign begins running.No matter what time users to the node, can receive the most appropriate marketing information via e-mail.1.Novice period: marketing objective of this phase is to guide the user to produce first purchase.When the user registration / subscription messages, and immediately start the “Welcome to Mail series”, namely the use of e-mails 5-7 gradually build brand trust and deliver value by way of Kama, the advocacy component signature product.After the welcome by stage, many users are ready to chop hands.However, to build trust between the final payment, there is an “invisible killer”: abandoned shopping cart (cart abandonment).2016 data show that the average rate of global electricity supplier abandoned the vehicle and up to 77%!Therefore, Truman deliberately set a series of e-mail, users who abandoned the vehicle’s recall.2.Active period: the marketing objective of this phase is to allow users to remain active, sustainable consumption.How can customers continue to pay attention to it Karma Road?Trudeau’s team created a VIP program: If a user’s consumer behavior close to “whale” (for example, if his next single, and the average order value (AOV) or the average number of orders exceeding a certain fixed value) , put him VIP user defined – will then trigger the corresponding marketing activities (such as special discounts), and the user will receive an e-mail to thank.3.Loss period: This stage marketing purposes is to bring back the loss of old customers.In fact, most of the old Kama road users still stuck at this stage.When the collapse of the company in the dying struggle, largely affects their experience, resulting in greatly reduced trust.Since these users are on the old subscription list in the mail, they continue to use the e-mail is not regain it very simple?However, Truman immediately realized that he underestimated the difficulty of the matter, the initial recall success rate is very low.When you lose a person of trust, it is difficult to fight for a second chance.After hitting the wall, Truman immediately enabled the growth of a hacker secret –a / B test.He lost the old user base is divided into a number of 10,000 people in the group, and gradually test different scenarios.They first tried a discount in the range of 10 – 30%, then later tried to return cash to send gift cards followed, and finally tried “CEO personal letter”, even calling.Been to make unremitting efforts, after too many failed 20 tests, Truman finally found a set of optimal combination of old customers gradually recognized Karma Road newborn.In order to better understand the behavior of high-value users throughout the life cycle, Duluth team also made use SurveyMonkey NPS questionnaire that asks the user: “How big is your willingness to recommend it to a friend Karma Road (1 assigned 10 Minute)?”In addition, the questionnaire also includes several core issues: What you are still shopping elsewhere?What we should sell merchandise did not sell?You usually have to read what blog?It is through continuous learning and understanding, Duluth customer needs have a more accurate grasp, greatly improving the user experience Karma Road and customer service.Before the operation, the Kama road did not make any marketing customer life cycle, this is a huge breakthrough.Fifth, increase revenue driven by Duru, the Kama road was finally able to survive the high-value customers.However, to form a complete closed-loop growth, there is still the final stage of profitability: the stay of customers into revenue.Due to the previous mode of transport ship failed, so the Karma Road also return to the traditional mode of stocking.Therefore, to reduce costs to improve profits by methods no longer work..So, Truman managed to increase average revenue per user (ARPU).1.In fact improve commodity price, discount strategy before Karma Road is a serious breach of their commercial value: Tide brand itself does not matter too much value on, more of a spiritual / cultural aspects of the pursuit and recognition – with fashionable point, then , it is “consensus”.For example, the Supreme Court never discount, but the new official website is always sold out within a few tens of seconds.He believed that, after some adjustments, Kama existing road users are not directed from cheap, but worth Tide brand recognition.So, how much the customer is willing to buy in the end product Kama way to spend it?Trudeau continue to carry forward the spirit of growth hacker, began to experiment price, supply and demand for different products, grouped and gradually raise prices, then observed purchasing behavior of users.He began to focus on the best-selling primer Karma Road?Shirt on.After a period of price increases, he was surprised to find: the price increased by 30% and will not affect sales!In other words, this category of income increased by a full 30%!2.Cross-sales data show that 35 percent of Amazon’s revenue comes from cross-selling (cross – vendor).In the Kama Road, Duluth began to practice cross-selling.Simply put, the customers bought the company A company B product marketing product.From the psychological point of view, has just completed a purchase of a user is in a “shopping period” psychological defense is very weak, difficult to resist the temptation to secondary.With email marketing, Kama way to greatly enhance the lifetime value of the customer.To purchase over bottoming?Shirt styles of people recommend six other colors, Jedi reversal of less than three months time, Truman would have made remarkable achievements, the company’s revenue improved 30%, ROI customer lifecycle marketing activities up to 500%!Eventually, in just 10 months time, Trudeau will Kama road to profitability.After a year and a half, Karma Road sold for tens of millions of dollars to the US shoe retailer Sheikh Shoes– ought to be erased from the history of the giant again vigor to achieve a true reversal of the Jedi.Of course, credit is not only a person’s Trudeau.This process, CEO Karma Road also played an important role, including negotiations with the brand side, consolidation of corporate governance, adjust the supply chain and so on.In addition, there is a vote Trudeau men skeleton staff, including an email marketing engineer, a design and creative team – as well as the entire product sector support.VII Summary This case clearly shows us how a CMO using data to make decisions, to promote science and enhance the company’s growth – in fact, these are the duties of chief growth officer CGO.It seems, Coca-Cola with CGO replace CMO, not hype, but real demand forced.How to avoid being CMO replaced it?Of course, the idea is to uphold the fine operation, adhere to the technology-driven growth data +!In summary, Duluth exactly what had been done to make things Karma Road back to life: Of course, we can learn many lessons from the road Kama’s body: 1.Fine operation determine success or failure.We can see that the road never do before Kama customer segmentation, customer life cycle analysis is not, there is no concept of marketing automation.Because it relies on the Internet early dividends started, do not know how valuable traffic – which is the current domestic situation is similar to the dividend faded, barbaric growth needs into a data-driven.2.Growth is a complete system.User acquisition, retention, liquidity is not fragmented.Kama road only concerned with acquisition (CPA), the pursuit of short-term outbreak, while ignoring the long-term value accumulation, will inevitably lead to an avalanche-like effect.3.Discount on subscriber growth is not desirable.I have to say, taking advantage of people’s psychology is a cheap shortcut.But this will inevitably lead to low quality of the user’s own, difficult to introduce retention and subsequent realization link.More importantly, once you start a discount, you can no longer go back into a vicious cycle.4.The best thing to do.Kama failed in large part because the road is too scattered energy, eager to build various peripheral brands.In the final analysis, it is to increase the influence of the brand, but too “Quxianjiuguo”.Not as good as the real thing, such as the Tide brand of SEO have done it first, or to achieve one million Instagram fans.5.Carrier pit too much, no experience Do not try.As a someone who has, this is my personal advice.At the same time, we also learn a lot from the CMO things: 1.Growth is the result of the entire team with.A survey shows abroad, growth hackers major resistance from boss.So, growth is always a top-down, they are full of.Imagine, no matter how high the level of Duluth even if the CEO is not supported, the staff is very lazy, we can achieve such results?2.The courage of trial and error.The company’s management often has a stock of concern.But for Kama road at stake, the Truman just to abandon this burden from marketing to product prices, a variety of bold experiment – this is the growth of the spirit of the hacker.3.VIP emphasis on user operations.Twenty-eight effect electricity supplier industry is particularly reflected-20 percent of people contributed 80% of revenue.However, most of the time but we put 20% of the “golden master” as ordinary people to deal with, which is obviously unscientific.We have screened these high-value users, be nurtured with different strategies, and tap more potential consumption value from them.4.Emphasis on data and technology.If the data is the soul, then the technology is flesh.During the operation Kama way, he is personally organize data and calculations, and not let his men to send a report over.On the other hand, he attaches great importance to all email marketing automation marketing –Karmaloop are triggered automatically based on customer behavior.Without this system, Truman thought it would be difficult to achieve.Finally, with regard to growth hacker system, “the father of growth hacker” Sean Ellis in his new book “Growth Hacker: How low cost explosive growth” in the book are discussed in detail, I recommend recruited read.About the author – an increase of two black box built by AlanYolo, focused on sharing growth hacker.At Imperial College London to read a master’s biology, but found the place really needs experimental thinking it is business battlefield, so adhering to study medicine can not save Chinese people’s self-belief into the media field. Good text recommended Xia notes: either evolve or die | Fu Sheng interpretation of “principles” and summaries of your life is not your own design, and who designed it?Do not self-torture, insisting not that hard!How to Think Like Charlie Munger as?Bill Gates: the richest man in the world must be the next gene from the field