Growth & Scaling
BY DIMITAR SAVOV
Ecommerce
LECTURE 6
All Course Resources
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The link with
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#EBF
www.sli.do
The Lectures
The Course Project
Today’s Agenda
Business Recap
Ecommerce
Business Formula
The Basic
Example
The Customer Journey
Pop Quiz
Small
E-Commerce Problems
E-Commerce Problems
Business Economies
Basic
Economies of Scale.
The average cost of producing/purchasing a good declines with the quantity of output.
History does not matter!
For example, to bake bread you need an oven but with the same oven you can make many breads.
Economies of Scope.
There are cost savings when different products/services are produced under the same roof.
History does matter!
For example, to bake bread you need an oven but with the same oven you can also make bagels.
Economies of Education.
The average cost of producing a good declines with the quantity of output.
History does matter!
In other words, how much I've produced yesterday will determine how efficiently I can produce today.
Judo Economics.
Taking the strength of your competitors and using it to your advantage.
Example: Advertising on your competitor’s brand search or entering markets created by large competitors.
Efficiency Coefficient.
The difference between the input and the output of a system.
Note! Efficiency is often expressed as X per Y.
Example: If one baker can bake 1 bread per hour now and if we give him a better baking machine which allows him to bake 5 breads per hour.�This is an Efficiency increase of 500% or 5x.�Every day we compete with ourselves to be more efficient.
If we are much more efficient than our competitors this allows us to buy them.
Retention Economics.
Longer Retention increases CLV and allows us to have higher CPA.
Example: A customer who makes 2 orders instead of 1 is twice more valuable and we can spend twice as much to acquire them.
Advocacy Coefficient.
The ratio at which acquired customers attract more customers.
The advocacy coefficient is 1 if every new customer invites 1 more customer to join.
If every 10 new customers invite 1 more the coefficient will be 0.1
Note that the advocacy coefficient can be negative. For example if every new customer tells 2 friends to never work with you the coefficient will be -2.
Network Effects.
The utility of a product/service increases with the number of users.
Network effects depend on the acquisition of a critical mass of users.
Increase in the number of users leads to an exponential growth in the utility of the product/service.
Companies
Scaling Up
The Stages of Scaling
The 6 Decisions
Leadership Goals
Leadership Problems
Leadership: the inability to staff/grow enough leaders throughout the organization who have the capabilities to delegate and predict
Scalable infrastructure: the lack of systems and structures (physical and organizational) to handle the complexities in communication and decisions that come with growth
Marketing: the failure to scaleup an effective marketing function capable of attracting new customers, talent, advisors, and other key relationships to the business
Leadership - People
In leading People, take a page from parenting:
Establish a handful of rules, repeat yourself a lot, and act consistently with those rules. This is the role and power of Core Values.If discovered and used effectively, these values guide all the relationship decisions and systems in the company.
Leadership - Strategy
In setting Strategy, follow the definition from the great business strategist Gary Hamel.
You don’t have a real strategy if it doesn’t pass two tests: First, what you’re planning to do really matters to enough customers; and second, it differentiates you from your competition.
Leadership - Execution
In driving Execution, implement three key habits:
Set a handful of Priorities (the fewer the better); gather quantitative and qualitative data daily and review weekly to guide decisions; and establish an effective daily, weekly, monthly, quarterly, and annual meeting rhythm to keep everyone in the loop. Those who pulse faster, grow faster.
http://bit.ly/EcommRockefeller
Leadership - Cash
In managing Cash, don’t run out of it!
This means paying as much attention to how every decision affects cash flow as you would to revenue and profitability.
Growth Tools
http://bit.ly/EcommRockefeller
http://bit.ly/EcommPriorities
http://bit.ly/EcommPACe
http://bit.ly/EcommPowerOfOne
Strategy
Competitive
Competitive Strategies
The Course: https://www.coursera.org/learn/competitive-strategy
Ideas on How to Compete
New Markets
Entering
Internationalization Strategies
Porter’s Five Forces
Ideas on How to Expand
Problems & Pitfalls
Internationalization
A Whole World of Problems
And more ...
Automation
Ecommerce
Things to Automate
And many many more...
Tools for Automation
The Scoring System
Questions?
Thank you.