Earn, Learn, and then Expand
Start small. I know you think your big, world changing product or service should be available to everyone day 1, but that’s not a smart move.
“If you aim for mass (another word for average), you’ll probably create something average. Which gets you not very far.”- Seth Godin on Minimum Viable Audiences
Starting small doesn’t necessarily mean starting at the bottom. Take lessons from HeyDay, a personalized skincare company, and Uber to enter a market at a premium price point, and then work your way down.
Maybe you haven’t heard of HeyDay yet, but you soon will. Their mission is personalized skincare for all. Now, they aren’t starting with serving everyone, especially when you see that a facial will run you $50+ (yeah, most people have likely never had a facial before) - but don’t let the premium services stop you from checking out. This company is learning from their premium customers so they can someday serve skincare for all.
When you stop by one of their physical retail stores for a facial they beauticians work to collect data on your skin, preferences, and desired outcomes. It’s a high touch experience for the customer and a real-time feedback mechanism for HeyDay. Instead of building all of the tech first, they start with a 1-1 interaction with every customer. Even better, customers are excited to pay for the services that makes HeyDay smarter.
HeyDay is not the cheapest, at $100+ per facial, or the fanciest, rooms are separated by curtains not doors, but they continue to win customers by giving them what they want. Better, personalized recommendations that will give them great skin.
Uber used this model too. Instead of providing cheap taxi rides at every price point, they started with premium black car service only. Customers who could afford it tested it, gave feedback, and helped the product scale it’s operations with each ride. Only after years of running premium did they begin to expand down to serve more of a mass market. They proved customer demand by having premium customers pay. It proved customers wanted the service and were happy to pay for a higher quality.
Both companies started the flywheel with premium. Other industries could do the same. Especially categories where it’s hard to compete by giving things away for free up front. Here are some ideas that come to mind:
Charge more to create a high touch travel planner, then use that data to build a scaled automated service for the masses.
Offer premium housekeeping services that are 3x what are on the market, but ensure that the service in impeccable. Learn how to replicate the process at different price points.
Provide better childcare flexibility, charged at a premium in order to perfect the process, then tiered down the road.
There are lots of crowded industries that could still improve with new technology and service offerings. If entrepreneurs want to enter, don’t start free and go up. Find more margin to build operations first. Earn, learn, and then expand.
Have other ideas of companies using this model? Or industries that should? Subscribe to my tinyletter to continue the conversation.
