The trouble startup founders find when launching a new product
August 24, 2021
In this episode, we talk about one way you need to improve your Net Promoter Score and deliver a better customer experience.
If you are a brand new starter founder or even if you're a season starter founder and you're doing a product launch, one of the challenges that you'll probably find is trying to forecast what your cost of fulfillment will be. And in terms of your cost for fulfillment, this means any kind of prices that go, you're taking your time however, is taxing you and it's really difficult to forecast, right? because it doesn't just stop at getting the product in the customer's hands afterwards.
There's going to be some level of support and there's all these different things where your cost of fulfillment, if it ends up exceeding the value of whatever you sold this product for, you're gonna go out of business, you're probably making very little money, you're not seeing very little return and you could easily fail. So in terms of being able to create a fulfill a bill process that is scalable, that keeps you happy, you might have to experiment a little bit to see what works for you.
And this is where a lot of founders can get into a lot of trouble, a lot of trouble because what a lot of companies will do is they will experiment with the feature and they'll realize that fulfilling this feature is costing them way too much and then they'll take that feature away and this will cause an uproar in uh, you know, around the startup community, whatever community that the startup has built and they probably gonna decrease the net promoter score, they're not gonna get much traction, It's gonna be a very bad look.
So here's how you fix it, the way you fix it is you have to set the frame correctly. And this is actually something that came up in a meeting we had recently because we are launching a brand new product and I'm considering how to fulfill this product. And one of my teammates, she was like "Robin, you are overthinking this, why not just pick something? let's just do it. Let's see if it works and if it doesn't work, we'll just take it away." And that's the thing, taking it away. I want to introduce you to the concept of the endowment effect. So what the endowment effect is is people value things that they believe that they already own versus things that they don't own.
Now to make to illustrate what I'm, what I'm talking about. There was an experiment where they gave people a coffee mug for example, and if they gave this coffee mug to people and they and people already owned this coffee mug and you were to ask this person, how much would you sell this coffee mug for? Well, this person might say that I would sell this mug for $7. Now if you take the same person and you take the same coffee mug, but it's not their coffee mug and let's just say that this is a brand new coffee mug sitting in the store. And if you ask this person how much they're actually willing to purchase or to spend on that coffee mug, they might tell you $2. So that discrepancy of $5 between the willingness to sell and the willingness to acquire.
That discrepancy is based on the amount of value that they're putting on ownership. So that status of ownership of that feeling of ownership, people value things that they already own and parting with it is painful and if someone has to paint part with something that they already own, they're gonna, they're gonna charge you for that. So in this coffee mug example, they, people are wanting to charge a $5 premium to part with this ownership from the coffee mug.
So what this means is people value things that they feel that they already owned. So if you are releasing a new feature, a new product and it's something that you're experimenting, you're not sure if it's exactly going to work and if you don't set the frame correctly and people believe that this is an expectation and not a privilege, not a bonus. Well, they're going to get really upset. So it would actually behoove you to overthink this process to make sure you're able to design this customer experience. But if you do take this away, you're doing it in a way that's transparent where this other person understands that, oh, this might be a beta feature or just testing it out just to see and you get the privilege of testing it out, you know, and it's going to be like a trial trial period where you're doing it.
Just being able to set the frame in that way will improve your Net Promoter Score, will get, will be able to allow you to deliver a better customer experience for your customers. So I hope this helps. We talked about the endowment effect and how people just value things that they already believe they own. So setting the frame correctly is very important. This is Robin Copernicus. Boom bam. I'm out.
Continue your journey with me on my other channels:
There's going to be some level of support and there's all these different things where your cost of fulfillment, if it ends up exceeding the value of whatever you sold this product for, you're gonna go out of business, you're probably making very little money, you're not seeing very little return and you could easily fail. So in terms of being able to create a fulfill a bill process that is scalable, that keeps you happy, you might have to experiment a little bit to see what works for you.
And this is where a lot of founders can get into a lot of trouble, a lot of trouble because what a lot of companies will do is they will experiment with the feature and they'll realize that fulfilling this feature is costing them way too much and then they'll take that feature away and this will cause an uproar in uh, you know, around the startup community, whatever community that the startup has built and they probably gonna decrease the net promoter score, they're not gonna get much traction, It's gonna be a very bad look.
So here's how you fix it, the way you fix it is you have to set the frame correctly. And this is actually something that came up in a meeting we had recently because we are launching a brand new product and I'm considering how to fulfill this product. And one of my teammates, she was like "Robin, you are overthinking this, why not just pick something? let's just do it. Let's see if it works and if it doesn't work, we'll just take it away." And that's the thing, taking it away. I want to introduce you to the concept of the endowment effect. So what the endowment effect is is people value things that they believe that they already own versus things that they don't own.
Now to make to illustrate what I'm, what I'm talking about. There was an experiment where they gave people a coffee mug for example, and if they gave this coffee mug to people and they and people already owned this coffee mug and you were to ask this person, how much would you sell this coffee mug for? Well, this person might say that I would sell this mug for $7. Now if you take the same person and you take the same coffee mug, but it's not their coffee mug and let's just say that this is a brand new coffee mug sitting in the store. And if you ask this person how much they're actually willing to purchase or to spend on that coffee mug, they might tell you $2. So that discrepancy of $5 between the willingness to sell and the willingness to acquire.
That discrepancy is based on the amount of value that they're putting on ownership. So that status of ownership of that feeling of ownership, people value things that they already own and parting with it is painful and if someone has to paint part with something that they already own, they're gonna, they're gonna charge you for that. So in this coffee mug example, they, people are wanting to charge a $5 premium to part with this ownership from the coffee mug.
So what this means is people value things that they feel that they already owned. So if you are releasing a new feature, a new product and it's something that you're experimenting, you're not sure if it's exactly going to work and if you don't set the frame correctly and people believe that this is an expectation and not a privilege, not a bonus. Well, they're going to get really upset. So it would actually behoove you to overthink this process to make sure you're able to design this customer experience. But if you do take this away, you're doing it in a way that's transparent where this other person understands that, oh, this might be a beta feature or just testing it out just to see and you get the privilege of testing it out, you know, and it's going to be like a trial trial period where you're doing it.
Just being able to set the frame in that way will improve your Net Promoter Score, will get, will be able to allow you to deliver a better customer experience for your customers. So I hope this helps. We talked about the endowment effect and how people just value things that they already believe they own. So setting the frame correctly is very important. This is Robin Copernicus. Boom bam. I'm out.
Continue your journey with me on my other channels:
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