Why Comparing Your Business to Competition Stops It from Growing

Are Your Product Options Stifling Growth?

When it comes to creating the next big start-up, Former Head of Product (Loyalty) at Qantas and Founder of Ceres One, Henk Kleynhans, states that comparing yourself to the competition is a sure fire way to remain in the shadows.

Instead, Henk recommends comparing yourself to a magical unicorn; to aim for something amazing and incredible, and to not settle by just keeping up with what your competition is doing.

Henk joined growth expert and Managing Director of ikaros, Daniel Lohrmann to discuss the problems he faced experimenting with pricing packages that had too many options for visitors to be able to navigate them without friction.

Why competitors won’t help you grow

This may be a surprising concept to many start-up founders, but, once you see what we mean by comparing two pricing packages, you’ll want to reconsider the way you present your products to customers.

Let’s start with one health insurance provider. It starts with lots of options, different ways to add on additional cover, and a range of different options for families and individuals as well:

Now take a look at what Henk did to simplify the health insurance options at Qantas:

It’s more accessible to navigate three, cleanly laid out options than it is to endlessly scroll through health care plans.

Health care is already difficult for consumers to choose: they often aren’t sure what they’re getting covered for and they aren’t sure if they are getting the right cover for their needs.

When Henk saw Qantas had low conversion rates on their website, it was critical to focus on their big hairy audacious goal; and not “just being better than their competitors.”

Instead, Henk recommends aiming to achieve a “ridiculous” 100% conversion on your website, and the rest of this post will cover how new start-ups can achieve this.

No one leaves a liquor store empty-handed

Before you start making changes to your pricing packages and website,  it’s time to reframe the way you think about converting website visitors.

According to Henk, we all think about in-store conversions as separate to online conversions:

“How many people have gone to IKEA and only bought one thing? It’s the same thing when it comes to websites: we accept that people are only coming to our sites for one thing or leave without buying anything.

If multiple customers left a bottle shop empty-handed, the owner will immediately know something is fundamentally wrong and work hard and fast to fix it. So why do we view websites as any different?”

Start by aiming for 100% conversion. It sounds ambitious right? But by starting here, we can figure out how to optimise and increase conversion at least by double what you’re currently at.

By aiming for 100% conversion, you’ll start to ask yourself why visitors are leaving without converting, instead of being satisfied with the 10% or so of people who do actually convert.

Growth is about aiming high, and constantly iterating to scale little wins into major ones. Henk states the best ways to achieve this are to eliminate the paradox of choice, and to start the experimentation process. Here’s what he says about these two steps.

Less choice actually means more conversions

This may sound counter intuitive to the serial entrepreneurs in the room, but too many options actually overwhelm visitors and will prevent them from converting.

A famous experiment conducted by Stanford University in 2000 revealed that supermarkets sold more jam when offering only 6 different types, and consumers were also more satisfied with their choice when only presented with a few options.

Supermarkets that offered a wider range consisting of 24 jams were able to generate more interest, however, in this case browsers did not convert to happy-jam consumers.

The way choice paralyzes consumers is discussed more in an article by Florent Geerts, where he highlights the four criteria that motivates consumers (quick decision making being the main one).

According to Henk, Qantas were able to achieve higher conversion rates by simplifying their plans and making it easier for consumers to choose one option.

So now that you’ve reduced your options for consumers, it’s time to start testing.

Experimentation needs to be part of your business

Let’s recap – you’re now comparing yourself to a magical unicorn and not the competition, and you’re aiming for a 100% conversion rate on a range of products that don’t overwhelm your consumers.

Ok, great. Now what?

Now it’s time to start the experimentation process. We cover how to test and optimise everything in a discussion we had with the Head of CX at uno Home Loans here, but before you begin, Henk stresses that you’ll need to ask some critical questions:

●  What is the hypothesis you want to test and then ask how you can test the hypothesis?

●  What is the one thing you want consumers to do on your webpage?

●  How do you attract the right customers?

●  What metrics at each stage of the funnel are you trying to meet?

●  Are you retaining existing customers? If not, should you focus on retention before acquiring new customers?

Remember, if you’re struggling to start or answer these questions, Henk’s main takeaway should help you re-focus and aim high: “compare yourself to a magical unicorn, not the competition”.

Are Your Product Options Stifling Growth?

When it comes to creating the next big start-up, Former Head of Product (Loyalty) at Qantas and Founder of Ceres One, Henk Kleynhans, states that comparing yourself to the competition is a sure fire way to remain in the shadows.

Instead, Henk recommends comparing yourself to a magical unicorn; to aim for something amazing and incredible, and to not settle by just keeping up with what your competition is doing.

Henk joined growth expert and Managing Director of ikaros, Daniel Lohrmann to discuss the problems he faced experimenting with pricing packages that had too many options for visitors to be able to navigate them without friction.

Why competitors won’t help you grow

This may be a surprising concept to many start-up founders, but, once you see what we mean by comparing two pricing packages, you’ll want to reconsider the way you present your products to customers.

Let’s start with one health insurance provider. It starts with lots of options, different ways to add on additional cover, and a range of different options for families and individuals as well:

Now take a look at what Henk did to simplify the health insurance options at Qantas:

It’s more accessible to navigate three, cleanly laid out options than it is to endlessly scroll through health care plans.

Health care is already difficult for consumers to choose: they often aren’t sure what they’re getting covered for and they aren’t sure if they are getting the right cover for their needs.

When Henk saw Qantas had low conversion rates on their website, it was critical to focus on their big hairy audacious goal; and not “just being better than their competitors.”

Instead, Henk recommends aiming to achieve a “ridiculous” 100% conversion on your website, and the rest of this post will cover how new start-ups can achieve this.

No one leaves a liquor store empty-handed

Before you start making changes to your pricing packages and website,  it’s time to reframe the way you think about converting website visitors.

According to Henk, we all think about in-store conversions as separate to online conversions:

“How many people have gone to IKEA and only bought one thing? It’s the same thing when it comes to websites: we accept that people are only coming to our sites for one thing or leave without buying anything.

If multiple customers left a bottle shop empty-handed, the owner will immediately know something is fundamentally wrong and work hard and fast to fix it. So why do we view websites as any different?”

Start by aiming for 100% conversion. It sounds ambitious right? But by starting here, we can figure out how to optimise and increase conversion at least by double what you’re currently at.

By aiming for 100% conversion, you’ll start to ask yourself why visitors are leaving without converting, instead of being satisfied with the 10% or so of people who do actually convert.

Growth is about aiming high, and constantly iterating to scale little wins into major ones. Henk states the best ways to achieve this are to eliminate the paradox of choice, and to start the experimentation process. Here’s what he says about these two steps.

Less choice actually means more conversions

This may sound counter intuitive to the serial entrepreneurs in the room, but too many options actually overwhelm visitors and will prevent them from converting.

A famous experiment conducted by Stanford University in 2000 revealed that supermarkets sold more jam when offering only 6 different types, and consumers were also more satisfied with their choice when only presented with a few options.

Supermarkets that offered a wider range consisting of 24 jams were able to generate more interest, however, in this case browsers did not convert to happy-jam consumers.

The way choice paralyzes consumers is discussed more in an article by Florent Geerts, where he highlights the four criteria that motivates consumers (quick decision making being the main one).

According to Henk, Qantas were able to achieve higher conversion rates by simplifying their plans and making it easier for consumers to choose one option.

So now that you’ve reduced your options for consumers, it’s time to start testing.

Experimentation needs to be part of your business

Let’s recap – you’re now comparing yourself to a magical unicorn and not the competition, and you’re aiming for a 100% conversion rate on a range of products that don’t overwhelm your consumers.

Ok, great. Now what?

Now it’s time to start the experimentation process. We cover how to test and optimise everything in a discussion we had with the Head of CX at uno Home Loans here, but before you begin, Henk stresses that you’ll need to ask some critical questions:

●  What is the hypothesis you want to test and then ask how you can test the hypothesis?

●  What is the one thing you want consumers to do on your webpage?

●  How do you attract the right customers?

●  What metrics at each stage of the funnel are you trying to meet?

●  Are you retaining existing customers? If not, should you focus on retention before acquiring new customers?

Remember, if you’re struggling to start or answer these questions, Henk’s main takeaway should help you re-focus and aim high: “compare yourself to a magical unicorn, not the competition”.

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