“A lot of times when people come to me with ideas on what they want to do or campaigns they want to run, modeling helps me make sense of it, numbers-wise. My background in Econometrics helps me build out models.” – Feranmi Ajetomobi
On July 11, we sat with two top Business Growth Professionals in Africa – Oluwapelumi Oyetimein who is the Chief Operating Officer at Peppa and Feranmi Ajetomobi who is the Country Manager at Cenoa to talk about growing startups: mistakes to avoid and how to navigate scaling.
Here are some of the takeaways from the session.
What’s the greatest challenge regarding company growth? – Pelumi
Figuring out whether you have a market or not is the biggest challenge. You may start out building for a particular market and then something changes (could be the economy, could be customer needs) and you realise that you shouldn’t have been targeting this market in the first place.
Figuring out your market and audience is one of the biggest challenges regarding company growth. You could be focusing on the wrong thing which is it is important that you spend time delving into the psychology of the customer figuring out what they need and dwelling on that.
Can you walk us through a specific instance where you had to make a difficult trade-off between short-term growth and long-term viability, and how you navigated that decision? – Feranmi
There was a campaign that a company wanted to push and they had a budget of $1M. I spoke to them and even saw the model they created which was impressive (because I like models and they knew that). The budget was great, and the idea was good but I was more concerned about the viability of the product cause it seemed like a short-term play (3 months, really). The big question was if the product would be alive in 3 months, what’s the tradeoff if the product wouldn’t be alive after 3 months. I promised hat we wouldn’t get the number of signups they wanted (1,000,000) cause the thinking was that that number of signups would translate to about 10% of transactions.
My goal was to get an amount of transactions showing what I could do with transactions, not signups.I put my head on the line and came up with a strategy. Long story short, that money went into another period over a specified period of time and it brought in more revenue over time.
They only agreed to this because my alternative showed how we could make money without spending that amount budget-wise.
Most times when you are pushed to do a short term. It should show that if you’re going to sacrifice and do something long-term, not short-term, you should be able to prove that to an extent in about 2 weeks so we can project a buildup.
I ended up saving the company about $1.24M with this approach.
Can you share an example of a minimum viable growth experiment you ran that yielded unexpected insights and led to a pivotal strategic shift?
Pelumi
Before I joined Peppa, it always came off as an Escrow product and even though I had consulted for them before, there are always things you can’t see from the outside. So when I joined, I asked that we reach out to our Merchants because it was the Christmas season and that’s when most platforms make sales. The CX team brought feedback that they (the Merchants) were not interested.
I sat down. Looked at the entire thing and realised there may be a problem because our primary audience (Merchants) were not aware of it and even if they were aware, if Buyers want to use Peppa to make payments, the Vendors themselves don’t trust Peppa enough and given the economic situation of Nigeria, it’s the money you pay the Vendors that they’ll use to execute your project. The whole idea of payment validates order. The issue was how to bridge that gap.
So we got people who could provide loans to merchants on Peppa.
One of our latest approaches is integrating Norebase Infra into our website so our customers can register their businesses right within Peppa. So that funding problem led to us building Peppa to become a full-fledged business suite which now provides all that Peppa has now.
Feranmi
When I started at Cowrywise, I followed the CEO Razaq to go speak at OAU, Ife which was primarily a student community.
I told him to give me ₦60,000 and I went to Ibadan to get frozen chicken and rented a canopy, DJ, Generator, and some other things I rented. We did a campus show the next day, got our first Ambassadors and we saw how students were depositing, ₦5000, ₦10000, etc and we realized we could be doing something with this.
This was the first proof of concept of our Student Ambassador program at Cowrywise. There is no other FinTech company that has such a strong student ambassador program in Nigeria.
Can you share an example of a failed growth initiative and the key takeaways that helped shape your subsequent scaling efforts?
Pelumi
Failure is really good, It forces you to think differently.
At the time I joined SafeBoda, we were in Uganda, Kenya, and Nigeria. Kampala and Nairobi were doing good and we just launched Food and Shop at the time and were trying to test if performance marketing was going to work they were not tracking events and some things weren’t working. Before I joined they were doing up to $30k per month and there was no significant result. Before I joined, I told my line manager to shut down every ad cause we were just spending money. She said not to worry since I was resuming in about a week. When I joined, we started running experiments but because we didn’t have eyeballs on a lot of things, we didn’t learn fast enough.
What went wrong? Because we weren’t tracking, we didn’t see where people were coming from, and what we eventually found out was that.
We used to offer discounts and see people coming in and we’ll see it on AppsFlyer that need people were coming in but our internal tool (metabase) did not record that new people were coming in. Metabase was the only non-correlation among the datasets. I sat down one weekend to find the issue and it was so simple I should have thought about it.
So the problem was that on the SafeBoda internal tool, once you register, we have your data but Google and AppsFlyer were treating customers who hadn’t used the app in 90 days as new users. So we’d offer discounts for pizza delivery of Coca-Cola (We had a partnership with Coca-Cola) and so people would come in and we’d record growth on Google and Appsflyer and not on Metabase. It was such a learning curve for me so I try to ensure that we always have an internal source of truth. So when data doesn’t correlate with what’s on the internal tool, I query it immediately. Having an internal tool up and running is my first thing to do when I join a new company.
How do you balance the need for rapid user acquisition with building a sustainable, loyal customer base?
Feranmi
There’s really not one answer. It depends on what your objectives are. If you’re looking to raise venture capital and your investors are asking you consistently, most times aggressive growth is advised.
But if you want to build a successful company, my genuine approach to how I actually grow products is to always start by default from the community. I’m never an aggressive growth person, I’m always a retention first person because growth is a byproduct of retention. What this means is the better you retain people, the easier it is for them to refer other people and do more transactions or activities that are profitable to your business. I don’t have a problem with aggressive growth but if you’re going to push aggressive growth, answer the question of how are we going to retain these customers when we bring them in?
It’s a lie to say you’ll bring them in and then when you do, you figure out how to keep them. The truth is you’re going to spend more trying to bring back people you have lost than just bringing them in once and retaining them.
When you have to do aggressive growth, start thinking of retention from Day 1. If you don’t have a plan to keep them and they churn, you will lose money. From Day 1, I’m balancing that out.
What advice would you give to founders and growth leaders who are transitioning from startup to scale-up mode?
Feranmi
It’s one thing to go from 0 to 100,000, and it’s another thing to go from 100k to 1M, but when you want to go from 1m to 5m, you’ll realise that 100% from 100k to 1m is not the same as 100% from 1m to 2m. One thing to know when understanding this type of growth is Adjacent Users (people who use your product but not as much as core users). You need to focus on them to understand the blockers that stop them from using the product as much as your core users would.
When Instagram was made, it was made for young cool people who wanted to share images with their friends. But now we see mothers using Instagram. Facebook did the research and built for them by bringing in long-form video content and other things and in so doing, they turned the adjacent users into core users. So my advice is to know your adjacent users, and find a pathway to make them core users before you spend on marketing to scale up.
Pelumi
One of the things that determines survival as a business is revenue. You have to make sure you’re making money. Fix the bulk of the problems that come with your product. If you try to scale up with a defective product, it won’t be pretty. There are certain things you need to fix before you start trying to push to scale.
Watch the webinar replay here. To catch up on the previous episode, click here