Don’t be a Bloated Unicorn

After 10 years, Twitter still hasn’t turned any profit. This is one of those highly valued company which all startups aim to become. They all aspire to reach the highly sought list of unicorns (private companies valued at more than a billion dollars). But the danger in aiming to become the next Twitter is that even though you have tons of users and excited investors, converting eyeballs in money is no easy task.

Twitter does have the potential to generate massive amounts of revenues and it’s just of matter of finding the right business model to monetize the use of their platform. But right now, they’re struggling to find that miracle formulae. And that struggle provides an important lesson for companies that are investing in the development of an online platform.

Even though Twitter built their platform, that the users came in droves, no substantial money followed. Their valuation is still mostly based on potential vs real revenues. Of course, they’re still a successful company, albeit they more or less can now be considered as a blotted public unicorn.

So what can we learn from Twitter’s growth?

I’m sure there’s a huge team of analytical quants (even after their recent staff cuts) focused solely on growth hacking and the increase of user engagement. And that seems to be the strategy of many today. Focus on growth now and figure out the monetization part later.

That might work for a few, but does it make sense? How many unprofitable unicorns can there be? Especially for non-startup companies (for a lack of a better word – meaning companies that DO NEED to generate revenues NOW) who are launching online platforms to increase their revenues. Growing your user base for the sake of growing it is not a sustainable model.

We can get a tingling feeling in our stomach when we see our number of visitors and/or registered users increasing. But if it doesn’t convert into increased revenues, what is it worth?

Most of us are not interested in acquiring a million users, we’re just interested in targeting the right segment of potential users and pulling them into our own ecosystem.

So who is that single person that used your online platform and that generated revenues? You should probably focus on understanding and developing a close relationship with that person. Because this is the only person yet that’s worth any value to you. Not the thousands you’re trying to pull via fancy growth hacking “exploits”, but that single person who understood the value of what you’re providing and generated revenue in return.

That’s what customer analytics is all about. It’s about understanding that single customer, its profile, journey and its behaviours. Why did that user generate revenue? Learn from that user and then start building the channels to pull in similar future customers.

By |2017-08-01T18:14:32+00:00December 20th, 2016|Customer Analytics|0 Comments

About the Author:

Olivier Dupuis is the CEO and founder of Lantrns Analytics, a small agency that helps you understand the motivation behind why an individual becomes a customer, the process of how he becomes one, and how to automate that process to accelerate growth and increase revenues. We illuminate your customer's journeys by providing rich data and analytics on their profiles, behaviours and motivations.