We hosted our 4th Stacklist event this week, with an illustrious group of founders who are all building some of the most exciting service-based startups in the US. All three businesses rely heavily on technology but ultimately attribute their success to being able to offer a superior experience that feels personal to every customer. At this event we got to hear from:
We hosted this event because we were interested in the tension that service startups face between building a scalable product that is still a nuanced personal interaction for the customer. Noa hit the nail on the head when he said that
(these startups) ... are trying to deliver an art. We’re trying to create a structure that’s just enough to allow for some regularity in what we deliver, but not so much that you lose the magic.
These founders contributed invaluable insights for not only entrepreneurs in the services sector, but anyone building a startup who is focused on creating a positive experience for their customers. Here are a few highlights.
“The Endgame is in the Provider”
Each of these companies has built a system that enables their staff to create great experiences for customers. At Fluent City, teachers must submit and teach a sample lesson plan before they are trusted with the FC clientele. And at NOMI, stylists’ cosmetology certifications are checked and a demonstration of their service capabilities must be put on display for the team. In addition to training, these startups show support of their teammates on the frontline teams. For example, Homepolish works with each of their hundreds of designers to help them set the right prices and find clients that are a good fit.
Cultivating the right team of providers begins with recruiting. James Rohrbach explained that enthusiasm is the number one trait he looks for in his teachers, who need to be able to make students show up even “when they’re tired after a day at work, it’s raining, and the subway isn’t running.” At NOMI and Fluent City, where teachers are all W2 employees, the staff undergoes a rigorous vetting process to ensure that they match within the company culture and can deliver a standard experience.
Customer Acquisition is not One-Size-Fits-All
It was clear that all of the panelists are in a perpetual state of honing their marketing practices and improving on their customer acquisition tactics. Between offering coupons, various types of referral programs, cold-calling and creating group discounts and deals, there are many ways to develop the sales funnel. James mentioned that Yelp and SEO were among the efficient channels for customer acquisition and that they were incorporating a new referral tool called Friendbuy to help bolster the customer referral channel.
The key is knowing your customer. Different incentives are going to appeal to different types of consumers who seek varying levels of services. Early on at NOMI Beauty, Nikki offered coupons to attract new business but received negative feedback from her luxury clientele that discounts cheapened her product, what she calls “the filet mignon of blowouts.” Eventually, she did away with them and switched over to a referral platform. And, per Noa, there is nuance to organic referral (which has been a successful channel for Homepolish); while customers are often inclined to refer their friends to designers, they probably don’t want to feel forced to be a megaphone.
Core Values Matter
Solid foundations matter, whether they’re company economics or company values. Setting core company values early provides every member of a startup with a common sense of mission as well as operational priorities. The name “NOMI Beauty” comes from Nikki’s Hebrew name, Nomi, and the company uses this homophone for “know me” as a guide in how they think about their operations and customers. Their technology and their stylists combine in a way to save each of their clients’ preferences in one place so that stylists can access this information and produce replicated, personalized experiences that make them feel like NOMI “knows them.” These values drive decision making and encourage brand consistency. Core values help even the smartest founders stay on track with their company’s mission, prioritize the things that are most important to the success of their business, and get rid of those that don’t. And they empower members at every level of the organization to make good decisions for their work and the company.
Early on, Noa Santos and his team came up with four precepts that have driven the success of Homepolish and helped them complete thousands of design projects. By focusing on being the solution, keeping it fun, making it personal, and dreaming smart, Homepolish has been able to help clients across the country achieve their dream space.
While qualitative feedback can guide specific changes, quantitative data can provide general insights about how your company could be serving employees and consumers better. At both Fluent City and NOMI, James and Nikki are proud of their excellent NPS (Net Promoter) scores which are well above 70% (anything above 50% is considered very good). This means that a large majority of their customers are positive promoters of their brands. Delighted, Promoter.io, and Wootric are just some of the tools out there that can help anyone track their NPS.
They also both value customer and employee retention as one of the highest indicators of their companies’ success. Other indicators of success that companies in the services industry can focus on are average resolution time, satisfaction improvement, and comparison to competitors. Yelp stars provide a very basic numerical metric for these startups, which can then be supplemented with more detailed customer reviews that paint a nuanced picture of the consumer’s experience with your “product." Nikki actually takes it one step further and has built a personal data scheme that allows her to monitor anyone who comes in contact with her app. She also uses feedback cards with clients, and is able to back-up her company’s prestige with an 86% satisfaction rate and a 30% response rate on the cards themselves, which is significant in relation to an average 1% response rate for a standard hotel feedback card.
Feelings are Your Bottom Line
Focus on building an experience rather than an airtight product. This will help you foster relationships with lifelong clients rather than one-time customers. Place emphasis on how they feel about your company, your employees, and their experience, and alter your business based on their feedback rather than your desires. Each customer should be treated as if they are the only client of your business and every single one of your clients should be given the same experience. NOMI prioritizes the personal, rather than technical skills their stylists have to ensure the experience they are trying to create. Dubbing it “ladysitting,” they train their beauty professionals to be able to read the nuances of interactions with clients and alter the level of conversation based on what their customer is implying they need. They also try to style and converse in a manner that leaves customers leaving empowered, which is a value of great importance to the company's mission. And at Homepolish, Noa has cultivated a group of designers without the ego, who are there to “listen, rather than dictate.” Instead of a client feeling like their home is someone else’s vision, with a Homepolish designer, they should be able to see their own ideas brought to life by talented professionals. Your new startup may not be able to provide a perfect experience 100% of the time, but if you can strive for this same ideal regarding how you make your customers feel, you will grow a successful service business.