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Nick Jenkin’s, of Dragon’s Den fame, opening sentence said it all – “To all my customer’s, I’d like to take this chance to say, ‘Thank you’, I rarely get the chance to meet in you in person.”
Nick started thinking entrepreneurially at University, with his first venture in screen painted dress shirts. With no market research he was left with stock of the wrong size and made no money as a result but a valuable lesson learned. He had more luck in his next move as he graduated with a degree in Russian just as the Iron Curtain fell and western capitalism was moving into Moscow.
Having spent time in Russia (St Petersburg) myself, I could empathise with his own experience of building a business in the developing economy which had a feel of the wild west about it. After enough adventure, and some serious threats to his life, Nick returned to the UK to do an MBA while he thought about the next business he was going to build. And luck was with him again as it was the birth of the internet – he knew he was onto something. By his own admission Nick Jenkins knew nothing about the internet, but neither did anyone else! He learned as he went along.
There were a lot of challenges along the way, and after 11 years it was an overnight success! Nick gambled everything he owned to get the venture going and keep it alive – he did not lose faith, even though he came dangerously close to running out of money completely.
Moonpig Secret to Success
Nick pioneered on-line personalisation with the greeting cards company Moonpig. Starting in the early days of the Internet meant he had to learn all the lessons himself because, as he said in his own words “I didn’t know what I was doing, but neither did anyone else!”
Initially the price for the card was set at such a low price that Moonpig was at risk of going bust by having too low a margin and too high a cost of customer acquisition. Analysis of the numbers meant they could take the decision to raise prices, knowing that not to do so would be disastrous. The stark choices were:
- Raise prices to survive, with the risk of losing customer and possibly going bust.
- Not raining prices and going bust anyway!
They raised the price and noticed almost no loss of customers – but saved the company!
Nick Jenkins – Facing Cash Challenges
Having no money to “waste” on marketing, they became exceptional at analysing every aspect of consumer behaviour.
He compares the customer journey to the Olympic sport of curling where a 20kg carved and polished “rock” is glided on ice towards a target, in a similar concept to flat green bowling. On route the team members “polish” the ice in front of the stone with brushes (brooms), smoothing the route to get as close to the target as possible – eliminating as much friction as they can.
In the early days of the internet building an ecommerce website was extra-ordinarily expensive (no Shopify for $99 a month!) and all of the focus in Moonpig was on making the customer experience as easy as possible. Constant split testing of both the content on display and how each customer was behaving – where they got stuck or stopped, where they clicked and when they stopped in the process. Removing any friction was critical success.
There weren’t the technical tracking tools (such as Hotjar, Crazy Egg or Sumo Me) available in those early days of e-commerce. Knowing past customer behaviour allowed them to predict future buying patterns, though this did not stop continuous testing and tweaking of every aspect of the prospect and customer journey to get the best results.
Commitment to Customer Service
Everybody in the Moonpig team was committed to giving the best customer experience, every time. Nick gives one example of a large personalised card being ordered for a retiring Head Teacher in Nottingham that didn’t arrive in time. When the customer rang up and told the story of why it was so important, the card was immediately re-printed and couriered to the school so that it could be signed and presented.
This was way beyond the cost of the card, but a great deal of goodwill was generated from the customer and boosted the positive feeling staff had about delivering excellence.
Test every channel.
Moonpig tested every marketing channel, looking for those that were scalable. Knowing what the typical customer spend was became critical to scaling their marketing activity. This meant analysing their customer behaviour, how long they stayed a customer and how many new customers they referred.
Key questions the Moonpig team asked were:
To attract 100 customers:
- How much does it cost?
- How many of them buy?
- How frequently do they buy?
- What is the average order value?
Knowing these numbers meant the team at Moonpig knew exactly how much they could spend on getting a lead and then the conversion rate and ultimate cost of acquiring a customer.
Finding the Game Changer
The critical turning point for Moonpig was trying television advertising. At the time it was perceived to be extraordinarily expensive but when they investigated it worked out to be very cost effective. The trigger for investing in TV advertising was seeing a new competitor in the market in the TV. Knowing their numbers and the cost of getting a customer from the constant analysis of lead generation and customer behaviour meant they knew exactly how much money they were willing to invest. They understood what results they needed to establish TV advertising as a successful marketing pillar.
When Moonpig discovered that their cost of customer acquisition was much lower through television advertising, they started to grow the investment, doubling their spending each month. At one point they were spending £1m per month on this marketing activity. As with all marketing pillars, there does come a point of diminished returns and knowing the numbers allows this to be tracked so you can build then next marketing investments.
After months of doubling up on their spend, the acquisition rate started to plateau and they identified their optimal TV advertising spend.
Happy Investors
After years of battling to establish themselves in the market and with external investment of £3m, Moonpig was sold in 2011 for £120m, giving investors a x40 return on their investment.
Very happy investors indeed!
Conclusion
Nick got focused on creating value from the business and knew exactly what needed to happen to make his business worth more AND be attractive to a potential buyer. If you want to follow in his footsteps, give us a call.
Christine is an author, speaker and multi-award-winning Professional Business Mentors who helps business founders significantly change business outcomes and with it their quality of life. She saves them THOUSANDS and increases the value of their businesses by MILLIONS. Since 2000 she has generated £millions of crystalised value in business exits.
The published author of 4 critically acclaimed business books, including SELL IT (How to Sell Your Business for a Richer, Brighter Future), 5 Minute Finance and What’s Your Profit Score, which has been described as “the most useful business book of the year”, she is currently writing the next book.
Are you stuck in the day-to-day of your business with no time to plan for the future? A Professional Business Mentor is just the leverage you need to get out of the rut and flying. Discover how you can make your business worth more AND avoid leaving money on the table when you finally leave your business. Click here to contact Christine by email alternatively you can book a call with the Business Mentor of the Year 2020, author and speaker. Who helps business founders get their businesses exit ready so they can enjoy a happier, richer future. She saves them THOUSANDS and increases the value of their businesses by MILLIONS.