Sometimes the best new businesses come from ideas that seem so simple that they make you say: “Why didn’t I think of that?” However, when you look more closely, the entrepreneurs are not necessary inventing something totally new. Instead, they are identifying one or two factors or trends that are important to customers that combined can ignite growth and success.
Let me give you a few observations in hopes of potentially stirring your own creative juices.
On a recent subway trip to NYC, I just happened to see an ad for Casper, a new mattress brand that lets consumers try out the mattress free for 100 nights.
I had never heard of Casper, but what a novel value proposition, right? Instead of walking into a store and testing out a bed for 10 minutes, you get to sleep on it in your home for up to 100 nights and return it no questions asked for a full refund.
Casper, which launched in April 2014, sells mattresses online for as little as $500 (a fraction of the cost of comparable high-end bed sets). It has effectively cut out the hassle of having to go to a mattress store, haggle with a salesperson and pay for all the overhead to operate a physical store. It ships luxurious, memory-foam beds directly to consumers in a box that’ll fit in the back of an average car trunk. In New York City, they’ll deliver to your doorstep in about two hours.
The first factor Casper uses is the 100-day free trial period. It’s not an original business tactic, but it’s fresh to the mattress market. Sure, some of the big chains have what are called “comfort guarantees,” but none that I know of run with it as their primary value proposition and marketing technique.
Sleepy’s, the brand that I think of in the Northeast with over 1,000 stores, pushes a price guarantee as their primary value proposition. Sleepy’s does have a comfort guarantee, but unlike Casper, which takes the mattress back, Sleepy’s will only replace it for another one of equal or greater value.
The second factor is the trend of new mattress materials: latex and memory foam mattresses made famous by TempurPedic, adjust to your body regardless of the type of sleeper you may be which makes for less of a need for a large product line.
Add a $50 referral program, and the company has some strong social media activity going as well. Case in point: this couple who purchased the mattress made a YouTube video which they hope will get viewers to click on their referral code to buy the mattress.
Here’s their video of the mattress expanding. Pretty impressive.
My 14-year-old daughter recently asked to be taken to the local Benefit store, and what I saw was brilliant. Benefit focuses on eyebrows, gets paid as a salon for the waxing, threading, and tinting, and then winds up upselling and cross selling you products for the whole face and body. Luckily, she saved up for the expense and I didn’t have to pay a dime.
So, here is a high-end cosmetic brand that is actually creating demand for eyebrows. Just as more coffee is consumed because Starbucks is everywhere, Benefit is making eyebrows and eye makeup more important.
I notice many women today wearing this new “push up” or “wing” style of mascara. Benefit sets the trend and makes a special item, the Push-up Eyeliner, to help you execute the look. It’s only $24. You can check it out here.
It’s so impressive when a business can jump on a trend, or better yet, create one. The first Brow Bar opened in San Francisco in 2003, and now Benefit has more than 2,000 boutiques, Brow Bars, and counters in 30 countries. You can even find Benefit self-service kiosks like this one in airports. It’s essentially a mini store run by a computer complete with an advertising billboard to boot.
So, the key factors here are: grab a specific concept like the eyes and eyebrows and make them important, and then create your own custom product to support the trend.
There are lots distribution outlets for makeup from health and beauty aid stores like CVS and Walgreen’s, to Sephora and department stores. Benefit gets to sell its own products direct, keeping all the margin, while making money on salon-type services, creating brand awareness to help push its product at those competitive outlets.
SoulCycle, Flywheel Sports and Peloton
In case you’re new to the indoor cycling scene, SoulCycle and Flywheel Sports offer Spin classes – but completely jacked. Each class (which costs upward of $30 a pop) is a high-intensity, hardcore workout combined with a social experience and loud music that leaves you drenched.
People love it. It’s not just exercise – it’s an experience. If you’re an avid cycler and frequent SoulCycle or Flywheel, you know the energy in the room and experience created by these fitness brands.
By focusing on Spinning only and making it cool (complete with celebrity endorsements and sightings), even the instructors become celebrities as in “you have to take Stacy’s class.”
These brands have taken the old Spin-class concept out for a new spin. They’re so popular that there are VIP programs where you can pay more for earlier access to reservations, making them even more money. Classes fill up and if you’re not on the list, you don’t participate.
And while their clients are happy to pay $35 a class, they also love the SoulCycle branded merchandise with the skulls. SoulCycle launched its retail line in 2007 and releases a new collection every month. Yes, every month. What a testament to becoming a true lifestyle brand. Here’s an example of the kind of great promotional gear that SoulCycle is selling.
Flywheel Sports started in 2010; SoulCycle has been around since 2006, and it draws about 50,000 people to classes every week – including celebs like Katie Holmes and Lady Gaga. This is no small-scale fitness fad. This is huge.
So factor one: take something inarguably really good for you healthwise, that has been around for decades, isolate it, make it special and exclusive. Then charge a lot, sell apparel, and create a lifestyle around it. These brands took Spin bikes out of the gym, put them in a boutique setting, and flipped the fitness world upside down.
New on the scene is yet another iteration: Find a problem a segment of customers have with the current successful model, and build a better mousetrap for those people. Enter Peloton. No more driving and the added benefit of only smelling my own sweat.
Peloton sells you the same high-quality Spin bike found in the class for home use, and you still get the classes with all the cool different instructors. They are beamed in on the internet-connected 21.5-inch HD screen attached to the bike. You see the instructor head on (they can’t see you only your statistics) and can be part of the intensity without leaving your home.
Now, if you are single and looking for a scene, maybe you’re not the right customer. But you can see the brilliant business minds at work, segmenting customer needs and putting forth solutions.
Many gyms are suffering from membership declines while companies like these pick off their customers left and right. Equinox, the gym brand, saw the threat and hedged by buying into SoulCycle in 2011.
Nest Thermostat (Google)
Have you heard about Nest, the electronic, programmable, Wi-Fi-enabled thermostat that learns and senses motion and lets you control your home’s temperature from any internet-connected device, smartphone, tablet, or computer? Nest launched in 2011, and by 2014, it was purchased by Google for $3.2 billion.
Playing off “The Internet of Things” trend, Nest with great style and marketing, brought a Wi-Fi-enabled thermostat to the market. But jumping on the trend was only one factor.
Not only does a Nest thermostat control a home’s AC, but it actually learns the home’s unique thermal profile, allowing homeowners to automatically save energy in ways they couldn’t with a standard thermostat.
These thermostats aren’t cheap at $249, but people are buying them. Nest jumped on the trend of the “connected home” but added the intelligence feature that tied in well to the personality of this high-end buyer.
Were the people at Honeywell, the Fortune 100 company that’s known for its iconic round thermostats, asleep at the wheel? It sure seems like it.
Honeywell has been around since 1885 and employs approximately 130,000 people around the globe. Did nobody think of a way to take the thermostat and make it simpler and better? Seriously?
Nest, like Benefit and SoulCycle, is extending its brand and product line by adding smoke and carbon monoxide alarms for a completely smart home. So not only did the company find a way to make the traditional thermostat simpler and better, but it developed a line of standard home products modernized for today’s homeowner and early-adopter personalities.
If you wanted frozen yogurt back in the 1980s, you basically had two options: TCBY or the freezer section at your local grocery store.
TCBY, the country’s first frozen yogurt store chain, turned froyo into everyone’s favorite frozen dessert. It tasted like ice cream, only healthier. It was so good, in fact, that Founder Frank Hickingbotham and his wife couldn’t believe it was actually yogurt.
And so the company had its first name: This Can’t Be Yogurt (TCBY). The name later (and permanently) changed to The Country’s Best Yogurt after a competitor sued over a similar name.
The first shop opened in Little Rock, Arkansas, in 1981, and TCBY quickly grew to be the largest company of its kind, operating approximately 3,000 locations in 29 countries. In the mid-1980s, it received nearly 500 franchising inquiries a week.
The franchise achieved $1.8 million in sales in 1982 and hit $5.2 million the following year. Annual sales nearly doubled for the next few years, reaching $70 million by 1986.
People were hooked on frozen yogurt, and TCBY was serving it up to froyo-frenzied consumers in strip malls across the country.
Then, the 1990s arrived, and with the new decade, TCBY tanked.
No new franchises were opened in 1990, and the company went through a period of consolidation over the next several years. Competitors like Columbo and Freshens started to invade the froyo market, and even big ice-cream shops like Baskin-Robbins began serving frozen yogurt.
Fast forward two more decades, and TCBY was down to only about 400 stores in the United States. People were getting their yogurt fix in a new way: self-serve. TCBY? More like DIY.
Frozen yogurt shops like Red Mango have popped up everywhere. If you don’t have one of these self-serve yogurt stores in your neighborhood, you no doubt have another: 16 Handles, Yogurtland, Menchie’s, and Sweet Frog, just to name a few. You know the ones.
These shops put customers in complete control of their froyo experience, and as your kid overfills the container with yogurt and toppings, you get charged by weight. Sounds like a great way to increase the average ticket size. No more waiting in line for a lackadaisical high-school kid to hand over your chocolate and vanilla swirl.
Self-serve frozen yogurt shops didn’t invent anything new – they simply capitalized on the DIY trend. Pinkberry launched in 2005 and has grown to more than 100 stores – mostly in Southern California and New York. Red Mango, which opened in 2003, operates more than 190 locations in 25 states.
These are just two of the many froyo shops across the country.
The self-serve trend wasn’t lost on TCBY. The company hasn’t opened a traditional store in five years, instead focusing on the self-serve model. It has opened more than 100 such stores since 2010.
TCBY is a great example of the need to evolve your business to keep up with what consumers want. When it comes to frozen yogurt, the trend is to step back and let customers get their yogurt on their own terms. TCBY, though it seemed to fizzle in the froyo market for awhile, gets it, and is back.
It’s amazing how these companies found success by taking a simple thing and refocusing on customer desires or finding new customer desires: a cool, new mattress that’s more comfortable and comes with a 100-day trial; making eyebrows more important than ever and building customers starting from the eyebrows; making gym classes fashionable; making a connected home environmentally friendly and cool; and latching on to the latest trend in how consumers want their frozen yogurt.
All of these ideas seem so simple, but are they really? How can you refocus to customer needs or create something desirable by focusing on one core thing in your industry? I invite you to leave your comments below.