How these three Australian retailers acquired their first customers
Friday, February 16, 2018/
Outside of sales to friends and family, a business landing its first customers can be an important milestone in its journey. It can set a forecast for how well the business will perform in the months or years to come — or whether the business is set to succeed at all.
SmartCompany caught up with three Smart50 finalists from 2017 to find out who their first customers were, how they acquired them and what they wish they knew starting out. The business owners, all from different retail industries and backgrounds, all agree that a long-term customer relationship is highly beneficial.
Yellow Octopus was founded in 2013 as an e-commerce business without any bricks-and-mortar presence. With reported annual revenue of $2.5 million in 2017, founder Derek Sheen says launching an online shopfront had its challenges when attracting customers.
“I guess one of the things we come across everyday is people [online] who haven’t heard about your brand. They first consider whether you were a legitimate business or not,” Sheen tells SmartCompany.
“We kind of stressed how we were a legit Australian business. ‘Here’s our address, here’s our phone number. You can call us to make sure we are a legit business, and there’s a recourse if the product isn’t right or the service isn’t up to par’.”
Through a combination of Google Adwords marketing and word-of-mouth, Yellow Octopus acquired its first customers within 24 hours of launching. The first orders were enclosed with a stress ball in the shape of an octopus in the hopes of establishing a long-term relationship.
“They were pretty costly to make, but we included one for every sale to hopefully get customers to remember us and tell their family and friends,” Sheen says.
While its unclear how much the initial cost of acquiring those customers were, Sheen says he would recommend new businesses keep track of these figures.
“You really need to know your margins, your [return on investment], the maximum you can spend on acquiring new customers and calculating the length of the runway — how long can you possibly survive by not making much money in the first few months of your business — and plan that out accordingly,” he says.
b.box for kids
Dannielle Michaels is the co-founder of b.box for kids, which launched in 2009 and sells a range of baby goods products in 35 countries.
B.box for kids boasted $13.9 million in annual revenue last year but Michaels says the b.box sales journey first started by renting a shelf in a gift shop stall.
Starting off with its initial ‘diaper wallet’ product, b.box sought out its initial customer base through a combination of direct online marketing and in-person sales.
“We literally rented a shelf from someone who was exhibiting at a gift fair. We pre-marketed to a list of retailers we were hoping to attract and that’s where we got our first customers — we left with 30. We spent a lot of time following up with them and what they loved about the product.”
Michaels and co-founder Monique Filer relied on trade shows to attract their first business-to-business (B2B) customers and eventually get their products into retail stores.
“We knew how many units we needed over a period of time to break even. The good news is that was really conservative, and we blitzed it in a few months. But we were just sponges; people gave us new ideas. The markets and the trade shows were really effective in our first years and to attract B2B customers.”
Michaels says she and Filer sought to develop and capitalise on their customer relations as much as possible in those early days.
“When you’re stating out, you have to treat people like you would like to be treated. Why would they stock that? What’s in it for them?” she says.
“Make it a personal experience. If I was telling myself that now I think I would say to myself, ‘be a bit bolder, think creatively and push the limits’.”
For camping store group Tentworld, the strategy for attracting customers has changed significantly over the course of almost 50 years in business.
Tentworld started out originally in 1968 as a business selling, contracting and repairing machinery as well as selling caravans, and only got its current name in 2004.
John Burrell, co-owner of Tentworld, tells SmartCompany the business’ first customers were secured through ‘traditional’ promotional means and offline advertising.
“We transitioned into being a full camping store in the 90s and used to ran campaign events and sales events quarterly. We’d put on a full event, my grandma would make scones and tea, and that was driven purely through radio and local news,” he says.
Today, Tentworld still continues to distribute catalogues to mailboxes. And alongside embracing a digital marketing strategy to complement the business’s e-commerce offering, Burrell says the retailer has also changed its pricing and discount strategy as more and more customers choose to shop around online and compare prices. It’s strategy contributed to Tentworld recording $30.9 million in revenue last year.
“Pricing strategy has changed to match the needs of what consumers have today. Most of the stuff in the shop was full price all year round, whereas these days our stores are discounted,” Burrell says.
Nevertheless, Burrell says some aspects of Tentworld’s service have remained constant throughout the evolution of e-commerce.
“The other thing has remained the same is the service we offer. We grew our stores in a different way [to other retailers] in that we try to run small teams so that way each team member has a knowledge of products and builds relationships with our customers,” he says.