What can COVID teach us about business?
Humans have experienced many pandemics through time. Our history is marked by disasters with similar patterns. In the case of COVID-19 we experienced the highest impact in the shortest time due to our open economies and travel, combined with our ability to track and measure, which makes this disaster unique.
In the business world this phenomenon is interesting as an example of exponential growth and virality. We often use the term “viral marketing” or “going viral”, but rarely take the time to think about what it means. In the case of COVID-19 “virality”, there are interesting corollaries for business growth.
Please allow us this theoretical exercise, as we are highly sympathetic to those affected by the terrible disease. Our ability to gather data and track users makes this terrible pandemic an opportunity to learn. Here are some of the interesting elements of virality which should be applied to any good growth strategy!
Patient zero
In the first months of the pandemic, countries scrambled to find their “patient zero” in order to understand where the virus started and how it spread so fast.
Once patient zero is identified, researchers can begin to understand how the disease spreads, which leads to containment strategies, and growth predictions (the famous r-naught).
The concept of finding patient zero, and the subsequent understanding of viral growth is the same across both a disease and a business. In fact, there is an entire branch of statistics devoted to measuring it.
Understanding the dynamics of a “patient zero” shows the importance of Point of Entry strategies. I.e., which channels and what prime prospects will we target for viral expansion.
Project your growth
In the life sciences industry there is a branch of statistics called “survival analysis” which predicts the amount of time until an event occurs. In the case of COVID it can be used to predict the growth curve of the virus by estimating how many people in a population will get it.
In essence they use the spread of a disease, outward from “patient zero” into the community to predict how it will further spread and how other communities will likely be impacted.
Source: this is a very interesting video from 3Blue1Brown (Simulating an epidemic)
You’ve probably gotten very used to seeing graphs like this one for COVID growth and prediction.
In the business world, we can use these exact same algorithms to predict acquisition and retention of a company’s customers. Starting with the first customer we calculate how fast a company is growing and predict further growth based on the size of the market and effectiveness of the marketing efforts. Then we calculate the retention probability of every customer. The resulting analysis and graph looks strikingly similar to the one above.
If your company is like most, there are parts which are growing faster than others, and parts that retain customers for longer. You have multiple patient zeros, and that is where segmentation becomes important.
Segmentation
Many of us have heard: “This is a virus for old people”, or that it affects more men than women. In fact, data shows that 80% of COVID related deaths in the United States were people 65 or older.
In order to understand what was going on and who was most impacted, the affected population was immediately segmented and we discovered the risk factors. Age (older patients), gender (males have a higher % of deaths and infections), obesity (higher chances of infection and mortality) and health (pre-existing complications).
We’re not here to understand the medical aspects of this pandemic, only the story around the data and in this case how a proper segmentation is critical to growing your business.
Understanding segmentation is the key to invest in the right customers and remove the toxic ones. Not all customers are the same and you must treat them individually — we will talk about Segments of One in another post. You must know how our message can be transmitted along segments and how retention is impacted.
There are segments of potential customers in your target market who are more likely to become customers and stick around for longer. And, much like the young people today who feel immune to COVID-19, there will be groups of people who are less likely to be interested in your offering.
Understanding your customer segments and who has a higher propensity to “infection” is critical to develop the right strategy, understand your business potential, and find the right channels to grow.
Virality
How contagious is your message?
When it comes to business, we fall in the trap of believing that our sales proposition is a killer. Based on a few Powerpoint slides and simple tests, we think our product/service will fly. But that rarely happens.
With COVID-19, we did not understand the scary infectious potential until the virus existed in the population for some time. The same truth holds for our own businesses — our proposition will only reveal its growth ability when it goes live in the real world. We should absolutely pre-test and fine tune before launching, but we need to get real data from real users under market conditions.
Note: If you are wondering what this guy is doing here dancing, this is a Fortnite character called “Infectious” — got it?!
We must measure and understand what makes our proposition interesting, to whom it resonates, which channel best propagates the message, and how long will it last. Measuring all this properly and observing performance with an agnostic mind will help us identify what generates the virality and increases it.
Distribution channels
We just mentioned the importance of understanding which channel best propagates your message. It’s also critical to understand how resistant your message is in each channel.
There are sometimes channels which seem optimal for generating conversion but ultimately perform poorly. Other times you are in the right place at the right time with the right info, and magic happens.
Once we have a proper cohort analysis and understand the business and distribution strategy, we can analyse the actual performance per channel and run alternative scenarios.
Measuring how each channel contributes to the overall business performance will help you understand which channels generate short term impact, which build up for the future and which are totally neutral or evaporate so quickly that the result is irrelevant.
Social distancing
The key measure to control this virus (and many others) is social distancing.
If we look closely, we may learn how important social interaction is to achieve virality. “Social” is a buzzword, however it contains an immense power when properly activated.
Your business’ ability to keep users “close” will determine your ability to grow the community and scale up a solid business.
If we have learned something from this terrible disaster, it is the strong correlation between socialization and propagation. Measure how close your users are and compare the closest ones with the more distant in business terms to identify patterns.
Source: 3Blue1Brown (Simulating an epidemic) — seriously, you should check this out.
Stay safe
Unfortunately, COVID-19 will not go away soon. But maybe we can learn some lessons along the way and stay safe as well. If you want help applying these lessons for your business, please get in touch. These principles are baked into our Acquitention Strategy at Epic Labs. Acquitention is “acquisition + retention”, using data science and operational experience.
We’ve analyzed billions of dollars of customer revenue, and helped improve companies all over the world. A simple Acquitention Heuristic can be done in days, and follow-on strategy implementation is available as well. We often increase retention by 5+% percent, improve marketing conversion by 10%, and we’re willing to structure our fee based on your success.
Get in touch via our website: https://epic.so
Note: if you are interested in additional data related to COVID-19 please check this WHO site for reference: https://covid19.who.int/?gclid=CjwKCAjwydP5BRBREiwA-qrCGhss63U3FDvsDOqrvCzVKSyvppvcy-idjbDyQJrYF0S1sYwg719GDhoCVjcQAvD_BwE
