Keep Tabs on These Five Startup Trends
1. Hyper-personalization
According to an article published by Business Insider, only 22% of consumers are satisfied with the level of personalization they receive. Considering the fact that 80% of consumers prefer to purchase from brands that offer a personalized experience, this number seems startlingly low.
Now that I’ve satisfied the statisticians, let’s look into why hyper-personalization really matters. To start, you may be wondering: What exactly is hyper-personalization? I’m sure you’ve all received the occasional personalized email, addressing you by your first name in that sometimes-too-friendly tone. That’s personalization on a basic level. Hyper-personalization combines this effort with additional behavioral and real-time data to create a customized marketing channel tailored to every consumer touchpoint, from the social media advertisement to the actual product you receive. Think of it this way: Every customer is an individual. Why not treat them as such?
How are startups catering to this preference? Let’s take a look at Care/of as an example. Founded in 2016, Care/of perfectly exhibits the concept of hyper-personalization. In fact, the entire business centers around the trend, providing its customers with a portable box of personalized daily vitamins and supplements based on lifestyle, goals, and health requirements. This level of personalization benefits both the consumer and the company, as Care/of gains tailored insights with each interaction, leading to improved products and marketing techniques.
2. Subscription Services
You wake up and scroll through the latest headlines on your New York Times app. After a few minutes, you roll out of bed and throw on some clothes from your latest Stitch Fix shipment. You then head to your kitchen and turn on your new favorite Netflix series as you prepare your lunch for the day using ingredients from your Hello Fresh delivery box.
While your life may not perfectly mirror this fully-subscribed one, the world is headed in that direction on many counts. The market for subscription services has grown at an annual rate of more than 100% over the past five years.
This business model works particularly well for niche markets within the realms of food, beauty, apparel, and lifestyle. Additionally, curation-based subscriptions represent 55% of the market, reflecting the consumer demand for personalized products and experiences.
While it is impossible to say exactly where this market is headed, take the words of Tien Tzou, founder of Zuora, as one distinct direction. “The reality is, ownership is dead — now it’s really about access as the new imperative.”
3. Corporate Social Responsibility
For those who don’t know, corporate social responsibility, or CSR, is the act of giving money or time to further social good and sustainability efforts. Good CSR allows companies to connect with consumers on a deeper level through incorporating social initiatives within their values. In fact, nine out of ten consumers purchase because a company supports an issue that matters to them.
One popular example of CSR done well is Patagonia. By matching its operating model to its business model objectives, the company has ingrained social responsibility into its entire operation. With a focus on social and environmental impact, Patagonia has adopted a few initiatives to match its action to its talk. There’s the 1% for the Planet Initiative, the Worn Wear Initiative, and the anti-consumerism marketing campaign to name just a few.
So, enough about Patagonia. How are startups embracing this trend? CSR has become more of an expectation than a differentiator and “companies that ‘get it’,” writes James Epstein-Reeves for Forbes, “are the ones that are using CSR to push [innovative] business processes into the organization.”
Startups are beginning with CSR, forming businesses around a strong social or environmental goal rather than the opposite. Take TOMS for example: Upon first launching, social impact was already baked into the company’s business model, matching each shoe purchase with a shoe donation to a child in need.
4. Non-traditional Working Spaces
Ah, WeWork. Despite the coworking company’s failed IPO, WeWork had been a forerunner in shifting the idea of the workspace. While perhaps not the end-all solution, coworking spaces still remain a growing trend.
In 2018, an estimated 2,188 spaces were opened worldwide, out of which almost 1,000 were in the U.S. Historically, large office spaces existed out of necessity. However, with the creation of the internet, personal computing, and handheld devices, managers can now communicate instantly with their employees, wherever they reside. The need to house employees under one roof is no more.
While coworking spaces have popped up in a variety of cities, led by several companies outside of WeWork, the future of this workplace solution is not yet set in stone. I urge you to keep an extra close eye on this trend to see exactly where it is headed.
5. Direct-to-Consumer Brands
Direct-to-consumer brands typically market directly to a consumer through a digital channel rather than a traditional retail channel. This model eliminates the middle-man in the selling process. The main benefit of doing so? Data. And as a result, a much deeper connection to your consumer.
“For the digitally native brand,” writes Elle Morris for Forbes, “data is king.” Complete, uninterrupted access to customer data allows direct-to-consumer brands to create unique and precise customer experiences, pointing back to our first trend to keep tabs on: hyper-personalization. Not only do direct-to-consumer brands offer rich customer data but also, they tailor to more niche markets based on homogenous consumer bases. They provide convenience and simplicity to their customers, as they typically offer a personalized shopping experience without the onslaught of overwhelming choice. Because these brands know their consumers so well, they don’t need to offer thousands of options for a single product type.
Who are these brands? Glossier is a direct-to-consumer leader, repaving the beauty industry with its personalized products and fully-integrated marketing. There’s also Harry’s, revolutionizing the way men buy razors, Warby Parker, disrupting the eyewear industry, and Casper, shifting the way we purchase mattresses, to name just a few. While these companies are dubbed disrupters today, their models may be the norm of tomorrow.
For more information, check out some of these interesting reads:
Hyper-Personalization: Marketing in the Age of Alexa
Subscription Models: Retailers that are Boosting Sales with Subscription-Based Shopping
Non-traditional Working Spaces: Even If WeWork is in Trouble the Office is Still Being Reinvented
Direct-to-Consumer Brands: Why Consumer Trust in Direct-to-Consumer Brands is on the Rise
