Gems: Protothon Recap & Case Study
A couple of weeks ago Gagan, Grace, Pawan & I had a chance to participate in the Product Buds Spring Protothon. The event kicked off on April 9th afternoon and submissions were due on April 11th at noon.
It was an overall great learning experience as I never participated in a hackathon until this one.
Below is a recap of our entire process from the Problem statement to MVP.
Theme: Given everything that’s been going on, the overall theme for the Protothon was Social Impact and being to create a solution/product that can be beneficial for folks.
Participants had a chance to choose from the following 5 sectors to pursue an idea.
- Health Care
- Financial Services
Given these choices, our team decided to focus on the Connectivity Sector as that was where our common interests aligned.
Within the Connectivity Sector, the primary space we wanted to focus our attention on Small Businesses & Local shops as they have been affected the most due to the pandemic.
The shopping experience has now been changed forever, which accelerated the move to a widely accepted e-commerce model.
That coupled with the fact that it is hard to find out where the local businesses are gives us a unique opportunity to use technology to solve this problem.
According to an Adobe report, about 40% of a business’s revenue comes from repeat customers (Ref #1), who represent only 8% of all visitors.
Bain & Company released a study showing that a simple 5% increase in retention can result in a profit of 25% or more. (Ref #2).
This tells us that if we can increase customer retention for small businesses, then the businesses will thrive and in turn make the community a better place.
Small businesses tend to have difficulty acquiring and retaining their customers.
Especially now when the foot traffic has died down, it is hard for them to build up an online presence and or advertise with their limited monetary resources.
We ran a survey asking our users whether they would shop at small businesses more if they could find it easier and it was a pretty clear yes.
Users, specifically millennials are more socially aware and want to make conscious buying decisions. They are also keen on one-of-a-kind unique experiences that small businesses provide.
How can we help small businesses reach these users?
This is where we come in. Our app Gems will display small businesses, local mom/pop stores, and local venues to our users and offer rewards and points for continuously shopping there.
78% of those we surveyed said they would go back to the small business( cf. appendix 3) and shop more if they could get rewards and points for it.
Our main competitors are Google, Facebook, Groupon, Yelp, etc.
There are two main problems with these giants.
One, they have too much competition and it is hard to find those unique small businesses.
Second, they are driven by advertisements, the businesses that users are most likely to see are very well advertised and could hide the small businesses that need support.
Gems provide a no-noise option, where users can focus on making conscious decisions and support their neighborhood businesses.
Through our app, users can see all local small businesses within a certain distance, view the business, and more importantly see what their loyalty program is. It’s a great way for a user to shop at a small business and earn rewards/points which they can build up by continuously shopping there.
There’s also a good chance that users will introduce their friends/family to the business so it’ll help drive more users to the small business as well.
This allows small businesses to increase Customer Lifetime Value (LTV) and grow retention.
By using technology to build a specific local business-oriented marketplace app, we hope to improve customer retention while at the same time increasing customer LTV through our unique royalty program-based engagement process.
6). User Demographics
Given the nature of adoption when it comes to app and technology, we are focused primarily on small business owners and users in the US.
We are also specifically targeting and catering to potential customers who are more tech-savvy, care about their local politics, and overall want to help out their community.
We found through our survey that of 76% our respondents were willing to discover surrounding small businesses, and they were Gen Z or millennials.
Our user base will mostly consist of 16–35-year-olds.
According to the Census Bureau (ref #3), there around 166 million folks fall into the category of Millenial, Gen Z & younger which represent the TAM (Total Addressable Market) of our target end-users.
As of June 2020 (ref #4), there are 31.7 million small businesses in America that employ approximately 60.6 million employees.
7). Use Cases
- User Account Creation and Business Account Creation: The following diagrams showcase how both the user & business owner would create an account on Gems.
2. User Journey: The following diagram shows the customer’s journey as they discover new promotions and events in Gems.
Although we chose the high effort and higher time consumption option, it aligns with our vision of trying to offer a rewards program to drive customer retention and engagement for small businesses.
8). Minimum Viable Product (MVP)
While building the Minimum Viable Product, it is important that the core objectives of the app are accomplished so the product can be delivered to the customers fast and we can obtain their feedback.
Our core objectives are building brand recognition and customer loyalty for small businesses in their neighborhood. Following the user journey maps, we decided to work on the following features for the MVP version:
- Building Business Accounts: It is important for businesses to create their profiles, add personalized information, and then add promotions/coupons to attract users. The business profiles would get approved to make sure they are legitimate.
- Building User Accounts: Customers have an option to continue with the experience and collect promotions without creating an account. Creating an account, however, adds the ability to collect points for shopping and adds coupons to their accounts.
- Business Loyalty: Customers can select a business as their favorite, and filter based on their favorite businesses. This would build brand loyalty.
- Brand Awareness: Customers can share the promotions with their friends using the sharing feature.
- Notification: When a user redeems a coupon, it will be added to their calendar on the app which will send them reminders to use it before it expires.
- Customer Engagement: Customers receive points for collecting and using the coupons. The points can then be converted to extra discounts and offers.
- Adding location: Customers can select their location, so the app can show their neighborhood small businesses. Also, they can decide of the miles
3. Home Page:
- What’s Happening Now: The home page shows the events or promotions happening close to the customers.
- Customers can filter based on Trending, Gifts, Hangouts: Since our focus customer base is GenZ and Millennials, these filters could capture their interest.
- Customers can filter based on what they are looking for
Considering the scope of the project, we decided not to add the payment or buying feature right on the app for the first version of the MVP. It would, however, be added in the following version after gauging customer response.
9). Design Mockup
The finalized Figma with all of the mockups we created for submission can be found here.
Here are some of the designs we came up with.
10). Success Metrics
Our primary focus is to help small businesses drive additional customer retention & maximize customer lifetime value.
In order to achieve those metrics, the two underlying metrics that are important to monitor are DAU (Daily Active Users) (ref #5) & MAU (Monthly Active Users) (ref #6) along with Retention Rate (ref #7)
With the initial launch, gaining as many users as possible is important. However, over time with daily usage fluctuating as the app matures, looking at less frequent trends such as Monthly Active Users is a good way to evaluate performance.
Maintaining/Keeping users is equally if not more important than the initial acquisition of customers. As the user base grows we want to limit the churn rate (ref #8) to as minimal as possible. However, if we start to see an uptick in churn that will be a good indication that some additional features or gathering user feedback will be critical to limit churn moving forward.
Before we fully flesh out the MVP, we’d like to do some more research on rewards programs and how they can be used to increase customer retention.
We understand that different regions and different user bases might react differently to different rewards systems ie. what might work in NYC might not work in Boise, Idaho.
We are also working out how we can get small businesses into our application and think of a mutually exclusive program where both of us can benefit. As of now, this will be an open platform to search and sign up for rewards programs for small businesses. In the future, we are looking into a subscription-based model where a monthly fee will give you unlimited access to all the small business deals in your area. For their part, small businesses can also pay a little extra to be listed as a go-to deal. This will drive traffic and customer loyalty.
Throughout this process, we realized that our generation (gen z and millennials) would very much like to shop from small businesses and small businesses have trouble maintaining repeat customers so we are hoping Gems can connect that gap and benefit everyone in the community.
To view our deck that was used for submission please click here.
References: These were all the various websites used for our case study.
- Three Reasons Small Business Recovery Relies On Customer Retention, Not Acquisition
- Did You Know: A 5% Increase in Retention Increases Profits by Up to 95%
- Now, more than half of Americans are millennials or younger
- 2020 Small Business Profile (US Small Business of Administration Advocacy)
- Daily Active User
- What startups should know about Monthly Active Users (MAU)
- Retention Rate
- What does churn mean?
- Congratulations Picture (Appendix 12)