Is your threshold for success too low?

There’s a great story I read about a US start-up (let’s call them “Flame”).

With their mobile app, Flame had an excellent take-up rate for new customers.

But they struggled to get repeat customers and the issue they diagnosed was that the open rate on their in-app announcements was too low.

Their baseline was around 6% which, over time, was causing problematic churn. A hard, concentrated effort saw that open rate rise to 10% - a significant gain.

They doubled down again to tweak, adjust and refine and saw another bump to 12% - double where they’d originally started.

Everyone in the team was happy: a 100% increase is a massive win.

But when a new Head of Product joined the business, they brought a fresh, blunt perspective: a 12% open rate was abysmal.

She urged a reset in expectations and set a target open rate of 30%. As you might expect, she was met with a lot of pushback -  as an outsider coming in to tell them what they can and can’t do, didn’t she understand that they’d just grinded to double their open rate?

How would 30% be remotely achievable when 12% had taken so much to achieve - the incumbent team’s frame of reference simply didn’t allow it.

“Your Uber has arrived”.

She ran a simple test.

‘Send out a notification, right now, to everyone that says “Your uber has arrived”.’

And when they did it, 55% of users had opened that notification within an hour.

They never ran that test again, but they didn’t have to. She’d just established a new upper limit that was achievable, and was able to increase her target open rate from 30% to 55%!

New data and a new perspective made 12% look weak in comparison - whereas just a few weeks earlier, it had been a massive win for Flame.

Great - what does that mean for me?

We need to have and understand the data in order to make better decisions overall - and we can apply this thinking towards plenty of places as a public company.

What about your share price?

If we move up 20% - is that good, great or still well below it should be?

Are we a $2 stock in $0.20 clothing and we need to prioritise large step-ups?

Or are we really a $0.25 stock and getting there incrementally is the goal.

What about your top holders?

Most companies just focus on their top 20 holders. Why these people? It’s usually because that is the report that is public, but is it the right list?

What about:

• Top 50, 100?
• Everyone with more than x00,000 shares
• Everyone who owns more than our daily liquidity
• Anyone who buys more than x0,000 shares on market

What would that do to your liquidity?

What about your liquidity?

Most listed companies don’t qualify for institutional, on-market, investment.

If you’re not in the top 30% that do quality, you need to focus on incremental gains (increasing retail buying) with any large step-ups as an off-market bonus (increasing HNW and institutional gains). Knowing that divide will help you make better decisions

That way, you can establish the right goals internally before communicating them externally which is key to bringing the right investors along for the journey.

Using this frame of reference as a mental check.

I like to use this as a way to work out what the real limits of a problem are and the spectrum of opportunities that exist as a result.

In the “Flame” example above, 12% was an amazing improvement from 6%.

But the uber notification that changed the upper limit to 55% revealed just what’s possible with a shift in perspective and some extra data.

Now you know what could be possible if you know what to search for, and how it can change your perspective and your plans.