Beyond retention, toward outcomes

January 13, 2022 · writing

Note: this is a new idea and I’m a bit wound up about it, so this is very much a v1. Feedback and counterpoints appreciated.

Many business frameworks assume a sort of eternal permanence: lifetime value (my life?), retention (until when?), daily active users (every day?), etc.

And hey, some problems actually are forever: email, file storage, note-taking, media, collaboration, and the rest of the daily/weekly workflow.

But plenty of important problems are occasional and ephemeral, not everyday.

For example, streetwear is an everyday/forever problem, whereas a wedding dress is an ephemeral problem. Both are important, but you can wrap subscription e-commerce around the streetwear and not the wedding dress. 

Specifically, let’s consider retention and lifetime value (i.e., the guiding lights of startups everywhere).

Imagine showing up (in pain) to a physiotherapist or divorce lawyer only to discover that instead of trying to get you through a tough time as quickly and affordably as possible, they’re thinking about how to retain you forever and maximize the lifetime value. Would they go so far as to actively harm you? Probably not. But subscription tax software is certainly doing something similar by lobbying against tax reforms. I understand the business model advantages, and it is a moral hazard, at least for certain types of problems.

I haven’t yet found the ideal language for this distinction, but I’m thinking of the it as:

1. Workflow problems (“I do this every day and want it to be nicer/cheaper/faster”), versus;
2. Outcome-oriented problems (“I have an important goal and want help in getting there ASAP”) 

So here’s the tension: improved retention is is delayed outcome. One is good for the business, the other is good for the customer.

The faster a physio (or divorce lawyer) solves your issue — after which you will ideally never see them again — the happier you will be with them. (And the more evangelical in terms of referrals.)

It’s not that workflow problems have “better” retention and lifetime value.

It’s that those concepts cease to make sense when applied to outcome-oriented problems. So I think we need a whole new set of frameworks for solving this category of problems.

Historically, outcome-oriented problems has been the domain of small businesses and indie craftspeople. This isn’t “concierge-as-MVP,” but “concierge-as-caring.” 

As in: “I know you’re experiencing a profoundly important, one-time event, and I am here for you.”

Or: “I can see that you’re in pain, and I’m going to help you to the other side as quickly as is fucking possible.”

These small businesses have compensated for the lack of scale due to the fact that outcome-oriented problems tend to have higher pricing power. These problems are (1) important and (2) one-time, which creates a different sort of spending math.

For example, I used to be quite close to a deeply talented craftsperson whose business was to design and create two (two!) wedding dresses per year (per year!!). She’d spend six months on each. And this wasn’t just sewing. She would fly to the client’s house, anywhere in the world, to spend a week shadowing the bride-to-be. She’d sit in the wedding venue with a sketchpad, designing a dress that would dominate that space. She’d go out for drinks and laughs and tears to get to know the bride. She’d collaborate with the wedding planner and make 3d renderings, mockups, and prototypes. If needed, she would trash the whole thing — months of labor — when the first iteration didn’t delight. And with only two customers per year, she earned a fine living.

But she also found it impossible to scale.

That’s the same experience — with different details — of every coach, consultant, mentor, and indie creator. It’s the curse of the business model, but also the moat, because it’s what has prevented the tech goliaths from gobbling it up.

I think that’s starting to change, but in a way that will still favor the caring, authentic craftsperson. I think that they’ll finally be able to deploy their care at scale. This won’t work for every outcome-oriented business (wedding dresses would still be tough, for example), but it will work for many of them.

Specifically, I’ve been thinking of using outcome-oriented communities (OOCs?) as the cornerstone for a highly-personalized, but still scalable business, with high potential for honest upsells and customer-friendly price segmentation.

I think that it’s arguably the model for indie creators, and that lots of seemingly separate fields will converge on it:

I’m working on a whole thing about this, so I know this is a bit frazzled and half-baked, but here’s the model on my mind:

https://www.youtube.com/watch?v=BydF2Eiu2KA

If you want to help figure this out, just ping me however you like. There’s a little group of us starting to think it through. (If you have already reached out and I haven’t emailed you back yet, you are not forgotten, I’m just slow). We could use a few more thoughtful eyes on the problem. 

And if I’m dead wrong about all this, please roast me. I want to learn. Hugs.

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