How Leveraging Consumer Data Can Guide You
In the startup world, pivoting can make or break a company… but this isn’t new news. For Cogo Labs, staying nimble and leveraging consumer data to inform pivoting decisions have always been parts of their strategy. To get a more in-depth look at how growing companies pivot according to existing, consumer data, we sat down with Derek Bennewies, co-founder of incubating Cogo company Contrast. Read on for the full interview.
Q: Contrast is a direct-to-consumer company built on Cogo Lab’s tech and data platform. What else do you, your company and your product(s) do?
A: Contrast helps people make better financial decisions. We build software that helps people understand their financial situation, make more informed spending choices, and form better financial habits. Right now, we have a mailing list with a curated selection of personal finance content. This is called SmartSavings, a super simple way to create a personal budget. And BuyLater is a web app we offer to keep track of the things you want to buy.
Q: What did the process look like in deciding on Contrast’s market direction?
A: We actually started off looking at digital wealth management, or “robo-advisors.” Examining some of the players in this space with the competitive intelligence data at Cogo, we thought we had identified some common weaknesses in their user acquisition strategies that presented us with an opportunity to act as a lead generator. So we put together a simple site and started driving traffic with Cogo’s tools. Basically, our approach was to start looking at competitor data, develop a hypothesis, and then answer that hypothesis by generating the data ourselves, on our own site.
Q: Is there one particular moment in Contrast history where consumer data informed an important pivot for the company?
A: We took a few shots on goal in wealth management, and we just weren’t seeing the kind of engagement numbers we wanted. Around that time, we came across a study by The Federal Reserve that found that nearly half of Americans have less than $400 in savings, which is terrifying! We also saw a few fintech companies via our competitive intelligence that were doing really, really well by focusing on the basics: automating savings, reducing spending, that sort of thing. When we put all of that together, we realized that we would be a lot more interesting to the population if we focused on the things that come before you get a financial advisor (i.e. just getting people to spend less than they make). After testing out a few landing pages and marketing campaigns with Cogo tools, we could see in the engagement data that this was the correct conclusion. So that’s the space we’re playing in today.
Q: How has pivoting changed your relationship with data over time?
A: We’ve learned to be more holistic in our use of data. We have some cool data sources here, but no single source is enough to inform everything about how you build your business. For example, now we consider our own site performance data as not just the result of some structured experiment, but also as inspiration for the next iteration. In some cases, we’ve also found that publicly available data (e.g. market sizing, household savings, etc.) can complement our proprietary data nicely. The marginal cost of considering another data source is often low, and can really help you better understand a market.
Q: Are there any other valuable things to keep in mind when looking at consumer data?
A: Be skeptical. There’s no perfect data source. Literally every consumer-oriented data set you can find or build will have some sort of bias. Maybe a competitive intel source will consider only one demographic or user type, for instance. On your own site, every traffic source is going to be different, so generalizing from a single one is dangerous. Having multiple, uncorrelated sources can go a long way in understanding and correcting for bias.
Q: Any final thoughts on why a pivot is important?
A: The idea is that pivoting is the difference between failure and success, right? But beyond the obvious, I think if you’ve done it at the right time, you’re going to be confident that you’ve learned something, you know what won’t work, and now you have this clean slate for the future. It’s definitely a stressful thing to go through, but I think once you commit to pivoting it can be refreshing too.