KavyaDon’t talk about pivot yetMore about what we learned from customers Emphasize that customization thing was really cool
Kavya Desai Devon Chen Emmiliese von ClemmPrinceton University, Lean LaunchPad December 12, 2012
Initial Idea: DIY Cookie Cafe• Baking as bonding and entertainment for family and friends• Assumptions- People appreciate: • Dessert, more specifically cookies • No mess/cleanup • Customization• Warm, freshly baked cookies provide a sense of love• Cupcakes recently experienced a boom in popularity; could cookies be next?
Feedback: Customer Interviews• Tested various value propositions through conversations and surveys: • Baking as an activity: families with children are somewhat interested, but low among other groups • Hassle free, no mess: not as highly valued as expected; many consider the trip to be a hassle • Customization: Customers got really excited about customization!
Trip to NYC• Explored dessert scene in NYC and learned about their business models• Learned about cupcake trend• Branding, individual portions, atmosphere, focus• Georgetown Cupcakes, Baked by Melissa, Levain Bakery, Insomnia Cookies, Rice to Riches, Molly’s Cupcakes, Babycakes
Key Interview: Loren Brill• Founder of Sweet Loren’s• Product: All-natural, frozen, ready-to-bake cookie dough and brownie batter that contains the finest unrefined ingredients• Target Audience: Upscale grocery store customers• Insights: • Her customer discovery process and pivots • Co-packers • Simplicity of break and bake dough • A need for packaging that jumps off a shelf
MVP: Website• Testing: Web Channel• Allowed for online ordering• Results: • Limited programming experience/time prevented us from having a more trustworthy looking site • Had trouble getting people to pre-order cookies for our Demo Event • Moving forward, a more interactive online ordering process is key
MVP: Demo Day• Testing: Physical Channel• TapRoom Café, Campus Club • 8 hours long • 130 cookies sold • $145 in profits • Price: $2.50 per cookie• Positive feedback on customizability, deliciousness of cookies• Negative feedback on wait-time• Complicated operations
Key Interview: Modern Cookie Co. • Failed customizable cookie business in northern California • Insights: • Conveyer belt oven • Minimizing wait time is critical • High foot-traffic location is necessary • Barriers to marketing cookies as “healthy” • Need for consistency in product offered
AB Testing• Tested different value props through 4 campaigns • Facebook Ads • Google AdWords • Splash pages• Indicates out customer acquisition costs will be high • Low click through rate for all • High cost per click • Very few sign ups• 251 page visits to 4 pages between Google & FB Ads• Caveats: • Customizable cookies are a new concept • Very low word count: other methods may be more effective
AB Testing: Advertising Campaig 1 2 3 4 n Company Cookies to Cookies Cookies to The Cookie Name Crumbs to Crumbs Laboratory Crumbs (Crowdsourced) Order 2 Dozen ½ Dozen 1 Cookie 1 Cookie Size Min CTR .25% .22% .28% .26% CPC $.52 $.42 $.41 $.52 Campaign 1 2 3 4 Advertising Holiday Convenienc Customizability The Cookie Angle e Laboratory CTR .0063% .0043% .0049% .0073% CPC $.81 $1.27 $1.01 $.79
Cost Analysis: Highlights• Human Labor: • Web Developer ($10,000 retail vs $50,000 web) • Employees ($85,000) • Insurance ($7,200)• Major fixed costs: • Utilities ($7,800 retail vs $10,000 web vs $16,000 both) • Commercial ovens ($2,000 retail vs $10,000 web) • Freezers & Fridges ($3400 retail vs $5,200 web)• Variable Costs: • $0.98 per cookie (retail), $0.33 per glass milk, $1.30-$1.58 per cookie (web)
Customer Flow Customer Places Order Online Customer Orders in Key Activities Person Receive & Organize Order Mix Dough with Mix-Ins Shipping Bake Cool and Notify Customer Package for pick-up Delivery Service
Revenue FlowOverheads (Utilities,Rent, Salaries, etc.) Pay for Ingredients Pay for Suppliers of Mix- Doughs Co-packer Ins, Beverages, Pay for Pay for ShippinServes g Shipping Company CookiesCookies Delivery Service Customers Pay for Delivery (i.e. Seamless)
Is this a Business?• Great potential: Overall concept, customer interest, value propositions, and partner possibilities• Considerable hurdles: High start- up and fixed costs, wait-time in retail channel, driving web traffic• YES, this is a business. Roll-out needs to be strategic though.
Is this a Business? • Start web-based with a baking facility partner • Cut major costs of rent and equipment • Focus on developing a marketing campaign, branding, and a great site for sales • Move into a retail location that doubles as a processing facility • Split time between operating physical channel and web channel out of the same location • Use pre-existing website to facilitate sales • Both channels can grow off each other in terms of building brand • Depending on performance, invest more in web, retail, or both. • If web channel is overflowing with orders, invest in processing facilities and hire more employees to fulfill orders • If retail location is building popularity, consider franchising into similar locations, malls, etc
Moving Forward: Next StepsImmediate:• Establish critical partnerships • Baking facility to use in part-time for web channel • Co-Packer• Build a fully functional, aesthetically pleasing website • Online ordering capabilitiesNext Steps:• Explore different levels of customizability- crowd-sourced “cookie of the month” flavors• Build a mobile app