CFO World

7 ways to run your marketing department like a software startup

Koala co-founder and marketing leader, Dany Milham, shares how he's tapping growth hacking techniques and Agile methodologies to keep the mattress online retailer on a steep growth curve

In less than two years, Koala has soared up the ecommerce charts with its breakthrough in-a-box mattress featuring anti-disturbance technology, delivered to the consumer within four hours and supported by a 120-day trial.

Having chalked up $14 million in revenue in its first year, the business has since doubled its headcount and today has 40 people driving rapid expansion across Australia, New Zealand and more recently, Hong Kong. Now on the cusp of its official launch into Japan, the business is speeding up once more, stepping out of its one-product strategy with a range of pillows, a bed base, and sofas.

The ambition over the next 12 months is to have up to 20 products while maintaining agility and customer service performance.

To help, Koala’s marketing strategy and approach is equally disruptive, driven by co-founder and CMO, Dany Milham and his heritage as a software developer and data-driven agency consultant.

Over the past 12 months, Milham has taken control of structuring the organisation to “live and breathe” Agile. It’s just one of many software methodologies and growth hacking techniques he’s employing to not only drive efficiency and rapid growth, but to also ensure teams are collaborating around the common aim of solving customer pain points.

Here, we detail key ways he’s fuelling customer and growth success.  

Embrace Agile

“Being a software developer, Agile is something that comes naturally to projects you run,” Milham tells CMO. “But trying to get that across customer service, marketing, communications functions and even performance media has been a tough thing to get people’s heads around.”

But it’s vital if Koala is to maintain both its ability to service its delivery guarantee, as well as continue to experience rapid growth. Key to being Agile has been embracing weekly sprints plus retros [retrospectives], along with storyboarding.

“It’s through these that we really make sure we’re looking at what the customer’s problems are, and how we solve them every time,” he says. “What we like to do is put the focus on what are this week’s challenges and this week’s customer problems, and how do we get to solve those.”  

Harness automation

Another key efficiency driver is the automation technology powering Koala’s data-driven efforts. Milham says the automation engine was set up from the start in order to deliver on the brand’s promise of speed and ease of purchase. The group’s overarching brand pillars are affordability, speed and convenience.  

“Once you start looking into the customer data, it’s really easy to work out what triggers purchasing behaviour,” he explains. “Those pain points were decided before we launched: It had to be an amazing customer experience from landing on the website. The first impression you get from our website is speed, and all the way through to speed of delivery and last mile we have made sure there are no bottlenecks or things that will slow that down.”

In addition, Koala has moved away from a traditional website and built a Progressive Web App, claiming to be one of the first five companies in Australia to adopt it from Google.

“This turns your website into an offline-like app, so you don’t see lag or images loading, and it increases the speed of your website by 300-400 times,”Milham says. “It allows you to store on iPhone as an app, but optimises across all browsers and devices regardless of Internet speed.”

For Milham, customer experience is clearly something that should be driven by marketing. But he also believes marketing should be responsible for technology decision making, too.

“All technology is run out of the marketing side of our business because if marketing is the voice of your customer, technology needs to be driving that voice,” he says.  

“Automation has been huge, from our email funnels to our customer feedback loops. We have also built our own logistics platform, Gumleaf, which includes live tracking and capitalises on location intelligence.

“That is a massive differentiator still today. There still isn’t any other Australian brand besides Iconic doing 3-4 hour delivery who does it Australia wide. But what’s the point of focusing on 50 per cent of your customers? That’s why we delivered Gumleaf.”  

Be performance marketing nerds

On the skills front, one of the big areas of investment for Koala has been in performance marketing. To facilitate this, agency-like skills have been brought in-house, including creative design, media buying and data management.

“Doing things in-house allows us the agility to be able to change our creative or campaigns on an hourly or daily basis,” Milham says.

“For example, we now have a creative director always working on ads on a weekly basis. We have a good content website that will be pushed out soon. That’s all done in house and aligns with our SEO strategy.”

Koala is also a Facebook certified partner and tests new features both from the social media giant as well as Google.

“We picture it as building a marketing engine. We have strong targeting both on search, programmatic, display and in terms of our email. And our website changes based on how many times you view the website,” Milham says.

Having the engine also allows Koala to change its awareness focus swiftly and successfully. For example, the company undertook AM radio advertising in July, targeting an older demographic from its traditional base of millennials and those experiencing life changes, such as moving out of home, going to university or getting married.

“We’re now moving into TV and doing cheap TV after morning shows, targeting another segment,” Milham continues. “Because we have this powerful engine built, it’s almost channel irrelevant. Once we keep moving the awareness focus, regardless of channel, and plug it into the engine we’ve built, it’s the best way for us to achieve consistent growth.”  

Equally, it’s this automation engine that’s enabling Koala to expand into adjacent categories by quickly plugging in products and customers.

“We feel we have built this amazing customer experience engine that we happen to be selling a mattress through. But we don’t really picture ourselves as a mattress company,” he adds.

Co-create with customers and beta test

Having a customer feedback emphasis, meanwhile, is driving product and marketing efforts. Over the past 12 months, Koala has built up its own research team, and runs the Koala Club to constantly research new products with customers. Participants answer surveys and share insights, participate in beta testing and get first access to new and discounted products. Koala staff use this to constantly refine and decide on product features and what categories to go into next.

“We have designed our bed base to be assembled in two minutes, no screws, no bolts and four-hour delivery and that’s come off the back of direct feedback,” Milham says. “We did look at different life events but also segments of people in general. That’s again keeping our focus on what are the next 2-3 steps for our customers in terms of products and features and ensures we’re working on the highest impact stuff.”

As a case in point, Koala recently undertook a sprint on designing a sofa, investigating personas and participating in all-day workshops, then encouraging staff to shop at 10-15 different lounge companies while imagining themselves as the target persona.

“We went back, sketched and prototyped it and came to a design for what the lounge will be. Now we’re going through the testing phase,” Milham says.

Up next: 3 more ways Koala is bringing innovative software thinking into the business

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Unite product with marketing

Equally important is removing any disconnect between product and marketing. “If the marketing is again the voice of the customer, they should be intertwined with products,” Milham says.

“If you look at most agile businesses, the products normally come from the marketing side because they’re so in tune with what people want. Whereas if you’re in a business where product makes products without going through marketing, you’re not staying true to your customers and you’re probably going to be looking to build a relationship with a new customer all over again.”

Analytics gets fed back into the insights team and product team, creating a closed feedback loop.

“You’re constantly learning about pain points, putting it through an innovation principle, feeding that back into marketing and product coming inbetween innovation and the innovation requirements,” Milham says.

Having a 120-day trial also supplies teams with a constant stream of feedback on product. “When we get a return, we send a full survey, asking them why, talk about the foam, and it goes straight back into the product and marketing teams,” Milham says. “If it’s something to do with our website, or delivery, it’s marketing responsibility to make that better.

“This also makes sure everyone in the business is working towards one goal.”  

Adopt OKRs

Rather than use KPIs, Koala has introduced Objectives and Key Results (OKRs) as a quarterly filter for getting teams aligned across the organisation.

“OKRs are great at getting everyone on the same piece of paper, focusing on the same goals,” Milham says, adding that the company will set five OKRs, such as revenue, profitability, employee or customer satisfaction. “Everyone can see OKRs.

“Once they’re set, it goes department level, then to a team level. We sit down and talk about if we can reach them. For example, we have so many events coming up, but someone who manages our events has a filter that says for the next quarter, my goal is to target inner city mothers. Once we set up for the quarter, it allows people to judge based on will it affect their OKRs.”

With OKRs too, you can never fail, Milham claims. This is also because the company runs based on small team collaboration.

“We run 3-4 people teams, decentralised to a point where it’s the team fails, not an individual,” he says.  

Small teams are great because everyone is working to a central goal and they’re empowered to achieve it. Teams also change depending on the goal.

“Each team has a designer, developer if they need one and they can work on their own so they’re their own mini company with their own metrics,” Milham says. “It creates smaller groups but also more cooperation and transparency for that team to work towards a goal. And we have weekly reviews, so at the end of each sprint, we have burn down charts where we see where the effort was done and not done.”

Prioritise on ICE

Prioritisation of tasks is then undertaken using the growth hacking ‘ICE’ methodology – impact, confidence, ease.

For instance, if there’s a trade show the team is thinking about participating in, questions the group will ask are firstly, what is the impact going to be? Will the brand reach its target audience, or generate sales, or more increased awareness, and where does it sit in the funnel? This is given a score out of 10. Similarly, in terms of confidence, questions might include whether the activity can be executed and meet bang for buck. Thirdly, ease of execution is also considered.

Scores and then views in aggregate across items and the business prioritises those with the higher overall scores.

“With a limited amount of time and resources, you want something that has the biggest impact,” Milham says.  

“Being a fast-growth startup, everyone has amazing ideas. But this gives us a sheet where everyone can see what the top five will be. If there’s conflict in the room, it’s a really good tool for decision making: We just run it through the ICE method.”  

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