My First Hardware Startup: Rimo (10)
Five Stages of Awareness in marketing. Source: businessofhearing.com
[ This series of articles is about my startup company, Rimo, from the conception of the idea, recruiting a team, producing prototypes, to fundraising. ]
The redesign with Hatch Duo took only three months in total (April 2019 to July 2019). The next two months are dedicated to marketing, with the goal of fundraising on Indiegogo in October. Marketing is crucial because the first ten days of fundraising on the platform are very important. If the fundraising starts strong, it's easier to get featured and attract media attention, leading to more purchases. Conversely, if the start is weak, it becomes increasingly difficult to gain traction, leading to failed fundraising campaigns and fewer buyers. Therefore, most fundraising projects start advertising months in advance, offering early bird discounts. Interested individuals who see these ads can submit their email addresses to receive updates and reminders about the campaign, allowing them to take advantage of limited-time early bird prices when the fundraising begins.
Why Indiegogo? At CES, we met people from Indiegogo who were interested in our product and willing to help us with the fundraising process.
The marketing company we found was recommended by people from Indiegogo. Typically, the marketing company conducts market research to determine not only whether the product will sell but also who is likely to buy it, based on factors like age, gender, and interests. After completing the market research, they target advertisements to specific users. Without this research, ads would be less effective, like targeting elderly individuals unfamiliar with electronics.
How is market research conducted? By running targeted ads on Facebook and Instagram with various content. Some ads highlight Rimo's Li-Fi technology (communicating using visible light and screens, though "Li-Fi" might be misleading), others emphasize convenience, and some focus on information security.
Rimo ads that emphasizes Li-Fi techonology
Rimo ads that emphasizes the utility
Advertisements usually include a link for measuring the effectiveness. The click-through rate (CTR) indicates the likelihood of clicking on the ad after seeing it. Rimo's average CTR is only 2.10%, meaning only 2% of viewers click on the ad. Ideally, fundraising ads should have at least a 5% CTR. Once users click the ad, they're directed to a website with a simple Rimo introduction. Interested viewers can submit their email addresses to receive fundraising updates. These email addresses are crucial, as individuals willing to share their personal information for Rimo updates likely clicked the ad intentionally. However, providing an email doesn’t guarantee a future purchase. After submitting their email, users are directed to a webpage where they can pre-order Rimo at an early bird price by entering their credit card information with a $1 deposit. Viewers who reach this stage are highly likely to purchase the product.
Rimo's market research cost $1,436, resulting in 183 email submissions and three credit card entries. The cost per email (Cost per Lead, CPL) is $7.85, and the cost per credit card submission (Cost per Reservation, CPR) is nearly $479. This means advertising expenses to sell one Rimo are close to $500. According to the marketing company, ideally, only 20% of a product's cost should go to advertising. For a $100 Rimo, the CPR should be at most $20, far less than $500. The high CPR suggests the product might not be appealing, as the low CTR leads to high CPL and CPR. In simple terms, low ad click rates result in too few email and credit card entries. Rimo's CPL of $7.85 is nearly four times the marketing company's goal of $2.
Rimo marketing research results
The cost per credit card info acquisition is $479
The cost per email acquisition is on average $7.85
Some might think low CTRs are due to poor website design, causing users to leave without submitting their email. This is partly true, as only 23.1% of visitors submit their email, meaning one in four visitors does so. However, this rate is actually decent, as the marketing company aims for 20%. Therefore, the marketing company concludes the product isn't appealing to the general public and suggests targeting business users instead. The company also finds Rimo is more attractive to middle-aged users, with the lowest CPL in the 45-54 age range. Ads emphasizing Li-Fi are the least appealing, as people are unfamiliar with the term, while ads highlighting ease of use are the most attractive. It’s possible that older users find video calls more challenging, making ads focusing on simplicity most effective for this age group.
Rimo is more attractive to middle-aged users
Based on the above market research results, the marketing company believes that Rimo has limited appeal to individual consumers and recommends developing a business version of Rimo for B2B (Business-to-Business) marketing. However, since Rimo was already completed, we decided to move forward and launch it on Indiegogo at the end of 2019. We deliberately set the fundraising goal lower to make the completion percentage look better. Although in the end we reached 100% of our fundraising goal, it was far below our actual target, and the Rimo project ultimately ended in failure.
Discontinued Facebook Portal
Facebook Portal, a similar screen device launched by Facebook in 2018 that focuses on facial tracking video calls, was also discontinued in 2021. This seems to validate our marketing company's conclusion that this type of product has limited appeal to the general public. I believe the root cause of the failure is that most people do not see the fixed-angle issue in video calls as a problem or feel that 360-degree video might be cool but unnecessary. Without a need to address, there is naturally no demand for products like Rimo or Facebook Portal.
Five Stages of Awareness
Rimo's marketing challenges can be described using the "Five Stages of Awareness." These stages categorize consumers based on their awareness of the product. The first stage is "Unaware," where people do not realize or notice the fixed-angle issue in video calls, which includes almost everyone worldwide. Some people might notice the problem, like those who often cook while video chatting and frequently need to adjust the camera view. These individuals are aware of the problem but haven't thought much about solutions, falling into the second stage, "Problem Aware."
The third stage is "Solution Aware," where people know the issue and are aware of products that can solve it. They might actively search for solutions on Google. The fourth stage is "Product Aware," where people know Rimo can solve the fixed-angle issue, have an impression of Rimo, and might mention it to others. The final stage is "Fully Aware," where people fully understand Rimo, know the price, have researched it, compared it with other products, and are ready to buy.
In Rimo's case, the majority of people are in the first stage ("Unaware"), with a few in the second and third stages. The marketing challenge for Rimo is to use advertising to move most people from the first stage to the fourth or fifth stage. We spent over $1400 to obtain only 183 emails (representing the fourth stage, aware of Rimo) and three credit card entries (fifth stage, ready to buy Rimo). If Rimo were a mobile phone, marketing would be easier since most people understand what a mobile phone is for and thus are in the third stage ("Solution Aware"). Converting them to the fourth or fifth stage would be much simpler.
Due to the fundraising failure at the end of 2019 and the subsequent COVID-19 pandemic, the Rimo product was discontinued. I want to thank Eric, Winnie, and Ulysses for their support. They worked with me on Rimo for years without any salary. We are also grateful to our friends who helped us with videos, fundraising, and publicity.