Courtesy of Secret
By Andrew Reid
May 5, 2015

Last year brought with it the rise of anonymous social networking apps like Whisper, 7 Cups of Tea and Secret. Media and analysts alike were skeptics, labeling these new apps as online confessionals filled with inappropriate banter. Backed by well recognized venture capitalists and millions in funding, many of these apps remain strong performers with Whisper alone reaching 10 million users and 7 Cups of Tea taking on the form of online therapy. The same can’t be said for Secret, which shut down last week after just 16 months after its creation.

As the press has reported, Secret made a few key mistakes: First, it targeted tech-savvy professionals, rather than teens like Whisper did. Second, Secret’s connection to the address book didn’t actually make the app anonymous. Other reports indicate Secret’s founder and CEO David Byttow closed the company because of the way people were using the app, including the spreading of malicious rumors, was not in line with what he had originally envisioned. While all of these reasons may or may not be true, I believe the largest oversight was Secret’s misunderstanding of its user base. If the app truly knew its audience, had a strong grasp on what users wanted from the app and delivered on product, it very well may have been a thriving business.

Companies are well aware that we are living in the age of the empowered customer where people have more options, are fickle and are vocal about their opinions than ever before. Businesses are working hard to be more customer-centric in order to attract new and existing buyers or users. Recent research by IBM shows that second to the CEO, the c-suite cares most about what customers think. And additional data from Aberdeen suggests that companies that collaborate with their customers to make better business decisions are more profitable.

It’s not surprising that Amazon (AMZN), Cisco (CSCO), Sprint (S) and many others are so focused on customers. While large enterprises are making it a top priority to focus on customer wants, needs and experiences, the same can’t be said for smaller companies and startups. Specifically, Secret failed to offer its users complete anonymity—a component that’s enabled its competitor Whisper to win with. It also should have been more closely in tune with the wants and needs of its relatively more tech-savvy audience, since the value of Secret to a tech community is far different than that of a teen audience.

But how can a company know if it’s making the right moves if it doesn’t actually engage with its customers for their feedback and insight? It can’t. Social media analytics is inaccurate with only 30% of users sharing 90% of the time. And customer data is reactive, showing how many people shopped, or how many users downloaded an app.

The most valuable lesson resulting from Secret’s quick rise and fall for start-ups is that they need to better understand customer behavior and preferences — and they need to do that over time. In order to succeed, start-ups have to be proactive in understanding customer preferences so that they can then anticipate trends. Big businesses are already doing this. There is no reason for start-ups not to. At it’s height, Secret had hundreds of thousands of users. If the company engaged with even a fraction of them to better learn about their behaviors, opinions and reactions to potential product decisions it could have still been in business today.

Andrew Reid is president and founder of Vision Critical, a cloud-based customer intelligence platform that helps connect companies to customers. Reid is not an investor of Secret, Whisper or 7 Cups of Tea. He also does not own shares of Amazon, Cisco or Sprint.

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