Beware the start-up case study

Beware the start-up case study

The global nature of the web has given entrepreneurs unparalleled access to case studies, guides and personal stories. These are eagerly read and acted on, a few being elevated to the lofty heights of mythology. Yet many of these seem to have a fundamental flaw that is rarely addressed: in the European Union it might be illegal.

Many of the case studies of US firms we’ve seen floating past various feeds have elements that in a European context might require heavy modification to be practical. In some cases they could even be inaccessible for regulatory or cultural reasons. Yet we’ve also encountered EU based entrepreneurs who have lapped these examples up and asked how to implement them. It’s a worrying precedent that risks seeing European startups fail simply because regulators decide to shut them down.

While regulation and legislation is a complex and murky world best travelled by lawyers there are four common themes that we see in US centric case studies that Europeans need to be mindful of. 

A/B Testing

A lot of case studies high light the importance of A/B testing (and other variations), which we fully endorse. However, the design of these tests have to be carefully considered so it doesn’t fall foul of anti-discrimination regulation. This is particularly important where aspects such as price and features could be flexed to target specific ages, genders and religious or sexual orientations. EU legislation expects a 44-year-old straight atheist male to be able to buy the same product with the same features at the same price as a 23-year-old lesbian Catholic.

What this doesn’t mean is you have to market your new product to everyone in a bland, one-size-fits-all ways. A/B testing of marketing messages, advertising locations and even which features you emphasiseto what audience is still applicable, provided you don’t discriminate when it comes to providing the product. There is nothing wrong with offering a 10 percent discount to the readers of a magazine specifically targeted at women, but there is if you refuse to give the same discount to a male reader who happens to have found it.

Targeted marketing

From cold calling to SMS blasts to auto-subscribing people onto mailing lists, various tactics have been recommended on the pages of US centric case studies that might prove problematic in the EU. Data protection laws are designed to prevent unwanted messages reaching citizens, often by requiring an explicit “opt-in” to receive such targeted marketing. There are also various statutory lists that are maintained where citizens can register their details as a sign to the economy they do not want to receive unsolicited marketing, and which must be checked before a campaign is started.

Some of the detail buried within case studies might also prove problematic if not tackled in the right way. Shopping cart abandonment messages (emails sent to prospective customers who don’t complete the sales process) could be seen as unsolicited marketing if presented in one way, service messages that don’t require opt-in consent if presented in another. Automatically subscribing customers to newsletters is another common theme; yet will fall foul of EU rules. 

App sprawl

Cool new tools to optimise marketing or improve personalisation are often promoted in case studies, complete with links and free trials. Keen to keep costs down, entrepreneurs can find these compelling and eagerly sign up without fully understand the potential consequences to them and their customers. The situation is made worse by the explosion in cloud-based services where data and apps can be based anywhere in the world and presented through an EU friendly domain name. 

EU based businesses must ensure personal data is managed in accordance with data protection regulation. Included in this is a requirement that data is not sent, processed or stored outside the EU unless certain conditions are met, conditions which are often not met by non-EU startups. It is essential that before signing up to a service promoted in a case study a thorough check of how the service manages data is made.

Consumer protection

Customer service case studies have become increasingly common and can be a good source of learning. They need to be read, however, with an understanding that consumer protection is much stronger in the EU and there are specific regulatory requirements on companies to act in particular ways before, during and after a sale is made. This can include specific information that has to be provided, particular rights around warranties and guarantees or what happens if the customer complains. This can constrain the way you apply a customer service best practice, or even make it impractical.

Lessons for entrepreneurs

The pressure is on to start the money rolling in and then drive your business into profit. Case studies are a great way of short-cutting some of the learning that needs to happen, as well as sources of ideas you can apply to your own company. However, when you start to think about how to apply the lessons to your own business you must consider the regulatory environment you operate in and understand what bits you can – and must not – apply. Without this care you risk exposing your business to accusations of discrimination and mishandling personal data, all doing untold and fatal damage to your fledgling brand.