One of my great mates loves art and has used Art Money to buy some of her newer pieces. She was gutted when it collapsed in June. I am sure they had a full database of customers who equally sad.
For those that don’t know, Art Money was an Australian fintech specialising in ‘buy now, pay later’ services for art purchases and sadly in June announced a suspension of operations after running out of money – that old chestnut! Despite having raised $100 million in debt finance and partnering with thousands of galleries worldwide, Art Money struggled to maintain profitability in the face of rising interest rates, a tighter economy, and changing market demands.
[$100 million! I was only talking this morning that when businesses are unfunded there is no room for mistakes, maybe when you are over funded it happens too!]
Their closure is a stark reminder that while an innovative product can propel growth, it’s customer discovery, especially during tough times, is what will help sustain it particularly when times are tough.
So, what have other businesses done in a similar situation?
1. Adapting Your Business Model to Customer and Market Realities
One key insight from Art Money’s collapse is the importance of business adaptability. When market conditions shift, so do customer behaviours and preferences. Regularly engaging with customers allows businesses to spot early signs of change and pivot their offerings to match current demands.
2. Financial Planning Meets Customer Insights
The art market’s contraction meant that fewer people were willing to make discretionary purchases, including art. Art Money’s reliance on consistent customer spending left it exposed when buying behaviour changed. Customer discovery is not just about what customers want; it’s about understanding when they’re likely to buy. Assessing customer readiness and adjusting offerings based on financial realities can be crucial to staying afloat during lean times.
3. The Importance of Market Timing in Customer Discovery
Luxury or niche markets like art purchasing have fluctuating demand. For Art Money, aligning product offerings with market timing could have been a game-changer. Customer discovery should include market timing. Knowing not only what your customers want but when they’re most likely to act can help align your offerings with peak demand cycles, which is especially important in fluctuating markets.
4. Re-Evaluating Your Customer in Times of Economic Change
When economic landscapes shift, so too does your customer base. Economic conditions can change who your primary customer is. Businesses that actively re-evaluate and redefine their target audience in response to economic shifts are better positioned to find new pockets of demand, even during downturns.
5. Maintaining Customer Engagement in Lean Times
Even if customers weren’t actively buying, engaging them with art-related content, financing tips, or insights into the art market might have kept them connected and ready to act when conditions improved. Customer discovery isn’t only about making sales. Sometimes, it’s about maintaining the connection, understanding what keeps customers engaged even when they aren’t buying. Building this connection can increase brand loyalty and prime customers for future purchases.
Continuous Customer Discovery as a Lifeline
Art Money’s story is a great example about the dangers of sticking to a single business model without adapting to the changing needs of your customers. By staying close to customers, startups can gain insights that not only inform immediate strategy adjustments but also foster resilience in the face of market shifts.
For any founder, the lesson here is clear: Innovation begins with understanding your customers, but sustained growth depends on continuously rediscovering them. Regularly revisit who they are, what they value, and how they respond to external pressures because customer discovery isn’t a one-time effort. It’s an ongoing commitment to understanding and serving your customers, come rain or shine.