With the end of free money being upon us, we will undoubtedly start to wonder more about how we spend our money. That will also manifest itself to the digital products and services we use, where we will be more keen to ensure that we feel, we get real value for our money.
But not only will we do that. We will also insist more on trying things out for free to get a sense of the value at hand, before we decide to commit our money towards a given service.
This poses both an opportunity and a threat to startups.
While the idea of offering something for free and then convert to a paying customer is by no means foreign to startups – it’s called the ‘freemium model’ for a reason – startups need to be very aware that they are not being lured into the trap of having to offer too much for free with slim prospects of ever making the conversion happen.
The nightmare scenario to avoid is one where the startup will need to deliver the full experience and go above and beyond to prove it’s worth to a potential customer only for that customer to choose something different or just stay with their current solution. That scenario will incur excessive cost on the startup with no prospect of recouping that cost, and it goes without saying that that will not be a viable model going forward.
Getting this right is a delicate balance to be sure. Because while a startup won’t want to be caught in the trap, the broad expectation on the customer side is to be delighted every step of the way when trying out a new product or service to see if it fits the customers business needs.
The most successful startups at striking this balance will be the ones who understand precisely what’s needed in order to delight customers – no more, no less – in order to turn them into paying customers. Furthermore, the best startups will understand the need to develop models of payment for their services that grows with the customers needs, keep them engaged while at the same time ensuring that the underlying business model is viable not only in the long term but also in the shorter term.
This is a delicate balancing act, and in order to get it right it will most probably require deep insights into the customers domain area to understand what’s important drivers of customer delight and what aren’t. This again will force startups to reconsider their hiring practices within customer success in order to make it less about generic skills and more about understanding the customers and what they’re actually looking to achieve within their line of work.
Ultimately the point is that not only is the era of free money and uncaring customers over. The era of ‘one size fits all’ customer success and growth strategies is also over. It will take focus, dedication, experience and insight to delight the right kind of customers going forward;
Those that actually end up paying their bills.
(Photo by bruce mars on Unsplash)