Your customer is the bottom line

There are many approaches towards building a healthy startup business that will take off, grow end endure during both good and more challenging times. But honestly I cannot think of a better one than to treat your customer as the bottom line.

The math behind it is simple: Every time you delight a customer by solving her problem and giving her a delightful experience more than worth the money, she’s paying, she will stick around. And not only that. She will also be advocating your product and brand to those she knows or comes in contact with who are experiencing the same sort of challenges as the ones, you helped her solve in the first place.

When I think about it there is actually no real viable long term alternative to this approach. Of course there are numerous other ways you can optimize for growth, gain initial traction and stretch your available funds to last a bit longer, but over the longer term? Don’t think so.

The problem with a lot of more tactical approaches towards building your bottom line is that they are inherently short term. They may put a band on the sore or enable you to play through the pain barrier, but they don’t fundamentally cure or fix anything.

You will always be in the need to come up with new approaches, new tricks, new creative ways of doing things, and chances are that the positive effects of these things will vane over time. And then you’ll really just be playing catch. All. The. Time.

So focus on the customer and delighting her. Make that the primary outcome of everything you do in your startup. If you’re looking at doing something that cannot be directly related towards a positive contribution to this outcome, think hard about whether you need to do it. Be tough on yourself. And eliminate all necessary distractions in order to focus on – you guessed it – delighting the customer.

If you’re looking for proof that the approach works, look no further than to Amazon and its founder Jeff Bezos. He is notorious for always wanting to put the customer and customer satisfaction first. Often to the extreme and – sometimes, I would argue – to the detriment of his own team. That’s more than dedication. That’s obsession. But the results speak for themselves.

Of course your not Jeff Bezos, and your startup isn’t Amazon. But there are still things that you can do in your everyday operation to put the delighted customer left, front and center of everything you do.

You can start by really taking customer success and support seriously. Stop looking at it as a support feature, you need to have but don’t really invest in. Invest heavily in it. Put some of your best people there. Give them the mandate to truly listen to customers and feedback, and allow them time and space to turn that feedback into thoughtful suggestions for things your startup can do on the product side in order to further delight customers.

That’s not to say that you should just go with any whim and whichever customer yells the highest about something they may think they want or need or something they want you to remove. Far from it. But it is about keeping an ear to the ground and maintain a balanced approach to listening in that will help synthesize the most crucial nuggets back into both your product and everything surrounding it.

Your product will most likely be all the better for it. It will delight customers more and help attract new ones. And it will fuel the success of your business and your bottomline in ways that nothing else can.

(Photo by saeed karimi on Unsplash)

(In)efficiency rocks

Maybe the headline is a bit controversial, but let me try to explain what I mean.

Oftentimes I see products that are super efficient in who they are targeted towards. You can see from the product and the words being used to tell about it that the team behind has been guided by a very clear idea of who they were building the product for.

All that is good. In some respects. But potentially limiting in others.

Of course it’s great to have alignment with who you are solving a problem for as it should increase your chances of getting Product Market-fit for your product. The flipside however is that that exact approach has a risk of you being limited in your thinking and thus in what your product could do and become, if you had a bigger perspective.

A lot of this has to do with setting the right strategy, and even though many will claim that they have had thoughtful strategy processes, it is also rather safe to say that not all people who work on developing strategies are great strategists.

If for instance the people in charge of developing your product strategy are very minded on a specific outcome, chances are that they will build the plan that suits their purpose and delivers on what they wanted in the first place. And they might very well not be the best or most profitable plan.

Thus what you should do is first of all to ensure that your strategy planning has the right source of altitude from the beginning, so you really get the broadest possible view of the horizon. And then you should go about being inefficient in building your product.

Now, that sounds pretty horrible, so what does it mean?

Essentially it just means that you should resist the urge to have a specific, narrow outcome in mind and build your product towards that. Yes, you might be able to get a very efficient process going towards that goal, but the goal itself may well turn out to be limiting.

Instead by taking a more inefficient approach you’re being open towards outcomes. Your mind becomes broader, and your thinking in terms of how your product can be applied and for whom will be bigger and ultimately have greater chance of profitability. Provided of course that the features and value proposition of the product itself is still razor sharp.

(Photo by George Pagan III on Unsplash)

Time your own luck – now

Getting a business off the ground of course has a lot to do with the idea and what pain you’re looking to solve for customers. But it is also about timing and luck.

Some people say that you can make your own luck. And perhaps that is true. To an extend.

What you certainly can do is look around you at what’s going on. And if you look at the world right now, there are at least 3 good reasons, as I see them, why this might be a great moment to time your luck so to say and venture into something new.

First of all, a lot of incumbents in different industries are busy elsewhere handling the fallout from the pandemic with disrupted supply chains, increasing prices on goods, lack of talent etc. They’re way to busy with that to innovate in earnest themselves let alone keep a keen eye on what you’re doing.

Second, there are a lot of change afoot after the pandemic. New trends have emerged, new patterns of behaviour – some of which we still need to see the resilience of after the pandemic eases, mind you – have got on the radar etc. And with that new pains, needs and demand for new, innovative solutions that you might be able to provide.

And third, there is the work-from-home thing. While some people yearn to get back to normal office life, there are also millions of people out there who feel the opposite. They are ready for a change. Maybe even for a move into entrepreneurship. So when I said above that incumbents might have a hard time finding the right talent, it could be an entirely different matter for you.

So what are you waiting for?

(Photo by Michał Parzuchowski on Unsplash)

Beware changing models

Can you start out with one type of business model and then transition to a new one without facing huge challenges?

The question is a valid one. And the answer is probably “No” in most cases. And it is worth exploring a bit further, as it’s often a topic that comes up when I meet with founders.

The issue with wanting to change the business model is that what I need and want as a founder and business owner is not necessarily the same as my customer needs and wants.

Let me a simple example from my own life as a customer:

When I order a case of wine from my preferred ‘wine pusher’, I expect it to be an interesting wine from a wine maker, I would otherwise never have heard of and at a reasonable price. Like I am used to.

I do not expect to get an offer for a wine they have produced themselves together with a chef, I have never heard of (even though it probably says something bad about me that I don’t). As I got the other day. And immediately decided to decline.

Why?

Because it broke the fundamental ‘contract’ I have with my regular supplier: You find regular wines from little known places that I can then get a good offer on. That’s the model, I have signed up for. You DON’T try to introduce your own brands into the mix, because that deviates from our ‘contract’.

Could I be more forgiving here and just try it out? Absolutely. And I fully expect that many of their customers do so. Otherwise they probably wouldn’t do it. But I think it goes to show how challenging it can be to make changes to your fundamental value proposition and business model.

I think you need to be very aware of this. Because while it may be tempting to try to change your business model to introduce new revenue streams, cut costs, increase sales, boost your bottom line or whatever, you won’t succeed in it if you’re out of sync with what your customers are expecting.

Don’t ever take even your loyal customers for granted.

(Photo: Pixabay.com)

Records or music?

“Are you in the records industry or the music business?”

Maybe it seems like a banal question, because the two at face value sound like one and the same.

But they aren’t.

The latter is about the value proposition. The former is about the mode of delivery.

The key thing to consider, when you’re looking to deliver value to customers, is your key value proposition. The music so to say.

You then deliver that through whatever channel is best suited – for your customers. That means that you never ever get stuck in an insistence that you deliver it in a certain way, take it or leave it.

In other words: You don’t insist on delivering a record, if what the customer wants is the single delivered through a different channel, medium or packaging. You just do whatever the customer says and what fits into the customers habits and lifestyle. Period.

Sadly, a lot of legacy companies insist on being in the records industry rather than in the music business. They do so at their own peril. And they are – and will be – paying a price for it.

Don’t be like that.

(Photo: Pixabay.com)

Challenge the status quo

What is the one thing driving startup opportunity in the post-pandemic era?

The willingness of everybody to challenge the status quo and be open to new ideas, new ways of doing things and – with that – new products and services from new and inspiring companies with strong value propositions.

Now, what is the status quo?

Actually it is two things. And most of us are eager to leave both behind.

There is the status quo of the pandemic lockdown. Of course we want to be rid of that and get our freedom back.

But there is also the status quo of what was before the pandemic, and where we have had more than a full year contemplating what if anything that was before we would like to change. And how changing things are actually – even if forced by a pandemic – (by and large) less painful than what we imagined it to be.

Look at it this way:

The barriers of “that isn’t possible” or “I don’t need that” have been lowered by the past 12+ months of Covid-19.

If that isn’t a signal of opportunity to reimagine and reinvent things, I don’t know what is.

(Photo: Pixabay.com)

Jumpstart your insights

When we try to figure out what the jobs, pains and gains of our future customers are, it is tempting to do all the research from scratch.

But maybe you don’t have to. Maybe there are forums where you can get a pretty good feeling, before you spend a lot of time doing surveys, interviews and observe the behaviour of your customers.

One place to look is in competing products. Especially the ones that seem to do rather well.

Get your hands on them, try them out and reverse engineer the problem statements that lies behind the form and feature(s) of the product.

What is the core feature of the product? Does it cater to a specific target audience? Which? And why? And what is the core assumption behind how it’s done?

If you spend a bit of time reverse engineering the competition for jobs, pains and gains, you will probably get a pretty good idea about what the real jobs are that determines whether a customer buys and uses said product or not.

And then it becomes a question of your future product doing it better, cheaper or whatever. But preferably better since that will serve you well, when you start to focus on retention.

After all you shouldn’t make it as easy for another competitor to snatch away your customers from you, as it (perhaps) was for you, should you?

Another place where you can look for insights into the jobs, pains and gains of your future customers is social media. I know for a fact it can be a pure gold mine for insights into what needs, your product could serve.

The great thing about social media – and especially more niche oriented groups – is that people are unfiltered. They will be looking for advice and guidance, and the more they look for it, the bigger a felt need it is for them.

That is not to say that you should do everything, a community tells you to do. Of course you shouldn’t, and often the conversation ventures in a lot of different directions.

But if you take the time to look for signals – tone of voice, mentions of a specific problem again and again etc. – there is actually a ton of things, you can take away with you.

That should set you off to a good start before you start doing a lot of classic user and market research too.

(Photo: Pixabay.com)

Theory vs reality

Theory is NOT always reality.

Case in point:

A politician might think that incentivizing public employees through rating and a cash bonus is a great idea and will lead to better outcomes for all; not least those who are at the receiving end of the service and says thanks by providing a top rating.

But a public employee knows from experience that such a system will create a stampede towards the citizens who are nice, no hassle and provide the better ratings leading to the higher rewards, while those in need who may be cross, downright angry, unable to rate or just provides a poor rating will risk being left behind. Because in a rewards driven system no one (or at least very, very few) wants to pay the price of caring without getting the reward.

Right there is the difference between theory – or ideology of any sort – and reality.

For that very same reason it is super important not to be stuck in an ivory tower thinking you can outsmart reality.

You can’t. Your great ideas will most likely fail. It goes for ideology and politics, and it goes for business and startups as well.

But you can navigate reality. But it takes respect for reality. And that is achieved by immersing yourself in it and get your hands dirty, before you try to figure everything out.

(Photo: Pixabay.com)