Can churn be good?

Churn is inherently a bad thing for any startup. You don’t want to lose customers or revenue. At least not in the 99% of the cases.

But churn can also be spun into a good thing.

Churn is an opportunity for you to learn, what you can improve and do better. Because by churning, customers are essentially telling you that you’re not bringing enough value to them.

Hence churn is an opportunity for you to think about how you can deliver more value going forward. And start doing so. But you of course first need to understand why they churn – really understand it:

If they have chosen a competitor, figure out why? Is it a matter of features? Flow? Price? Or something completely different?

Should the churn make you reconsider your roadmap priorities? Or how you market and sell your product so expectations are better aligned, and you get better at understanding who the right and best customers are for you?

Etc.

There are plenty of opportunities to learn from churn, and you should. Unless churn happens because a customer goes bankrupt, each churning customer is an opportunity to understand the market, the customers and your value proposition to them better.

So take the time. Don’t neglect churn or accept it by relentlessly focusing on growth in new customers to compensate for the customers, who leave. First of all, it will be an issue when growth becomes harder to sustain. And second, and most importantly, you miss out on an opportunity to do better going forward. And reduce future churn.

(Photo by Junseong Lee on Unsplash)

Who are you selling to?

Let me admit it straight from the bat: I have an overwhelming fondness for business models that addresses the users wallet directly.

Not in terms of forcing them to splash the cash but in terms of delivering products, services and experiences that solve meaningful problems and challenges to people, which they are both willing an able to pay for.

Having said that I of course also realize that there are product and services, it makes little or no sense to sell to others than enterprises or even public customers.

But there is another consideration I think is important to make, when you’re thinking about how to get your product or service to market:

Is your product or service one that grows bottom-up or one that will only get a decent chance, if it’s implemented top down?

Normally, we would probably think that products coming from below would have the greatest chance of being successful. I think this is true to the extend that the user experience is superior, and the product is solving a problem that is well recognized by all by at the very least being more efficient at it.

But what if the product or service requires a ‘leap of faith’ in order to be given a chance and get an opportunity to prove its real worth in delivering value to users?

Here, perhaps, it would often be better to go the entreprise route; find the internal champion of whatever problem or challenge your innovation is looking to address, making him/her see the light and how they could benefit from your product or service, and then let them buy it and roll out across the org.

The more new – and not in a consumer-friendly ‘shiny thing’ – kind of way a product is, the more I think you should bet on this enterprise approach. People can be unforgiving after one or two tries, and the corporate culture of moving slow but getting there in time might end up serving you well.

I guess, my overall point is this:

Look at your product or service and get crystal clear on the level of buy-in, it needs in order to be successful in a B2B context. The more buy-in it needs, the more patience you will need, and the more you should probably go the classic enterprise sales route.

(Photo by Hunters Race on Unsplash)

Dealing with lost outcome

A couple of years ago I had the great pleasure of helping an interesting startup in the data management and analytics space get off the ground.

Part of that was to help them pitch to early angel investors in order to get the first funding. And one of the international investors we talked to had a point that stayed with me:

“To me this just looks like data porn”.

What he meant was: A lot of numbers and statistics but very little real actionable insights that made sense to him. And which he thus doubted would ever make sense to future customers.

His point came back to haunt me when I read a statistic claiming that 80% or so of SMEs really don’t know how to capitalize on their data, while reading another place that 90% of the companies providing the data management and analytics tools at the same time think they are delivering a killer user experience that just unlocks value at the click of a button.

There is something that is disconnected here. And I have a hunch what it might be:

The ability for SMEs to identify the outcomes they’re looking for – put them into words – coupled with an inability of the providers to think in terms of outcomes rather than inputs and analytics, when they design products.

It’s like one party is from Mars, the other is from Venus. And somehow they just can’t find each other.

In all fairness, I don’t think this is only true with data management and analytics. I think it’s a more generic point across B2B products and services; that startups and vendors are so focused on developing great products based on their own merits rather than developing great products that helps future customers get to the outcomes they are looking for in the easiest and most painless way possible.

So what could a remedy for all this be?

Communication. Built-in communication. A built-in communication and story telling strategy so to say that informs how the products are structured, the user experience defined and the value being delivered to the customer in such a way that they will not for a second doubt they have chosen the right product to help them get the outcome they have set for themselves.

A lot of things are happening in parallel in product development today, and many of them are good. But I think they lack the glue of the overarching story; the keeping track of the ‘Why?’ of it all when it comes to delivering value and outcomes including all the bigger and smaller sanity checks, you should include along the way.

Great communication could be that glue.

Great communication could tie prioritization of the roadmap with the user experience, the optimized flows and how you present the product and it’s core features to products. Great communication should be the rocket fuel of the growth story as well and dictate how the product is communicated, being sold and serviced afterwards.

Because communication is not only about PR, press releases and coming up with the creatives for the next campaign. Communication should be a key component of both product, sales and company strategy.

So people like the business angel from above and the customers, he was thinking of, instinctively ‘get it’ because the story points directly towards achieving a highly valuable and desired outcome.

(Photo by JOSHUA COLEMAN on Unsplash)

Saboteurs

We’re so used to innovating and building products and businesses for people, who have a need for what we are looking to go to market with that we completely forget about the other people.

The saboteurs.

While I totally understand why we never think about those, who don’t wish us well – it’s not the kind of thing you want to spend a lot of time thinking about – thinking about them may actually hold some merit.

Let’s think of it this way:

What are the scenarios where someone would aggressively try to detract other people from using your product?

And more importantly:

What can and should you do about it to try and counter it?

Maybe the answer to the last question turns out to be “Nothing. Haters are gonna hate.”

But just maybe it could spur a couple of twists to your products and services that not only deter the saboteurs from going crazy on your product but actually also ends up delighting your loyal customers even more than they already are.

If that is an option, wouldn’t it be worth spending just a little time reflecting on who your potential saboteurs are, and what you could/should do to counter them?

(Photo: Pixabay.com)

The power of a (new) story

Back when I took the Prof G Strategy Sprint with Section4, one of the things that stayed with me was just how powerful a great story is in shaping entire companies.

I was reminded the other day, when I had a meeting with a seasoned communications professional, where we talked about what great people with a background in communications have to offer a startup board of directors.

The answer is: More than you would think.

Because aside from offering advice and help out on the PR and communication strategy and associated activities, what they can also help do is reimagine the entire mission of the company.

Now, why would you ever want to do that, you may ask?

Simple, really.

When you start out you may have a rather narrow mission in mind. You’re pretty set on the problem, you’re looking to solve, and who you’re solving it for. If you’re good (and lucky) you will have an excellent North Star guiding the first part of your startup journey.

But what happens when you have got that first product in market, and you have started seeing some traction? Do you focus on doubling down and getting even better at delivering your value proposition to that particular client segment, or do you start looking for ways to expand your footprint into new segments?

If you decide on the latter, it will most often take reimagining the vision. If fx you’re a MedTech company looking to serve a particular niche of hospital clinics, you may wonder if you could go direct to consumer – or direct to patient as it would be in this case.

That would entail a new storytelling. A broader vision and mission that can still be tied down to the original purpose behind the company so as not to alienate anyone on the team in process.

Done right this re-crafting of mission or purpose, if you will, could unlock the journey towards new value propositions, new products, new revenues – and new highs for the startup.

And having someone close to the company – eg on the board or an advisory board – with deep experience within communication could be the ideal catalyst for that sort of transformation.

(Photo: Pixabay.com)

The negative value proposition

Is creating value as a startup with something new always inherently positive for everybody concerned?

Maybe not.

What if part of the value creation you offer is to help take away the uncomfortable pain of someone having to confront someone else with a problem, the first one really just want to be rid off? Is that a positive for everyone concerned?

Case in point:

If a healthtech startup as part of it’s value proposition offers doctors the ability to spend less time with patients, is that a net positive for all? Why it may help drive down cost for the health sector as such, wouldn’t it be a loss of value instead to a lot of the patients affected by being less able to actually meet an expert?

I am not saying here that it’s wrong, and you shouldn’t try to deliver that kind of value. I am just suggesting that what you may offer as a positive value to one set of stakeholders might be seen as the opposite to another. And you need to be aware of that and own up to the fact that that is what you (also) do.

Especially so if you’re dealing with vulnerable people.

(Photo: Pixabay.com)

Cakes, taxes and value

I come from a small town in the Western part of Jutland and aside from red sausages (don’t ask) I was brought up on really good, traditional bakers bread (and it showed).

For the same reason, I have always found Lagkagehuset to be almost a profanity.

I mean: How can someone set up a chain of bakeries in the greater Copenhagen area (and later beyond) offering pretty poor bread at absolut premium prices – and be successful at it?

Lagkagehuset have since been sold to VC funds, moved to a tax haven and are now in the papers for reaching out to get financial aid from the Covid-19 help packages, even though they make their best efforts to not pay tax in Denmark.

As a result people are starting to revolt; not wanting to keep supporting a company who privatizes profit but socializes loses.

Ok.

But shouldn’t you have revolted in the first place due to substandard experiences from over priced products?

I mean: Evading taxes should not have been the real killer in the first place (and quite honestly, I don’t think it will be once the current controversy has died).

Lack of connection between value proposition, quality and price however should.

Lagkagehuset offers a opportunity to study what it really means to have a value proposition and fulfilling a job for the customer. What may be on the face value is not necessarily the real driver.

Obviously, the bread and the prices didn’t matter to customers. If they did, Lagkagehuset would never have become such a success. Maybe behaving responsible does matter? It makes for a funny business and Business Model Canvas, I’ll grant you that.

But maybe it will give some added perspective and perhaps even some pause to how we think about what really drives behaviour and what a great value proposition actually is. It’s clearly not what’s stated in the public Powerpoint deck or on that fancy poster in the shop.

It is both harder, more complex and more irrational than that. Understanding them takes real work.

NB: The cakes on the picture bears no resemblance to those served by Lagkagehuset.

(Photo: Pixabay.com)

Get value from values

What does it mean to have something of real economic value that customers want? Is it to have the best product within a category worth an extra charge, or is it to have a product that sits so well with the belief system of the customer that they are willing to pay a premium price for?

Luckily, it seems to be the latter. And it is great for a couple of reasons.

First of all, it vindicates those who strive for domination within a niche by building run-of-the-mill products that are just cheaper for customers to buy. Personally, I have never been a big fan of competiting on price because I don’t fance the end game; essentially free offerings. Second, I find it reassuring that despite everything else that is going on, customers are still looking to pay decent money for offerings that fits well with their personal belief system(s). This should be a welcome call-to-arms for everybody working on making customers better off.

(Photo: Pixabay.com)