Part 2: CUstomer-Facing Mistakes
(Part 2 of 3) 50+ Common mistakes first-time founders make -- and what to do to instead to extend your runway, improve your product and retain the team
Originally published in April 2023, updated in September
Part 2: Customer-Facing Mistakes
Product Focus
[Biggest Mistake] Virtually every start-up/company I’ve worked with (including my own), struggles to identify that key positioning and differentiation that solves their customers’ pain points as a painkiller (they desperately must have) – and not as a vitamin (nice to have at some point, maybe).
Rob Leclerc goes a step further, and suggests you evaluate if “...your product [is] a vitamin, pain killer, narcotic, or a religion?” (2021)
Kyle Sandberg (2018) walks you through how to uncover “Painkillers vs Vitamins” with a Jobs-to-be-Done (JTBD) framework
Customers pay us for products/services when we provide them value:
[Biggest Mistake] Once the company’s identified its positioning (or its current version of it), it forgets to learn its current customers’ workflows – for how the customers solve their pain point(s) today, e.g. to better understand the status quo. What ends up happening then, is that the solution the start-up will propose will seem like the customer will have to re-learn and retrain on how to do things, which creates friction for adoption – instead of the solution (seemingly) seamlessly integrating/plugging into the customer’s existing workflow to solve their problem.
Here's an example of how Duolingo iterated on implementing gamification before understanding their customers’ workflows – and how they learned and iterated from that.
And when solving the customers’ pain points, don’t forget to solve the customers’ pain points end-to-end. That is, make sure that your customers don’t have to jump through hoops to get the solution to work for them, such as not having APIs they need to integrate themselves. This way, you’ll have an easier time selling your product, which will be easier to position, pre-qualify for, and close.
If, on the other hand, you start selling and it seems really hard to close leads, find out from prospects what’s not working – or standing in the way of – the close. What else do they need to see from the product/service?
(Deeply) Technical founders (such as myself), forget to use your customer’s words in pitches (and even on their websites). If you don't use the customers' words to express their pain, they won't feel heard and go elsewhere, since they may not understand that your solution works for them.
There have been many pitch decks of start-ups trying to explain their solutions in Life and Bio Sciences, Pharmaceutics, Aerospace, IoT, and AI – where (co-)founders are extremely very small and deeply technical, that develop pitch decks for someone with the same background and expertise as them. But when they pitch to a non-technical/general audience, I’m left confused, wondering: “what is actually the problem, the solution, and why it matters” – and can I have this in layman’s terms?
Another mistake start-ups make (and that I’m also working to fix) is not charging relative to the value provided, but as an all-purpose recurring monthly subscription service. If we don’t align the prices (including the what, how much, and how often) we charge customers to how the customers would typically buy this to solve their pain points, you won’t see much increase in engagement/revenue on the platform.
One example of this is MyFitnessPal moving the barcode scanner feature to help customers have an easier time tracking the foods they ate, from the free to the paid tier, to grow conversions from freemium to the paid subscriptions (which did get a backlash).
You can’t be all things to all people! You can’t please everyone (though I’ve tried)! So a month-over-month 100% cohort retention should not be the target. Not everyone is (or should be) a fit for your product.
Say you’re currently trying to please everyone; here are some things to try to niche down to improve your go-to-market (GTM) strategy and close prospects more easily:
(If you have the data) See what’s going on with your customers – how are they using the platform? Who’s most engaged? Who’s brought the most referrals? What pain points are you seemingly solving for them?
(If you don’t have the data) When you talk to prospects, who are those who get super excited and can’t wait to sign up? What pain points are you seemingly solving for them?
There’s a lot going on – and everyone (customers, VCs, co-founders, etc.) will have lots of ideas for you; don’t forget to – focus, focus, focus – to solve one customer pain point at a time, end-to-end, for one type of customer/industry/etc. – before expanding into a different customer base/industry/etc. This way you’re not stuck maintaining multiple product lines/offerings that are all incomplete and have no concrete GTM and closing strategy. Some ways to do this are to:
Ruthlessly prioritize, to work on the most pressing, highly impactful thing first, and finish one product line at a time, before expanding into a different product space; and
Scope down, way down, then scope down some more to the smallest step that will help you learn if the proposed product direction is worth making – before making a major investment into it.
When just getting started on an MVP, wireframes are your friend. Bonus points if they’re interactive. This is the no-code solution that you DIY, which will help you get in front of customers – and their feedback/input – faster.
There’s no shame in pivoting! Customer preferences and pain points may change – or you’ve found a better niche/focus that’s more profitable and scalable. Embrace it! You may just find your "white hot [customer] center" -- and improve your product-market fit (PMF).
If you already have multiple product/service lines, don’t forget to specify how the different offerings differentiate and complement (or feed into) one another; the different offerings should not be substitutes or competitors of one another! This way, it will be easier to qualify and upsell prospects and customers.
Privacy
Don’t forget that when it comes to data collection on your customers, focus on what’s legally and ethically possible – that’s also the least invasive and provides value to your customers in return for less privacy. Watch out for unintended consequences of data sharing!
I highly encourage your revenue model to not be centered around selling your customer data, because that erodes customer trust and increases misalignment between how the product brings value to its customers (who share their data) and its clients (who buy the data). If it’s not, call that out on the front page of your website (even if it’s in a footnote) (!). This will help you stand out from your competition.
Bonus points: Consider adding on the website terms and conditions that help your customers understand (in layman’s terms) why you’re collecting the data that you are, and how it will benefit the customer that you’ll have access to their data.
Consider making it relatively straightforward for someone to opt-out of all the different tiers of data collection, which will also build rapport.
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