#WisdomWednesday: where startups stumble on the path to customer centricity
We all know that people make or break your company’s growth, as we covered in this blog post. Putting customer centricity into practice isn’t always easy though: early-stage startups often trip up on some of the same mistakes when trying to weave customer centricity into their business. No worries, we’re here to back you up! This #WisdomWednesday we’re sharing common missteps to avoid when trying to become customer-centric, and how to straighten them out:
Why it’s so tricky for startups
Becoming customer-centric is easier said than done for startups: your lean team has limited human resources focused on several different business goals. Spreading yourself too thin can get in the way of leveraging customer insights in a way that really drives your growth. It takes more than basic customer support and a little feedback gathering to power true customer success.
Each company’s path to customer-centricity is different, and there is no cookie-cutter formula for successfully engaging, onboarding and supporting your customers. While your approach depends on your specific product, service, or culture, the essential question at the heart of customer centricity stays the same: why do your customers need you? Answering this question gives you your “Why”, your reason for being as a company. Customer centricity doesn’t mean much unless you’ve defined what makes you relevant in the lives of your customers.
If you know your Why, you’re on the right path. But there are still some common stumbling blocks that can throw you off course and undermine your quest to deliver real value for your customers. These make it tough to grow, let alone scale up.
#1 You’re not building an emotional connection
Successful customer centricity rests on understanding your customer beyond their transaction with your company. So while your customer feedback process may be focusing on their experience with your product or service and how satisfied they are with it, there’s more to the story than that: who are your customers? What social, emotional, economic and cultural factors are driving them? What do their lives look like? In short, what makes them tick?
These are things that are hard to quantify, but essential to understand. You may think you get your customers already, but this needs to be based on more than just a superficial understanding. If you don’t have the capacity on board to dive into your customers’ lives and contexts, you may want to consider hiring a consultant who can help shape your customer insights. This knowledge is important in building an emotional connection with your customer.
Ultimately, it’s this emotional connection that drives customers to choose one brand over another. Think about the old branding example par excellence, ketchup: what’s your favourite brand, and why? It’s probably a loyal attachment to a certain label that brings certain associations with it. It could be because your grandma used to squirt it on your fries (unless you’re Belgian, in which case take mayonnaise as an example instead). Or maybe you’re on a tight budget, and it’s just the cheapest one. In any case, it probably has little to do with the contents of the bottle itself. And while you should definitely be focused on providing the best product or service you can, that emotional connection is the special sauce customers need to bring you home. So how do you build it? It’s about more than branding: it’s about how you treat your customers every step of the way.
#2 You’re not communicating directly
The more layers are involved, the greater the chance that miscommunication slips in. You have to stay close to the customer to create the right solutions for them. That’s where startups have an edge: they can leverage their small size to build customer centric communication from the ground up. Every team member can have direct access to customers, from the CEO down. Leverage this proximity to weave customer feedback into your product or service design, sales strategy, and website development.
Whatever you’re doing or building, gather feedback first. Have it at hand before you even host that first brainstorming session over ping-pong. The customer should be with you from the start. As your company grows, you may no longer have the CEO calling up customers for feedback. But customer centricity will be part of your founding team’s DNA, guiding the growth of a company that always looks to the customer first.
#3 You’re using the wrong metrics
How do we know we’re successful? The classic way to measure a company’s success is to measure how much you sold, and at what cost. You end up with your margin, your net profit, and presto. If you want to improve your customer experience, you need to measure so much more.
Customer centric metrics focus on customer equity: the total value of a customer relationship over a given time. You get this number by multiplying the number of new customers by their CLV: Customer Lifetime Value. CLV measures the value of your customer to your company, not just on the basis of one purchase but over the course of the whole relationship. The CLV is a concrete value based on purchasing habits and revenue, and tends to stay steady.
Existing customers are more valuable than new ones, so using this metric helps you retain this value and drive your growth. Measuring customer feedback and understanding the customer experience will help you understand what is driving your CLV. A great example of a company that does this successfully is Apple, who have been very strategic about building up their brand equity and creating a loyal customer base.
Of course metrics like sales, conversion and average deal size are also essential to success. That’s why our virtual networking startup Conversation Starterstays focused on their goals by keeping a dashboard of all their different metrics, as we explained here.
How does your startup ensure customer centricity is at the heart of your growth? We’d love to hear your strategies for staying centred!