Customer Acquisition Mistakes by any startup entrepreneur can lead to frustration and result in waste of time. The cash will get depleted and business may be at the brink of closure.It Costs Five Times More to Acquire a Customer than to Retain a Customer
“If there’s one reason we have done better than of our peers in the Internet space over the last six years, it is because we have focused like a laser on customer experience, and that really does matter, I think, in any business. It certainly matters online, where word of mouth is so very, very powerful.” — Jeff Bezos
Two Common Mistakes That Startups Make…and How to Avoid Them-Source;galawpartners.com
It’s not wrong to argue that the most crucial component of business operations is customer acquisition. The initial acquisition needs to happen before a business can even begin to think about retaining customers, and keeping them loyal for a long time to come.
If customer acquisition is so important, why aren’t more companies doing it right? The answer to this question may be similar to that of many other questions a business has to answer—humans are complex. There is nothing straightforward about converting a lead into a paying customer. Regardless of how much technology is able to automate certain processes, customer acquisition will always be a challenge for many businesses. That being said, there are a number of common mistakes some tech startups make that affect their ability to acquire new customers. This article uncovers some of them.
Customer Feedback on a solution
“I’m building a product to help people manage medical bills. Can you tell me…”
Any question that starts with the solution already biases people’s expectations. Someone hearing this question might focus on a minor problem they had with medical billing in the past and convince us that it is a major source of pain.
Better: Skip the “I’m building a…” intro.
A recent interview with a few startup entrepreneurs was conducted by an organization planning to offer customer discovery tour. They wanted to understand the pain points faced by the entrepreneurs so that the tour can provide them a process to mitigate those pains.
> “Scared to find & believe my prospect as
I have met max failures than success, so need to understand the reason”
> “I believe in my product, why is that customer doesn't believe?”
>” I have multiple customers, why is it that I'm not able to retain them, in spite of me doing best?”
1.All You Need is a Great Idea
2. Your product should have as many features as possible so that a large number of customers can be served.
3. I have an innovative idea. The market size is huge. Customer acquisition is no big deal.
4. Price the product lower than competitors and this will
ü In reality, you don’t need a great idea – all you need is to start.
ü Once you start, you’re out there acting on real market feedback instead of your fantasies dressed up as vision.
ü Be prepared to modify/ abandon the original idea based on reality check.
ü If the product requires change in the deep rooted habits of the customer, it will need higher cash burnout.
ü Calculate your customer acquisition cost ( Watch the video-
Not a Smash & Grab
Companies that focus singularly on getting a transaction may make that first sale. Those customers will likely be one-and-done.
Companies that take a ham-handed approach to acquisition drive up costs, limit response, slow acquisition, and shrink margins and revenue.
The original idea rarely succeeds and a trial and error process cannot be avoided in understanding what works with the customers.
Snapchat and Airbnb founders got negative responses from their investors when they sought their views on their ideas. The pain point of customers may remain latent till they get a new solution. In both these cases there was a large market waiting to be tapped.
Uber’s success has created a new word ‘ Uberification’ in entrepreneurship.
Cavincare Ranganathan revolutionized the market by launching shampoo sachets priced as low as INR One. He proved that business can make money by attracting customers at the bottom of the pyramid whose purchasing power is low.
Thomas Edison’s quote is appropriate to follow if you want to succeed in customer acquisition.
“I first find out want the world needs. Then I go ahead and try to create it.”