For startups, getting new customers and keeping them is hard. But if the work is done to align and perfect these three elements, success and business growth will follow.
#1 PRODUCT-MARKET FIT
The most crucial element to ensure success for a company is Product-Market Fit. So, what is Product-Market Fit (PMF), and how do you know if you have it?
PMF is creating something that people want that usually solves a problem. If a customer can’t live without your solution after using it for 90 days, there is PMF. If prospects do not understand the product offering, PMF is missing.
Make sure the solution solves a problem that people are willing to pay money to fix. Also, it should be clear how the solution provided fixes the problem; potential customers understand immediately. To validate and fine-tune a PMF, talk to current customers.
You can validate the PMF after you have at least 10 – 20 active customers, not before. After the customer is using your product, reach out and ask them:
- Why did you decide to buy our solution?
- What is the most significant benefit gained from it?
- How would you feel if you no longer had it?
In addition to these questions, identify a key metric to track that confirms customer adoption to help validate PMF. An example: Slack’s key metric was when a new customer sent 2,000 messages within the first 90 days.
Not every customer will love your product, and this is okay. It could be because they’re not an ideal customer. Regardless, find out why and what can be done to improve the solution. For the customers who love your product, you’ll now collect their firmographics and technology stack to create your Ideal Customer Profile.
#2 IDEAL CUSTOMER PROFILE
As a startup, it is easy to fall into the trap of trying to sell to everyone. But this can be the kiss of death. Don’t spend months on a sales campaign that turns into no sale. Also, don’t sell to customers who don’t renew their subscription because the product wasn’t an ideal fit. Instead, focus on nailing-a-niche. For example, last year, I had a client with a 14% close rate with companies whose employees were 95% PC laptop users. But their close rate was 41% for companies with PC laptops and at least a 20% MacBook install base. Guess what type of businesses we targeted for the rest of the year?
Identifying your ICP will ensure you’re getting the highest return on the sales and marketing efforts. To create your ICP, collect the following on every lead that enters your sales funnel.
For each Account (Company):
- Firmographics – Industry type, company size, location, and annual revenue. Ideally, you have an industry-wide pain you solve.
- Technographics – What technologies are they using because these can help or hurt your chances of winning a new customer.
For each Lead/Contact:
- Map out a Buyer Persona for each Job Title. Know their characteristics, goals, challenges, how they like to communicate, and how they want to buy.
Creating and then refining an ICP is ongoing. Continue to collect the firmographics, technographics, and buyer personas for each account and lead. Track this data in a Customer Relationship Management (CRM) System. Learn which profiles are more likely to move to the next sales stage and their close ratios. Developing and refining your ICP will increase your close ratios by an average of 20%.
#3 VALUE PROPOSITION
Some founders struggle with the value proposition because they’re proud of what they created. And they should feel proud. They spent a long time creating the perfect product with a lot of sweat equity. Now they want to tell everyone how great it is, and no one cares. It sounds harsh, but people who are not your friends and family only care about their issues. The prospects you target receive hundreds of emails every day, and they’re swamped. If you can’t articulate how to solve their problem within two minutes, then your value proposition still isn’t ready.
To create your value proposition:
- List the problem you’re solving
- What is your Unique Differentiator?
- What are your tangible results? ($$$)
Value Proposition Example: XYZ Cybersecurity prevents a ransomware attack on your network, even if one of your users accidentally clicks on a malicious link.
The value prop is a theme you use for all your messaging and content.
Messaging Example: Sign up for our next webinar to learn the critical elements in preventing a ransomware attack.
On February 23rd, 2021, Tiger Woods was in a horrific car accident. He almost lost his leg and didn’t know if he’d ever play golf again. After eight months of rehabilitation, he managed to make the cut at the 2022 Masters Major Golf Tournament, qualifying to play on the weekend. After qualifying, a reporter asked him about his journey back:
“Each day is a challenge. Every day, we face a new set of challenges. Keep fighting, chase your dreams and never give up.”
