If you have built a great product, assembled an awesome team, but the customers are just not coming, what can you do about it?”
The top reason why start-ups fail
Start-ups fail when they are not providing a solution to their market’s problems. The ‘solution-looking-for-a-problem’ is, according to market-insight leaders, CBInsights, the most common reason why start-ups fail (42%).
The obvious conclusion is that start-ups share a tendency to not research their markets properly – or at all, basing their solutions on the experiences of the founders who struggled with a particular activity in a previous life.
These experiences are translated into generic needs, giving rise to a wonderful product. Unfortunately, nobody else seems to share the pain sufficiently to want to buy the product.
That is not to say that the solution is really useless, at all. That’s rarely the case. In the CBInsights study, the founder of a failed start-up says that they realised too late that doctors want more patients, not more efficient offices.
Being the son of a doctor, the son-in-law of a doctor and having 4 cousins who are doctors, I can say with some certainty (although I would still research the point thoroughly) that doctors, at least in the UK, are not looking for more patients. They are looking for more support to get through the huge workloads they face so that they can treat their patients better.
It may have been a question of positioning the product differently or looking at different locations within the sector (e.g. UK v USA) or changing the pricing or the way it was delivered. Adding a missing feature may have made all the difference or it could have been a matter of improving communications; but until the market has been researched, it’s impossible to know.
As we wrote in our article, “Why FinTechs need to do more customer research, “the entrepreneurial spirit often does not have much room for the methodical details of research”.
We believe that failing to carry out research into market need is endemic in the start-up psyche, and that is borne out by the CBInsights study.
The problem is, if someone has built a product and clients haven’t come, they don’t have an infinite amount of time in which to research the market and then take the appropriate actions.
It’s not impossible – but it takes a great deal of courage and humility. They need to pivot.
Does this sound like you?
Drop us a line at firstname.lastname@example.org
and we’ll set up a call to look at the options
Pivoting means moving away from plan A which got you into the predicament, and moving to plan B, which will be a better strategy because it has been properly researched and analysed.
It’s time to get some help.
What does help look like?
There are 3 reasons to look for external help in situations like this: expertise, resources and objectivity.
You can expect an external agency to focus on a few things – quickly, not taking months:
1. Undertaking a situation analysis to assess
- Size of market
- Needs of market
- Competitor landscape
- A SWOT of your business
If you have clients, they will certainly want to talk to them to understand why they bought from you, what they like about the product and you as a company, and what they don’t.
In this process they should agree SMART objectives with you, so that everyone is working towards the same goals. The time element of SMART is extremely important when money is tight.
2. Product positioning
We can define positioning as the process to put a product or a service into a particular niche in the minds of potential consumers.
At the heart of positioning is understanding your prospects' pain points and challenges. If you want to help people who are fed up with paying exorbitant fees for forex payments what’s the real need?
- Is it fees?
- or the time it takes to complete a transfer?
- or the complexity of the process they have to go through?
- or the (un)reliability of providers' portals?
- or insufficient geographical coverage?
- or the difficulty of reaching unbanked constituents?
Can you solve for all of them, some of them or only for one?
How big is the problem, and how severe is the pain? If it’s not severe enough then the solution will have to be very easy and inexpensive to implement – but if there is a huge market and you can leverage economies of scale, that may not be an issue for your business.
3. Creating at least one buyer persona
This is a fictitious representation of one of your sweet-spot customers, understanding what drives them to buy, what inhibits them, where they are located, how they consume information and so on.
This helps to direct all the communications an agency needs to make on your behalf to start bringing in those customers.
I know this seems like a lot of navel-gazing at a point of crisis, but this is the minimum work that 42% of failing start-ups fail to do, and it is what brings them to this moment of crisis, so it essential for an agency employed to help to do the minimum in order to give the best chance of a successful turnaround.
In an ideal world you would devote 3-6 months to the business planning process, but here we are talking about a matter of a few weeks at most.
Let’s look at the second reason start -ups fail. Between them the top two reasons account for more than 70% of start-up failures.
The second reason why start-ups fail
The number 2 reason why start-ups fail, is that they simply run out of cash. Does this sound familiar?
Can you see the sand trickling through the hourglass and feel the urgency to generate some business, soon? You’re not alone.
29% of the failed start-ups surveyed by CBInsights had used up all their funding before they generated sufficient revenue to make their businesses viable.
Assuming that there is a market for the products and services being offered, we have to look at other reasons to explain why customers are not signing up in sufficient numbers to save the business: These might include the following*:
- You’re invisible to the market – no one knows you
- Even If they find you, they don’t trust you, because you’re too small, or they’ve never heard of you
- They don’t understand your product, so they don’t know why they need it
- They worry about integration with existing tech or practices
- Price or other positioning issues as we discussed above
*Listen to Conversion-Rate Experts’ awesome podcast “Making Websites Win” to hear this list in its original context.
Maybe you feel reason 2 resonates more than reason 1
Email us at email@example.com
We have a specific process designed to uncover
all the challenges and to create a strategy to help
What does help look like, now?
Armed with the research, the positioning and the buyer personas, the agency can begin to implement a strategy to get your business back on track. There is no magic bullet, but there are lots of things that can be done depending on the reason that customers are not signing up.
Max out sales productivity
Perhaps you think you’re sales team has been working at maximum efficiency, but unless you are supporting them with some tool to automate their efforts, they’re not.
We use HubSpot Sales suite. It’s not the only good platform out there, but it is amazing value for startups with funding who may be able to qualify for 90% discount in the first year. Let us know if you need more details from a user perspective.
Whatever system you choose should be able to support workflows and sequences that help sales teams to be hyper-efficient. It may seem strange to invest in this now, which is why the price-deal is so important, but even more important is getting your name and your product out there.
If we were working with you, we would expect each one of your salespeople to be contacting 50 prospects a day, using a sequence of automated, personalised mails interspersed with social media connections and direct calls.
It is no secret that people respond to video more than to text. But a standard video is no good – it needs to be researched and crafted for the individual client, 50 times a day.
Impossible? Not at all – it’s exactly what we do, and we have impressively improved our open rates as a result.
Use the research to be relevant
The research you have commissioned should inform everything you do – how you speak to your prospects, where you speak to them, the language you use, the problem you solve for; the pricing of your product. All this has been designed to help your sales teams become more relevant and effective.
We can look at this in terms of the potential reasons that customers are not coming to you.
- The optimized sales process will help get more people to know about you, but if you have understood that trust is an issue; you are too small or too new, you need a different communications approach that focuses on your credentials and expertise.
- This might also lead you down a different path to look at partner programs where you can benefit from the market presence and resources of a larger company to support you, train you and hold you accountable, exactly as we do with HubSpot.
- If you have understood that people just don’t see why they need your product – very common for innovative solutions, you will need to focus on the need or opportunity that your product creates and back it up with as much evidence as you can.
- Technical integration can be a big problem in markets like financial services where legacy systems dominate. Yes they’re expensive, but they are also well-understood and robust, and if you are offering a cloud-based system when everyone is used to mainframes and data centres, you know you have to answer the question about integration before you can deal with the cost-benefit. Why? Because the cost of something going wrong, and the effort of integration often far outweighs the operational savings a new product provides.
So far, we’ve talked about sales, automation, video outreach, using the research to boost results.
That’s because this type of selling will provide the quickest results in the short-term, if you follow these rules, use the research and reach the email volumes. Going back to our examples above – if you are in this situation, the lack of time will be a bigger issue than the cost of client acquisition in the short-term.
BUT in the long-term this type of selling is more expensive and less efficient than a technique called inbound marketing.
Although inbound marketing will take longer to generate leads, once the pipeline is full and flowing there will be far more leads than cold calling can produce, and those leads will be easier for your sales team to convert too. This means we need to run the two strategies in parallel, because we must look beyond the short-term issue to the future of the company.
What is inbound marketing?
Inbound marketing is the process of attracting customers to a company’s products and services through content that helps them as they seek a solution to their needs
The internet has created a new paradigm – a shift in the balance of power between buyer and seller. Now it’s easy. Prospects can research a solution to their needs long before they talk to a buyer, and the place where they do their research is online.
That is why details about your products and services must be discoverable to those people who need it, when they need it.
Techniques like search engine optimisation (SEO, see below) are employed to ensure the information can be found when someone is searching for an answer, and the content is placed on social media channels where people might be looking.
The key is that when a customer gets in touch, they are already seeking what you are offering, and that makes them far more receptive to your offer.
What to expect
In our own experience of using these techniques, the first thing that happens in that your SEO ranking begins to rise.
That means, when people search for the thing you are solving for, your website or landing pages appear higher up in the list of answers that Google or the other search engines like Bing, provide.
When people search for a particular solution, they only tend to look at the top 5 answers, so ranking highly answers the objection – no one knows about you or your products.
You will get some leads, but sporadically and unpredictably. In the early stages. They won’t follow the conversion paths you think they might but will come in because you just resonate with their needs.
As time goes on, the volume of interest grows as you become even more discoverable. At this point, the conversion paths stabilise, and we will get a steady flow of marketing qualified leads through your door. Because these leads are ‘inbound’ i.e. they approach you because they’re interested in what you are solving for, they are relatively easy to convert compared to cold leads.
Conversion Rate Optimisation
Once your agency has helped you generate a good number of leads, they can work with you to optimise the conversion rates using the data they generate.
This is a process that looks at every type of communication and every element of that communication, and experiments with controls and variants to arrive at the optimal point where more and more of the recipients of your communication are behaving in the ways you want them to.
Things that can be optimised include
- Blog copy
- Calls to Action
- Position on the page
...and many more.
This is a scientific approach to improving your effectiveness, with guesswork eliminated. It takes quite a lot of traffic in order to be most effective, so it’s not an early part of the strategy, but over time it becomes essential to break through into high levels of success.
At this stage, once you have a good local client base, you need to look carefully at service. Retention strategies are a key part of the marketing mix and they too benefit from automation, instant help from bots, comprehensive client knowledge contained in a form that is readily accessible to support staff, and so on.
These delighted clients are ideally placed to join your sales team! They can write reviews, inform their supply chain, link to you from their websites, (which is good for your SEO) and become a free (but priceless) resource for your product design team.
Choosing your help
There are lots of skill sets that you need to see from your agency when you are trying to recover from that less than wonderful strategic start.
Research, content provision, search engine optimisation, conversion rate optimisation, marketing and sales automation, SEO, social media distribution expertise are the key ones.
Marketers are not salespeople – they work with markets not with individual accounts and their role is to hand over leads at a mutually agreed point so that the sales teams can use their expertise to nurture and close the leads. Nevertheless, in these very difficult times, an agency that cannot roll up its sleeves and support the sales effort in becoming as productive and effective as possible, is not what you need.
They also need to work hand-in-glove with in-house marketing teams. You may have had some issues getting your business to start, but your marketing team has its own expertise and the agency’s job is to work with them to meet their business goals At Flagship, if there is an in-house marketing team or officer, we wouldn’t and couldn’t work without them.
Is this just another fad I can’t afford to spend time on?
That’s the best question you can ask – and we wouldn’t have much credibility answering it ourselves.
There are a ton of case studies to show how this works for all kind of businesses.
HubSpot’s own collection is the most impressive, although some of what they write about is obviously the benefits of using HubSpot, but you’ll see plenty about inbound marketing too. https://www.hubspot.com/case-studies
If this touches you...
If you feel your company is in this position, you probably shouldn't wait until there is no time to make a successful adjustment to your situation. It’s very easy to be wedded to a strategy that isn’t working, but obviously that’s a bad idea.
Instead, take the steps to build the business you dreamed about in the heady days when you were putting it all together.
If we can help, we’d love to work with you. Please get in touch – and we’ll get the process underway.