That little thing called the client…

OLYMPUS DIGITAL CAMERABusiness is simply an energy exchange. Previously in human history, we would have an excess of some or other product, for example, chickens. What we wanted was a lamb so we would exchange our chickens for someone’s lamb. In this process we would have to give more than 1 chicken for a lamb because it took more energy to raise one lamb than it did to raise one chicken. This was called the bartering system. Business is no different today, the only difference being we have created a universal expression of the value of our chickens or lambs called money. Thus the principles remain the same. We have a product or service we want to exchange for money, which allows us to purchase something we want such as a car or house or simply a good life. For all of this to work, we need people who want what we have, at the price we are willing to part with it, so that we are able to get what we want. Of course here is where that pesky little thing called a client comes in. For, an energy exchange to work there has to be a solution to a problem (supply) and clients willing to pay for the solution (demand). Demand means clients.

In our startup journey we got so caught up with our idea and product, thinking that it is the next great thing, and that people would be knocking down our door for it. Boy, were we disappointed when that did not happen. So what went wrong? Well, here are a few of my ideas with regard to that.

Given that we had people in our team experienced in our market we thought we understood what the client wanted, so we kept building features and never asked enough clients if we were solving a problem that they would pay money for. If you hear the words, ‘I know what the clients want’, from anyone in the team except the person talking to the clients, you should firmly put that team member straight as this type of talk is the death knell of your startup. In truth we did not have anyone in our team who had the gift of the gab and was willing to go out there and just talk to customers. So, when we did get some feedback from our target market we jumped on it and built the requested feature. Because we did not talk to enough of our target market we were unable to determine what were their real priorities and problems. All of this used valuable resources with nothing to show for it.

Secondly, we simply did not understand the numbers. After talking to a few people who loved the idea of our product but did not buy, we got despondent but if we understood anything about marketing we, would have known, that we need to get many more people, to know about our solution to their problem before we can make a sale. Here I would recommend doing your homework to really understand your market and where they like to get their information. Understanding how to create demand through the many options available to us today is priceless. A better idea is to get someone in the team who has experience in marketing and sales.

Thirdly, we made the classic error of letting clients use the software initially without paying; we soon found that people who get something for free do not value it. Here I would recommend a 30-day free trial, after that clients need to pay. This will quickly give you an idea of if there is enough value in your product to create a sustainable business. A 30-day free trial, allows the client to try your solution, risk free, particularly as you are the new kid on the block and have no credibility as yet in the market place. One gets so desperate to get someone to use your product that you lose perspective on the objective, the objective is to validate that you can make money and have a sustainable market. This is the difference between a startup and an established business. In an established business it is all about sales to cover the costs, make a profit and grow the business. In a startup sales are a validation mechanism that indicates if you have the right solution for the right market.

Fourthly, if you want to create a low touch online business you need to make the access to and setting up of your product very, very simple for your client, otherwise your profits are eroded by support costs. Important to note is what might seem simple for you to set up might not be simple for your client, so here is another aspect that should be validated.

One always hears people say that clients are the lifeblood of the business, but until you have created a startup the real importance of clients is simply an intellectual exercise. Finding them, getting into their heads and staying in their heads should be an all-consuming activity, if you really want to be successful.