Keeping the customers
A student wrote to me: “Someone told me that startup’s success is mostly due to the execution, the idea or the product is not important in today’s environment.” What do you think?
Answer: To start a company, you need to have a product that meets the need of the customers. Without the customers, there is no company so having customers is the most important factor to begin. But to stay in business and continue to grow you need another factor: How to keep the customers and how to grow the business. The basic formula that I teach students in my entrepreneurship course is “Get customers, Keep them, and Grow the business.”
To start a company is difficult because you need to have customers, but to succeed you need to keep your customers happy so they continue to buy your product and not from your competitors, and this is much more difficult. Anyone can build a website, or create a mobile app, but getting customers and be profitable requires more than just technical skills. There are million websites and products in App stores all over the world, and customers can choose whatever they want so to operate a company in a highly competitive market is more difficult. Even you have good product and customers, you need to improve your operation to stay competitive.
The most important factor after “getting” the customers is to “keeping” them before expanding elsewhere. Many startups often make the mistake of trying to do too many things, too soon. Many company founders want to add more functions for more people as soon as possible. Because they do not have enough people, they begin to hire and spend money before they build a strong enough financially foundation to overcome unexpected risks. Having a good idea and product is only the beginning. Every startup needs skilled people to continue to deliver values to customers and maintaining this team should be a priority. Skilled people is difficult to find and having them working together toward a common goal more difficult. Company founders need to treat them well by allowing them to share the company profits and extra incentives to keep them to stay and contribute to the company. Only having a strong team, founders can spend the time to analyze the market as well as the competitors to develop a strategy to grow the company. By trying to do everything too fast, entrepreneurs will be overwhelmed and will not be able to meet all demands and easily make a mistake.
I always told my students: “It is important to keep your customers happy by delivering what they need first then grow from there.”
Sources
- Blogs of Prof. John Vu, Carnegie Mellon University
