Understanding the hidden challenges of acquiring and retaining customers for a startup
16th November 2015

customer_retention

People quite often share startup ideas and links to prototypes with me and I feel a lot of admiration for these brave souls who set out into the unknown with just an idea and a lot of passion.

One of the biggest challenges they face is gaining and retaining customers. Those startups that have had a lot of registration forms filled but very few return users can testify to the fact. In that context here are some of the hidden or maybe not so hidden challenges of acquiring and retaining customers.

Its very hard to make users care a damn! Beware your assumptions!

The biggest issue that I see are the assumptions about the users behaviours. The developers create a story in their head about how the users will use their product. How they will do things like 'login everyday' and enter the right information at the right time. How they will share it with others and how it will go viral the minute you explain the concept to them.

The biggest issue that I see are the assumptions about the users behaviours. The developers create a story in their head about how the users will use their product. What they are not prepared for is the sheer apathy and inertia of users.

What they are not prepared for is the sheer apathy and inertia of users. Unless your product is super sticky like 'Facebook' or 'WhatsApp' or its 'stupidly simple', people just won't give a damn.

Recently saw a concept for a service which is like the AirBnb of parking spaces. Nice concept. But are the entrepreneurs expecting too much? Are users going to care about parking spots enough to put them online, manage them and deal with all the headaches? Maybe, maybe not.

Every thing costs the customer something, find out the real cost of your product.

You want me to check your app everyday? Ok, but its going to cost me. It's free? But doesn't it take my time? If it takes my time, it costs me. More so than money nowadays, its time and resources that are important to people.

Lots of startups highlight the 'Free' aspect of their software or service but don't take into account the cost to the users. Cost lives in the user's mind. It can be as simple as having to update your app on their phones regularly or having to check the emails that your service generates.

Lots of startups highlight the 'Free' aspect of their software or service but don't take into account the cost to the users. Cost lives in the user's mind. It can be as simple as having to update your app on their phones to regularly to have to check the emails that your service generates.

When you think of 'cost' beyond money, you might find your startup is too costly for people. Cost to users can be time, bandwidth, resources, attention, or interruptions. Its always a good idea to inventory the non financial cost accrued to customers using your products.

Don't depend on vendors and partners for promotions, the dependency is risky.

When I recently asked a friend how he is going to promote his startup, his reply was startling. 'Our vendors will do it for us as its such a great product for them'. Oops. Famous last words.

Your vendors or partners are busy running and promoting their own businesses. They have their own marketing challenges and ideas. They are dealing with attrition, growing costs, customer issues and more. Expecting them to be a part of your customer growth strategy is very risky.

Your vendors or partners are busy running and promoting their own businesses. They have their own marketing challenges and ideas. They are dealing with attrition, growing costs, customer issues and more. Expecting them to be a part of your customer growth strategy is very risky.

I remember a client who was promised N number of users 'guaranteed' by his prospective vendors. After months of hard work, when he launched the service, the vendors started playing hard-ball with him. What he expected would be a win-win relationship quickly became a series of negotiations after which he finally decided to go solo and keep the vendor dependency to a minimum.

Features are great, but 'usefulness' is the ultimate question.

What a fantastic idea! Worthy of a silicon valley startup! It's a niche no one's even considered! Its feature rich! But is it useful? Usefulness of your product can be measured in the following parameters

  • Does it make my life easier?
  • Does it require very little effort to integrate into my routine?
  • Is it something I care about?
If the answer to the above three questions are 'Yes'. Then, I believe its useful.

As I mentioned at the start of this article, I really admire the guts it takes to create a startup. The time, effort and money it takes is incredible. And I always wish for the best for these brave souls. In that spirit I hope that they will always keep themselves grounded, understand the hidden challenges and risks, remove false dependencies and go to market with a clear vision.

Cheers,
Ron

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