It is an open and known secret that nearly 70% start-ups close within the first year of starting due to multiple reasons and one of them is due to lack of paying Customer base and not able to deliver what’s been promised to them.
So we all agree that survival of any Business and even getting funded (mainly for start-ups like us) from investors is because of “Customers” and the “Value” that you bring to table. Investors and VC’s will always ask you, “How many paying customers you have and what’s their CLV (Customer Life time Value)?”
Recently, I was reading couple of articles on social media where the “failed” entrepreneurs were explaining their learning on why they failed, where they could have improved, how they could have developed the base product with less features and how much struggle they did to get first customers before winding up the business etc.
As usual most of the readers were giving their comments like
- “Good learning. Thanks for the updates”
- “True story like mine”.
- “I also want to be an entrepreneur and will remember all these points at that time”.
But none of them were asking one RIGHT QUESTION.
What happened to those customers who TRUSTED you to use your solution?
What happened to those Customers who are using your solution? How did you help them with transition?
Today, one of the biggest challenges that we face in marketing of our SaaS product is building the “Customer Trust”. According to me in MSME segments there are approximately 15% of customers have gone through this type bad experiences and another 25% heard of these stories and are afraid to take a decision. Because of this, we end up in spending nearly 5 times more efforts to win them.
During our meetings, we could see and identify that our prospect has a business need of our solution, but he can’t trust us due to his earlier bad experience. Our typical sales cycle is about 4 weeks. However in this case, our sales cycle goes into 12 to 15 weeks and sometime we loose the business too.
This case is common for everyone who is on an entrepreneurial journey.
My humble request to all the entrepreneurs is, if you are closing your business then leave the business gracefully and handover your customers to your fellow entrepreneurs.
First of all, try to follow some of the below rules (we follow this religiously) so that you can be there for a long haul.
- Avoid spending money on office setups like office Interiors with Glass doors, ACs, Huge Office banners etc. Cash is life line, so preserve it.
- If you are not able to hire an experienced professional, then check whether you can hire him on contract basis for specific cases.
- Pay a decent salary to your employees with a good learning opportunity to them. They believe you.
- Speak to customers, Develop the product and release to them – This will avoid unnecessary spending and rework on design (OK, we were very poor here. However in last 6 months we have improved a lot and we learnt our lesson)
If you happen to exit the business due to any reasons
- Speak to your customers about your case. They might come with an idea on how to get more customers. (This depends on how you helped these customers to achieve their goals)
- Agree on a migration plan and provide them other solutions that they might want to migrate to (Its not easy and it has its own problems)
- Help your customers to migrate to another solution.
- Be with your customer during this transition period and help them to succeed.
- Remember this small support will take you for a long journey and Customers will remember you all the time because business is full of ups and downs and our Customers know them more than anyone else.
You can also check the link at LinkedIn at https://www.linkedin.com/pulse/please-do-abandon-your-customers-nityananda-rao?trk=mp-reader-card