This is the last part of a five-part series on understanding your customer.
In this post we are going to answer two questions:
- What do you get in return?
- How can your relationship grow?
What do you get in return?
What do you get from your customers? CASH! That’s the obvious answer. Is it everything that they give you?
It all depends on your business model. Take for example something like whatsapp. What does it get from it’s customers? It doesn’t get any cash from the users. It doesn’t sell advertising either. What it does get is information and engagement. I’m not sure how it uses these. Facebook owns it and so revenue is less important.
With a startup a lot of your early customers give you information and feedback. I worked with one company who gave their product away for free to a major multinational. This gave them the credibility of having a large corporate customer on their books.
Google gives away its search product to consumers for free. This allows it to harvest data about them, their habits and preferences. It then sells this data to advertisers.
Another way of looking at is that every customer has an impact on your reputation. A buyer on Amazon gives you a review or testimonail. The social proof slows increases you value as a company. When someone sends you a nice email or piece of feedback that can be part of your sales material.
It can go onto a bug list. You then give it back to the customer as an improved product or enhanced service.
That said you do need to get cash in one way shape or form as sooner or later your runway ends and the plane crashes
For many startups the temptation is to give the product away for free to get initial traction. If you have to give it away to get customers you have a problem. The value proposition has problems and doesn’t solve the customer’s pain. To fix that go back to an earlier stage in the innovation curve.
How can your relationship grow?
I remember doing door to door sales years ago. I managed to sell stuff because I was a good salesman. It wasn’t because what I was selling was any good. I actually made sure that I never went back. That was a business where the relationship did not grow. It was ot intended to grow.
The ten minutes that I spent on the customers doorstep had to be paid for by that single sale. It also had to pay for all the places where I didn’t sell.
That is inefficent. Much later I worked for a food delivery company. Their model was to feed people every single day. It cost two to three times the cost of the first order to get a customer. When they fed them 10 times a month and kept them for 4 months the aquisition cost wasn’t significant.
They only managed to grow the relationship though because of a daily interaction. True it was all automated. That automated relationhip was question and repsonse every day. What food would you like? I’d like this. Was it tasty? Yes. Can I buy it again tomorrow?
Your customers may not buy that often. The frequency is not the issue. It’s how you create and build that ongoing question and answer sequence. What questions are you asking your customers that deserve an answer