“For a company to grow really big, it must (a) make something lots of people want, and (b) reach and serve all those people.” – Paul Graham
There are many challenges when you are an early-stage startup. You need to ensure you build something people want, ensure you reach your target market, and also get paying customers.
But all this involves certain cost and as an early-stage entrepreneur, your biggest pullback can be if these costs fail to convert into profits.
A study found that 74% of high-growth internet startups fail due to scaling prematurely.
As scary as it may sound, it is important for every single startup to reduce the cost of customer acquisition otherwise, they won’t survive in the longer run.
We’ve got you 7 solid experts with their actionable advice on reducing acquisition costs and helping you sustain your business:
#1 Avoid cash burns
According to Bloomberg, running out of cash is what ultimately kills 8 out of 10 businesses within 18 months of opening.
When you are an early-stage startup you try and push your limits to acquire maximum customers. In this process, startups often burn hands and fall victim to cash casualties.
According to Brian Balfour, VP Growth at Hubspot, “I think a lot of the frustration comes in for a lot of people are doing it just because others are doing it. It feels sexy in some shape or form. But there’s mismatch – the freemium model works only for very specific types of audiences and so you have to make sure you have those specific elements.”
#2 Leverage existing customers as your sales team
Even if you have a handful of customers leverage them as your sales team. Industry expert, Sujan Patel, co-founder of Content Marketer, told us in an exclusive interview, “Right when customers purchase a product, you pop a share button and make it relevant. People are super excited. In B2B, viral loops and sharing works effectively when people have the most excitement. When they’re most emotionally vulnerable and when they’re most excited, when those two converge, that’s when you get the most out of virality.”
Sujan further suggests, “The simplest thing is when you have that ‘aha’ moment – maybe that’s when someone purchases an account, pop-up something in the app or email saying, ‘Hey, give this a share’ and pre-craft the Tweet.”
#3 IGNORE certain kind of customer feedback
Customer feedback is great and validates your product. But if you make changes to your product with all sorts of feedback, it will simply shoot up your costs. You need to filter this feedback before incorporating it in your product.
Some experts are of the opinion, customers are not the best judge for your product. They know their pain points and the gains they are trying to achieve, but they don’t know how it has to be done.
Laura Klein, a well-known UI/UX expert and the author of UX for Lean Startups, lists down few elements for figuring out what kind of customer feedback you should actually use.
Laura says, “You need to make sure you are asking the right customers, make sure you actually understand the problem that you are dealing with and also make sure you are collecting feedback correctly. Not all of your customers are going to be equally important to you. Often the ones who have paid you are more important than the ones who are using your product for free.”
Laura also explained what is the right way to collect feedback. According to her, “If somebody says, I really want a button so that I can hit that and recommend it to all my friends. That’s a feature request. A lot of people would say ‘Great, we have added the button that lets you do that thing.’ That’s not the kind of feedback you take. You ask, ‘Why do you want that button? What will that do for you? What are you trying to accomplish?‘
If you find out other people were also trying to accomplish that same thing, or they are making a request that indicates they also want that certain thing.”
#4 Start selling before ‘Day Zero’
Selling after building can be one of the biggest blunders for any startup. If you wait for your product to be ready and then sell it, you will definitely increase your costs, and maybe even then you will not acquire many customers.
Content marketing guru, Neil Patel suggests selling your product before Day Zero.
Neil shared some insights with us where he said, “Before you build your product, you should be doing things like content marketing, SEO, creating a landing page like a squeeze page where people can sign up. All these things will help you collect email addresses of potential users. So then that way, when you’re ready to launch, you have a customer base. Then, from there, you want to try to create some sort of a viral loop whether it’s an invite flow or refer a friend system or where you get more points from more usage of the app.”
#5 Pick your right marketing channels
If Twitter works for a particular company or industry, doesn’t mean it will work for you. Investing your time, money, and energy on all the social media channels available is not a very wise thing to do.
Identify your right social media channel and invest there.
Dave Kerpen, the founder and CEO of Likeable Local, outlines how to pick the right social media channel to market your product based on the category you’re in.
According to Dave, “It’s about listening and understanding where your audience is. If you’re a major consumer brand, you have to be on Facebook, if you are a sports or entertainment or media brand, you should really think about Twitter. If you’re a B2B business, then LinkedIn is probably your primary. If you’re eCommerce, then Pinterest is super important. So think about really who you are and who your audience is, and where that audience is. And that should inform you on what social networks to get involved in.”
#6 Research your target audience well
If you don’t know who your target audience is, you’ll be wasting your cash and efforts both. In a #BiteSize interview with us, Andrew Hubbard, the founder of smartappmarketer.com, says, “The most leverage you’re going to find anywhere is going to come from researching your target audience, from understanding the user base you’re going after, finding where they are, finding what they like and what they’re interested in.”
A comprehensive research sets the foundation for all your future acquisition efforts. Andrew says, “Not only does it help you with user acquisition by allowing you to target ads more effectively, but it’s going to help with almost every other aspect of your marketing and even the development of your app as well.”
#7 Build great stuff
We spoke to Guy Kawasaki, the chief evangelist of Canva and one of the most influential experts of the industry . Guy drops the mic with one solid advice.
Guy says, “It’s much easier to sell great stuff than it is crap. So, if you want to do well in sales, make great stuff!”
He explains it with an example, If you enable people to test drive your product. You’re basically saying to them – ‘I think you’re smart, I’m not going to bludgeon you into becoming a customer. You decide.’ I think that you give them a very slippery slope so it’s not hard to convert to your product, so it’s not hard to begin to use it, there’s not a lot of manual labor, there’s not a lot of translation and all this kind of stuff. Great stuff, make it easy and enable people to test drive your product or service.
I guess that’s a ‘Mic drop’