It Tech Two to Tango
5 Tips for Startups Looking to Grow
Growth is about constantly improving the business and its products, operations, and quality of service, writes Pitango Managing General Partner Aaron Mankovski
Growing a business is a journey paved with challenges. From coming up with a viable idea, through discovering the market leadership position and defining a target demographic, to offering a viable product of value.
Growth is about constantly improving the business and its products, operations, and quality of service. No matter the vertical, getting the word out there is a challenge that is becoming increasingly complex and requires a company to carefully craft its multi-facets marketing and sales strategies to fuel growth.
1. Constant verification of the product-market fit. Product-market fit is a first step to building a successful company. It means a company meets the market with a product that can answer a real need and have a high level of stickiness. In its first stages, a company engages early adopters, gathers feedback and gauges interest in its product. In later stages, if a product-market fit exists, it means there are both an ongoing demand and an ability to generate leads in a specific market with the given product. Product-market fit is what validates customers and builds the foundation of loyalty for them to become returning ones. It is a precondition for effectively scaling the company’s marketing efforts, hence scaling the company’s growth.
The journey towards product-market fit entails ongoing build-measure-learn iterations, and while at it, a company sometimes falls short on one or two key performance indicators, and overlook them, thinking it can catch up on them later, but this always comes back to haunt the company. The most important KPI to look out for is the churn rate—if it is not on a satisfactory level, the market is sending you a message that you cannot afford to ignore.
2. Matching the business model to customer needs. The company’s business model must fit its product and market. Software-as-a-service (SaaS), for example, has become a popular business model, as it allows companies a lot of flexibility in shaping and adjusting its product. However, it is not ideal for every vertical, nor for every product, or for every company. there is a good number of products that cannot be delivered as a service. Same goes for verticals where it is challenging to update and monitor the usage of products, as SaaS thrives on a constant flow of measurable data. So, when shaping your business model, be sure to take into account all the relevant variables.
3. Communication, not price, is key for customer satisfaction. One of the most common misconceptions is that price drives customer satisfaction. It does not, communication does. By communication, I mean excelling in the following four departments: personalized customer service; exceptional company culture, allowing internal communication of customer input and closure for the customer; constant improvement of customer appreciation; and proactive customer support. Your customers want to know you are listening, they want to know you care about them, at least as much as they care about the product. Communicating with your customers is not just about problem-solving, it is about maintaining a relationship that leads to your product becoming an inseparable part of their professional or personal lives.
4. Building the right go-to-market team. The first thing you have to do is figure out your sales strategy, add the necessary layers of marketing and business development needs, and then get bullish on hiring. Once upon a time, the paradigm was that profit is generated solely by sales and that marketing is at the sole service of sales. We have come a long way since then. The key word now is synergy as marketers play an important role in generating revenue and in many cases play an equally important role in how revenues translate into profit. Marketers are likely to identify changes in customer behavior and needs, as well as in market forces, they study the trends, spend time understanding the company’s audience, and many more metrics that are impactful for any business.
5. Product-geography matching. A product and cost structure that is a good fit for the U.S will not necessarily work elsewhere in the world. In many cases, each location requires building its unique features and cost structure. Expanding into a new geographical market cannot be done remotely. Some companies may consider an expat who has a good understanding of both cultures, business-wise. Other companies might hire a local right away. There is no right or wrong, except what is right for the company and its leadership.
Aaron Mankovski is a managing general partner at Israel-based firm Pitango Venture Capital.