The founder’s dilemma: what to focus on now – and next?

‘Reformed’ founder turned academic, Chris Edwards,  analyses the most prevalent startup failure factor.

In today’s competitive marketplace, it’s more important than ever to put customers first.

But how do you find the time to do that when you’re running a startup or small business, where seemingly everyone and everything is vying for your time and attention? No idea, to be honest.

But the sad fact is, you need to make it happen because the life and future of your business depends on it. I’m not using the word ‘fact’ here as glibly as politicians and Fox News.

Far from it. I’m a former founder halfway through a PhD whose sole aim is understanding why startups succeed and fail, and the one thing I can say with certainty in the uncertain reality that is ‘Founderland’ is that failing to make your customer your #1 priority is the first nail in the coffin. 

Let me give you some context on this. In the field of academic research into entrepreneurship, our Holy Grail is developing a reliable predictive model of the factors underpinning startup success and failure. Researchers around the world are coming to understand this is no easy task because startup success or failure is often the result of several factors, many of which aren’t mutually exclusive, and some of which may, in fact, contradict each other.

In the academic context of understanding the performance of a startup, measurement matters, especially deciding what to measure, when to measure it, and which metrics matter most. After a year of research, this last question is the easiest to answer. No single factor has a more direct impact on the success of a startup – other than a lack of cash at hand – than the customer.

Customer traction is the life blood

Researchers worldwide are looking at this subject in several ways, and answers are surfacing that are at times blatantly obvious, other times just surprising (more on this in later posts). But the common denominator across most of the research is found in a simple statement: what matters most are customers. 

Profit. Metrics. Even staff, come second. That’s it. In that order. No rocket science here. But if it’s so blatantly obvious, why are startups worldwide still failing at such an extraordinary rate? Why are founders failing to put the customer front and centre? The answers are many and varied, but for the most part it’s because founders are so busy working in the business, they don’t have time to work on the business. We’ve heard this refrain time and time again.

I get it. Time is limited. There’s nothing more demanding of a founder’s time than the urgency of ‘now’ tasks. Time spent on answering the phone, dealing with customers (ironically), managing stock on hand, hiring, and firing staff, responding to emails, paying bills, dealing with the minutia of everyday life as a founder. These are all pressing realities that demand our time and attention. But they’re equally the greatest time suck in a founder’s life. 

So, if we accept that the urgency of ‘now’ tasks isn’t going to magically disappear, then all we can do is focus on ‘next’ tasks. What this requires of you is simple, make a commitment to carve slots of time into your week for customer-centric activity (more on this in a few moments). If you can make that commitment, then read on. If not, then I wish you the best.

Make customer-centricity priority #1.

First, you absolutely must commit to making the time. Outsource, palm tasks off, or deprioritise a task – just for the moment – if it doesn’t have a direct impact on the bottom line. Find volunteers. Offer an unpaid cadetship. Get a VA to manage your calendar and email. Get your mum, oldest child, or friend to mind the counter or guard the phone for an hour if you need to. 

Understanding and prioritizing the needs of customers is a must, not a maybe. Good news is that capturing customer insights is easy. It’s simply a matter of deciding what you want to know, and how you plan to go about knowing it. Consider the following list of just a handful of ways in which a customer and a business interact;

In-store you have customers making a purchase, asking questions, seeking help, providing feedback, returning, or exchanging items, using a loyalty program, or attending an event. Online, you’ve got them browsing a website, signing up for an email list, leaving a review, commenting, or sharing on social media, using a chat bot, downloading an app, referring a friend, subscribing to a newsletter, participating in a survey, and providing testimonials. 

All these common interactions and touchpoints are opportunities to capture insight and start measuring their impact on your bottom line. Every business can leverage everyday interactions with customers to learn more about their experiences, needs, and preferences to improve their products and service.

How? Strike up a conversation with a customer instore and ask a question. Send out an email survey that offers a discount voucher. Put a poll on Facebook. Get your cashier to casually ask a question at checkout. Get a suggestion box.

You haven’t asked them to help me help you

It’s relatively common as I speak with founders as part of my research to hear that there’s a widespread reluctance to speak or deal directly with the customer for fear of what they might say. Tough luck. Shift your mindset. They want to help you succeed; they’ve told me. 

In a recent workshop I asked a group of shoppers about their habits, the places they liked, loved, and loathed. I also asked them how many gave feedback to the shops they habitually used when the service was good, or poor, or when they had a suggestion or question.

Less than 5% said they spoke up. Why? The most common answer was that they wanted to, but they didn’t want to bother anyone &/or nobody asked for their input, so they didn’t bother.

Customers want to help you succeed

So suck it up and engage. I’m not trying to teach anyone to suck eggs, but engaging with customers has too many benefits not to mention them here. You’ll improve customer satisfaction and loyalty, reduce churn, increase your customer base through recommendations and rewards, increase customer spend and lifetime value, be able to make better product and service decisions, and improve your competitive advantage. 

The final component: key metrics that matter

Customer-centric success metrics are measurements that track how well a startup is meeting the needs of its customers and helping them achieve their goals. These metrics can be used to measure various aspects of the customer experience, such as customer satisfaction, loyalty, and lifetime value. Some examples of metrics that startups may choose to track include:

Customer satisfaction score (CSAT): CSAT is a measure of how satisfied customers are with a startup’s product or service. It can be collected through surveys, customer interviews, and other feedback mechanisms.

Net promoter score: This is a measure of how likely customers are to recommend a startup’s product or service. It is calculated by asking customers a single question: “How likely are you to recommend [name] to a friend or colleague?”

Customer churn rate: Customer churn rate is the percentage of customers who stop using a startup’s product or service within a given period. It can be calculated by dividing the number of customers who churned in each period by the total number of customers at the beginning of the period. This can be tracked by the front counter staff counting the customer footfall.

Customer lifetime value (CLV): CLV is the total revenue that a startup can expect to generate from a customer throughout their relationship. It can be calculated by multiplying the average customer value by the average customer lifetime.

A cheap and cheerful way to get started capturing and tracking customer-centric data is to commit to tracking these key metrics; foot traffic (or website traffic), total sales, average basket size, revenue growth, profit margin, customer satisfaction, and customer churn.

Sounds obvious, right? These metrics are barely scratching the surface for established SME’s and the top end of town, but you’d be surprised how many startup businesses across a wide range of verticals I’ve interviewed who have a general idea of the above, but when pushed for specifics were unable to provide greater clarity.

As an aside, a more detailed way to really dig into customer data is to review the following list and cherry-pick and prioritise the metrics you feel will be most meaningful to your customers experience, and as such your bottom line.

Customer-centric metrics that matter.

Cost of customer acquisition, churn rate, Customer Lifetime Value, Meeting SLAs (service level agreements), customer satisfaction, Net Promoter Score (NPS), number of customer issues resolved, call pickup time, abandon rate, order accuracy, rework, customers in-store, website traffic, cart abandonment rate, average time to resolution, average reply time, number of support tickets, first contact resolution rate, top sales agents, number of bugs reported, customer retention rate, support costs as a percentage of revenue, customer service satisfaction rate, number of customer issues, customer basket size, and last but not least, social media questions, comments, shares, and likes.

Irrespective of whichever path you choose, making customer-centric metrics an essential part of your week will directly impact your bottom line, improve the quality of service you offer, the number of referral customers you get, the average customer spend, and customer lifetime value. That’s not a guess. That’s what the research and the data say. 

Tracking and analysing these metrics provides valuable insight into your customers so you can make data-driven decisions that improve their experience. They may not always be right, but they are your best untapped asset for success, so maybe start by simply saying hello.

• Chris Edwards is a global award-winning innovator, author, and was a finalist in the Prime Minister’s Veteran Entrepreneur of the Year awards in 2019