Why Startup Companies NEED a Solid Customer Experience Strategy

Within the infographic is an interesting pie chart titled “Common Reasons for Startup Failure,” with reasons ranging from operational or tech problems to inadequate financing and troublesome teams. There are two slices of the pie chart, though, that I would like to call attention to: 34% of startups fail due to a lack of product-market fit, and 22% fail due to marketing problems. With a 56% share of the pie, that’s a lot of businesses failing because they struggle to appeal to their best-fit customers! If startups fail because they lack the research to target the best market segment with the most relevant advertising, the question then becomes: “How can those businesses solve those problems before they become fatal?”

In my experience, a crucial part of the answer to that question is building an engaging customer experience to gain insight about who a startup’s customers are. I say this because a good customer experience system can aid companies in solving the three key things I mentioned just now: a lack of research, targeting the wrong market, and designing appropriate advertising. Since CX is all about customer outreach and understanding your customers, deploying surveys and customer interviews helps startups learn more about their customers and what they want in a product or service that will solve their problem. The earlier startups are aware of this information, the better equipped they are to adapt to this change in understanding since they are in their earliest stages of growth. This ability to adapt more easily helps them develop their product or service in the most relevant way possible to what their customer segments need.

What if the startup identifies their solution isn’t fixing their target market’s problem in the way their potential customers need it to? Well, in addition to pivoting their proposed solution in a more relevant direction, another way to interpret the research is that a company needs to determine whether who they are targeting is the best-fit customer segment for their business. For example, if the startup finds that their “ideal” customer segment expects a certain level of features or quality that cannot be produced at the cost they want to pay, then it gives the startup the opportunity to consider who they think their ideal customer is. Perhaps they need to sell to a more affluent segment or consider removing features that are costly to produce and not necessary in the eyes of the customer segments they want to sell to. This information can provide a startup the wake-up call they need to take another look at their pricing strategy or development strategy to ensure they target the market segment that would be most interested in what they are selling.

Last, but not least, customer experience research will also help startups target their advertising in an effective manner! Since CX is all about mapping and adjusting customer interactions with the company, a startup’s advertising is one of the most crucial interactions since it is likely to be the first time a customer hears about their brand. Per the Technology Adoption Lifecycle, innovators and early adopters are the most important customer segments for a startup to target first with their marketing strategies, as they are the types of customers a business must satisfy to become more popular. Using CX methods to engage with these customers builds brand loyalty and helps startups learn about how they can improve upon their products or services to provide the best experience possible for their customers. Building brand loyalty also lets startups take advantage of word-of-mouth advertising which is free and effective! Once startups create a positive rapport with those groups, they can begin to transition into targeting the early majority customer segment using the knowledge they gained from speaking to innovators and early adopters. To learn more about brand loyalty and how it is built from a positive and engaging customer experience, check out my other article titled “How Customer Service and Customer Experience Create Brand Loyalty!”

Those three problems I identified earlier (lack of research, incorrect customer segment, and improper advertising) may be 56% of the reasons that businesses shut down, but that doesn’t mean those companies shut down only during the first year. After two years, 30% of companies fail; after five years that figure jumps to 50%, and after 10 years of operation 70% of companies are no longer in business due to stagnation in growth and innovation. Due to this, I wholeheartedly believe that building a solid customer experience early on is significantly helpful to keeping a company growing and innovating. As the company builds the right tools and processes to engage with customers and learn from them, it will continue to understand their customers’ needs and how they change. With that customer research, companies can identify crucial insights into how their brands should be changing over time as well. It could be that the company finds out that after two years, their most profitable customer segment has shifted in a direction that their marketing is not properly targeting its advertisements for. Using that customer research can help them pivot their marketing strategy and lead to even greater sales for that brand, increasing the longevity of the business even more.

This is why I think that CX is such an important concept that startups should think about focusing on; not only does it provide the company a way to build brand loyalty with early adopters, but it helps them identify who their target market is at any stage in the company’s lifecycle. Year to year, companies and their target markets are constantly changing, and establishing good CX tools and processes will help companies stay on top of their competition by always knowing who their customers are and how they need to change their marketing to appeal to them the most.

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