Why the Customer is Always Right is Wrong
Finding a sustainable market has been hard for many businesses during COVID-19, but practically every startup goes through that growing pain even in the best of economic times. Measuring the Total Addressable Market (TAM) and aligning your offering is a rite of passage for any startup trying to prove they can get a foothold on the market. Especially in early stage companies with short runways and aggressive sales numbers, it’s easy to let your product or service vision morph into whatever the customer is asking for. I think there’s a lesson here from the startup world for any company struggling to adjust to a new COVID-normal where their client base has evolved (or oftentimes, evaporated). In times of uncertainty, the customer is always right is wrong.
“The customer is always right” will have you chasing long sales cycles because you’re trying to fit your square product into a round hole. “The customer is always right” dilutes your focus as you’re chasing what are seemingly small changes, but can easily turn into distracting noise that pushes you farther away from what you’re really good at. “The customer is always right” jeopardizes your long term vision by giving your team mixed messages on what it is that you do - which makes it extremely difficult for them to do their jobs.
So what’s a company to do when your customer base is shaky? My recommendation is to adjust your “the customer is always right” mentality to a new one: The *right* customer is always right.
When you find uncertainty in your market, it’s a good excuse to reassess your product market fit. Here are a few questions you and your team can work through to help define that “right customer” and figure out if there’s enough demand to keep your business growing. In the end if there’s not, it’s hard decision time to pivot to a new offering, move into another market, or downsize to the point that you’re profitable again.
If your business volume has gone down, do you know why?
Is the change temporary or long term?
How have your customers changed?
Has the competition instigated the change or reacted to it?
Thinking about your largest (by sales volume) customer, what do they buy?
Thinking about your most profitable customer, what do they buy? (#5 and #6 probably aren’t the same customer, and it’s worth differentiating the two.)
If you could have more clients, who would they look like? Why did you pick that customer as your model?
If you could get rid of one customer, who would it be and why?
What’s the offering that you’ve sold the most of?
Who is your weakest seller and what are they successful selling?
Now that you’re thinking about your customers, take the steps to codify your Ideal Customer Profile. Especially in times of uncertainty, your ICP can be a north star as you’re forced to make difficult decisions. Define things like demographics (retail) or company size (B2B), location/geography, buying habits and preferences, and logistics that might be blockers or differentiators, and longevity potential/growth opportunities.
Align yourselves as a company around this customer vision, and check in regularly to make sure that you’re building products and services that match, your sellers are targeting prospects that fit that definition, and your marketing is geared towards that profile. Make sure every single person in your organization has a clear understanding of your “right” customer. This doesn’t mean you never sell outside of this definition again, but there should be an intentional reason if and when you do.
When you’re in the middle of a market shift, there’s no formula to easily fix your demand problem. But making sure you have internal alignment on who you can still successfully sell to will keep your team focused as you make the bigger decisions about the long term ramifications of change.
Looking for outside perspective? We'd love to chat and see if we can help you navigate the changes in your market.