10 Reasons Why Your Startup Isn't Getting Customers The average person tells 16 people about a poor customer-service experience. Don't let that happen to you.
By AJ Agrawal •
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According to a Harvard Business School study, approximately 75 percent of startups with venture funding will eventually fail. The same study found that a similar percentage of small businesses will fail within the first ten years of existence.
Related: Four Simple Ways to Find Customers
Of course, the primary reason for most business failures is an inability to profitably attract and retain customers. While there are many different types of business models out there, from software as a service, to marketplaces, to ecommerce businesses (and many others), there are a few common mistakes that business leaders make when trying to attract customers.
Here are ten of the most common, but often overlooked, reasons why your startup isn't able to attract enough customers to become successful.
1. Missing product-market fit
Product-market fit is the single biggest reason why businesses fail. If the product being offered is not aligned with the needs and wants of the target audience, it won't matter how good your marketing or sales teams are -- you simply will not be able to attract enough of the right customers to build a sustainable business.
As Eric Ries described in The Lean Startup, an effective way of testing product-market fit is by building an MVP (minimum viable product) that you then share with the target audience. By listening to customer feedback, you and your team will be able to find product-market fit over time.
Related: The Fastest Way to Find New Customers
2. Misaligned product-channel fit
Second only to product-market fit, product-channel fit is another critical business component that entrepreneurs must perfect in order to build a sustainable business. Channel refers to the marketing channels that a business employs to promote the product. Depending on the business model and the product in question, your business will be a good fit for some channels and a bad fit for others.
For example, Pinterest and Quora were able to grow their products quickly by harnessing the power of organic search. That channel fit well with the products offered by the respective companies, and with the desire of the target audience to quickly discover fascinating new content.
On the other hand, organic search might be a poor performing channel for an ecommerce business. The reason is that it can be difficult for a business to rank well organically in a world where giant ecommerce companies and review-oriented media outlets rank highly for most relevant keywords.
Instead, an effective channel might be social media ads, like those offered by Facebook and Instagram, which employ machine-learning algorithms to find and engage ideal customers.
3. Poorly trained salespeople
Businesses that rely upon a sales team to acquire new customers must make sure that those salespeople are some of the best trained, smartest and most compassionate members of the organization.
After all, it's the sales team that will represent the company each and every day to members of its target audience. If salespeople don't understand the market, or how the product is positioned within the market, it will be incredibly difficult to acquire new customers.
You should benchmark your sales-team performance compared to your industry. Are salespeople performing at or above this benchmark? If not, it's possible that the sales team is a weak link within your organization.
4. Confusion about the ideal customer profile
Each person within your company should know who your ideal customer profile (ICP) is. Members of your team should know the demographic and psychographic makeup of ideal customers. They should know how to find them, and how to speak their language in order to engage with them as a marketer, salesperson or customer-service representative.
If there is misalignment within the organization about the ICP, or worse, if your organization does not have an ICP, it will be challenging to craft a customer experience that appeals to prospects.
5. Impractical pricing strategy
Can your product be obtained at a reasonable price that makes sense to members of the ICP and to the economic buyer? Remember, you are not always selling the individual in your ICP; you may need to use your ICP as a champion within the target organization who then needs to convince his or her boss that your product or service is worth the investment.
Make sure that your pricing strategy makes sense to your ICP and to the economic buyer. Otherwise, it will be difficult for prospective customers to see the value of your product, relative to the price.
6. Lack of market education
Is the target market aware that your business category exists in the first place? If not, you should consider building a market education campaign to make people aware that a solution to their problem is out there.
Take a page out of the marketing playbooks of pharmaceutical or biotech companies. These organizations are constantly developing category-defining products that did not exist before. The first thing these organizations do is educate doctors about the problem and offer their solution.
They do the same with the general public through a mix of traditional and digital advertising. Once the market is educated, buyers are more receptive to the solution prescribed by the doctor.
7. Inaccurate lead-scoring
Businesses that sell to other businesses often employ a lead-scoring system to determine what leads should be sent to the sales team, and what leads should be held for further nurturing. If the lead-scoring system is not working properly, that may mean the sales team is being sent unqualified leads, and its members may lose faith in the marketing team. Another possibility: The sales team is not being sent qualified leads, and therefore the sales team will be unable to hit quota.
The criteria for the lead scoring system should constantly be reviewed to ensure that the right leads are sent, while leads that are not a fit are kept for nurturing.
8. Dysfunctional lead nurturing
All types of businesses can and should employ a lead-nurturing system based on email workflows (also called automated emails).
Ecommerce businesses that send out a regular newsletter can engage customers that might otherwise forget about the brand; and B2B businesses that send well-timed automated emails can engage prospects just in the nick of time.
In fact, a study by McKinsey & Co. found that marketing email is the second most effective way to acquire new customers, second only to organic search, and well ahead of social media. Ensure that your business has a healthy lead-nurturing system in place to generate customers consistently over the long run.
9. Dissatisfying customer service
The average person will tell 16 other people about a poor customer service experience according to an American Express study. If your business is providing dissatisfactory customer service or support, the problem is surely costing you customers. That means ten poor customer service experiences will result in a minimum of 160 other people viewing your business in a negative light.
Poor customer service may also be preventing your organization from attracting new customers through word-of-mouth referrals. The same American Express study found that the average person shares a positive customer service story with nine other people.
10. Disruptive competitor
While we often think of startups as disruptive organizations, by nature, it is certainly possible that another business is offering a more attractive product or service that is robbing your organization of customers. A good way to determine this is to speak with people in your target audience. Ask them about the solutions they currently use and why they chose them. If a disruptive competitor is out there, you will eventually learn about it through speaking with customers.
Conclusion
There are a number of plausible reasons why your business is unable to attract enough customers. Some of these reasons may be unique to your industry, but many plausible explanations are shared among businesses of all kinds.
Related: 5 Tips for Finding Your Ideal Customers Instead of Waiting for Them to Find You
Before looking for less-obvious answers, be sure to review the 10 reasons listed here to see if any of the common mistakes outlined are causing your business serious challenges.
