Figure Out if Your Startup Idea is a Great One
In short, it comes down to where you are on your search to obtain a problem/solution fit, also known as product/market fit. In his new book, The Startup Owner’s Manual, author Steve Blank notes problem/solution fit occurs when you have found a problem that a lot of people want solved and your solution solves it in a compelling way. Sean Ellis, of Catch Free, explains that determining whether your solution is compelling is the equivalent of figuring out if it is a “nice-to-have,” or a “must have.”
Select Your Company’s Growth Engine
According to Eric Ries, there are three engines of growth startups can use, including viral, sticky, and paid. To select your startup’s primary engine of growth, you must first determine the projected customer lifetime value (CLV) of an average user of your product.
For example, if you create an iOS app that costs the user $1.99 and you have no additional ways to generate revenue from that user the CLV is about $1.40 after Apple takes its cut.
Understanding your CLV helps you determine what growth engine is viable and provides structure to your brainstorming activity around specific tactics you can implement to drive user adoption. Dave Owens, author of Creative People Must Be Stopped, says that is exactly what you want to do.
Don’t Be Afraid to rotate
For those unfamiliar with LemonStand, it was first launched as licensed software back in 2010 by Danny Halarewich. LemonStand quickly built an early customer base and following especially among web freelancers and agencies. Early customers told us they liked the end-to-end design and development flexibility of the software’s templating and API approach, but many of them didn’t really want the overhead and responsibility for the web hosting infrastructure that went along with a licensed solution.
We also learned that as demand for traditional on-premise software was shrinking, selling perpetual licenses with very little recurring revenue made it difficult to continue investing in making the platform better for customers. This combination of challenges could have resulted in a dead end but in late 2012, Danny made a brave decision to pivot the company and completely rewrite the software as a native multi-tenant software-as-a-service solution.
Launch Early and Listen To Customers
When we first launched our SaaS platform, it was definitely a “minimum viable product.” We knew there were maturity gaps, but we also knew that there was a lot we didn’t know and rather than trying to anticipate everything, we chose to learn from our early adopter customers.
We had the benefit of a small community of what I like to call “friendlies”: many of whom were familiar with us through our original licensed product, interested to move to a SaaS delivery platform, and willing to trust that we’d mature the platform quickly. We spent a lot of time with them, using their guidance to build a differentiated platform in a competitive and fast changing market.
By soft launching with an only partly baked product, we minimized the time wasted going off in the wrong direction. By iterating quickly to fill gaps and show real progress, we built confidence and our customers started to talk more about us, spreading the word and contributing to our growth.
Redefine your on boarding process relentlessly
The most talked about benefit of a good on boarding process is that it converts free trailers to paying customers. But that’s not the only benefit to take into consideration. A good on boarding process can dramatically improve your churn.
A good on boarding process quickly and effectively helps your new signups realize the value of your product. Contrary to popular belief, on boarding doesn’t “stop” after the user’s first time interacting with your product. It goes on for weeks or even months, continuing to educate and nudge the user into benefitting from using your product, continuously helping them get more invested.
It’s simple, customers who are getting more value out of your product are going to be less likely to churn.
So how do you improve your on boarding process? There are a few specific on boarding hacks that we implemented:
A set-up wizard
Better empty states
24/7 live chat (or close to it)
User segmentation (person who signs up vs. their colleague)
Design for the novice, configure for the pro
Focus on Product/Market Fit
We’re a small company with big aspirations, and while it would be exciting to say that our platform is for ”anyone to sell anything anywhere” (hmm, that sounds vaguely familiar), it isn’t true today and we don’t plan for that to change.
While it sounds like it would be great if anyone could set up an online store with no skills or knowledge in 5 minutes or less, the problem with the concept is that if anybody can, inevitably anyone does and in many cases failure will result since they then have no idea how to build a real business and/or don’t have the willingness or resources to hire the talent that can help them.