First it’s all about the process… then it’s about improving it
We recently delivered a Customer Relationship Management (CRM) system to support a client’s international growth. This required a number of changes in the standard customer journey and varying different processes and communication challenges to localise and cater for the operational needs of the market. Because we largely replicated our existing custom process it was easy to adapt to local marketplaces and make improvements
Christmas is a great time of year to review your customer process, improve your focus and deliver better business.
Our associated services.
Here are two overviews suitable for early scale and scale up businesses from the close.io blog.
Tips for Early Scaling Businesses
1. Customer Churn
Most startups assume churn only tracks the customers who cancel their subscription, but there are multiple types of churn, all of which need to be measured.
2. Lifetime value
The lifetime value metric measures how much revenue you get on average from a customer from the moment they start paying you, to the moment they stop paying you. Like any SaaS metric, there are many ways to calculate LTV, and you can read more here.
3. Acquisition cost
How much do you spend to acquire new customers? Keep in mind that even “free” exposure, like content marketing, has a price tag. Find a way to calculate the cost of the time you invest.
4. Monthly recurring revenue
For an accurate look at your MRR, calculate the following: Profits from upgrades, profits from new buyers, losses from downgrades, and losses from cancellations.
5. Revenue per customer
This is a little different from lifetime value. This metric measures the revenue an average customer will create over different periods of time, including daily, weekly, monthly, quarterly, and annually.
There are hundreds of KPIs you could track and, as your business grows, probably should track. But those five will create a strong foundation to grow your startup from 100 to 1,000 customers.
Tips for Scale-Up Businesses
Step 1: Segment your customer base
Start by separating your current customers into two categories: Top-tail and long-tail.
- Top-tail customers are your largest customer group; the customers you specifically marketed and sold to in the initial growing phase.
- Long-tail customers are customers outside of your initial target market; usually early adopters who stumbled across your product and found a way to make it work.
If you’re at the 1,000 customer mark, your initial market is probably nearing saturation. You might still get some new sales out of it, but to really grow, you’ll need to expand into new markets. Here’s how to find them.
Step 2: Identify high-potential markets to experiment with
Let’s take a closer look at your long-tail customers.
First, group them together by market. For example, “Healthcare,” “Marketing,” or, “Legal.” Alternatively, if you’re looking to expand internationally, those markets might be countries.
Now prioritize those groups based on the value they generate for your company. You can measure that value in a number of ways. For example:
- Money: The amount of revenue they generate for your business, measured monthly, quarterly, or annually.
- Lifetime value: How much revenue you get from customers (on average) from the moment they start paying you, to the moment they stop.
- Size: The overall size of customers, measured in revenue, customers, or employees.
- Channel: How customers found your product. For example: Facebook ads, word of mouth, cold outreach, or content marketing.
- Acquisition cost: How much do you have to spend to acquire new customers? Keep in mind that even “free” exposure, like content marketing, has a price tag (often measured in time).
The groups that provide you with the greatest value are your high-potential markets; or industries and locations likely to generate increased revenue if you invest in them.
Don’t focus on today’s reality. Focus on future potential!
Choosing your next market isn’t as simple as “the one with the most customers or revenue.” You need to look at potential, not just reality.
For example, imagine you have two high-priority markets: Construction and pharmaceuticals. You have 20 customers in construction and three in pharmaceuticals. What’s the best market to expand into?
It’d be easy to assume that construction is a more viable market. But what if pharmaceutical companies pay more and are more likely to buy? Or what if you’ve already tapped the construction market, and aren’t likely to expand it further?
That’s where step three comes in.
Step 3: Run experiments and find winners
Remember those product / market fit tests you performed in the early stages of your startup? I hope you took notes, because you aren’t done with ‘em yet.
Once you’ve identified a handful of high-priority markets, perform validation tests to ensure there’s a lasting demand for your product.
This ensures you avoid a common mistake for many first-time entrepreneurs: Biased market investment, which happens when a founder discovers two high-potential markets: one they’re excited about and one they’re not. Instead of taking the time to validate the markets, they over-invest in the one they want and ignore the one they don’t.
It doesn’t fucking matter if you’re “excited” about a market or not
How you “feel” about a particular market shouldn’t factor into your decisions. Growth beyond 1,000 is about chasing potential, and potential should be reason enough to be excited. And if it isn’t? Get over yourself.
Your time and resources are more precious than ever, and need to be invested in markets with the highest possible ROI.
Step 4: Bet the house on the winners
Once you’ve identified your new market(s), it’s time to start investing in them.
No surprise, this is where most startups get stuck. They knew everything there was to know about their initial market, but now they’re entering uncharted territory and don’t know what to do.
You don’t need market expertise or experience
Here’s the good news: No matter how different two markets are, they’re both after the same thing: Using your product to solve their problems.
Sure, they might have two different problems that require two entirely different workflows, but that’s okay. You can learn about that, just like you learned about your first market.
Don’t make the mistake of assuming you need to be an expert in a market before entering it; you don’t. You don’t need to hire experts, either.
It doesn’t matter whether you’re expanding from tech to construction or America to South Korea; you have access to the resources you need to gain leverage. Here are two strategies to help you get started:
- Your early adopter customers in the new markets. Your customers are market experts. Have a question about this market? Just ask them! Reach out and say, “We want to invest more in your market. Would you be willing to hop on a quick call with us to answer a few questions as a trusted expert?”
- Domain experts for hire. Book some time with an industry expert. With the right questions, you can learn most things you need to know in a matter of hours. Just follow the 80/20 principle.
If you’re honest with yourself, you probably weren’t an expert in your initial market right away, either. And even if you were, you probably still learned a lot. This is no different. Treat it like a learning process and you’ll do fine.
Example: ElasticSales was entering new markets within days
We used to run a huge outsourced sales services company selling for over 200 different startups in hundreds of markets we weren’t experts in. How did we onboard new sales reps to these new products and markets? Within a day. Wanna know how? Check out our new sales rep onboarding hack here.
Adapting your sales process
The sales process that worked in America might not work in Germany, just like the sales process that worked in the tech industry might not work for the construction industry.
It’s usually best to treat new markets like a fresh launch. Eliminate all assumptions and develop a sales process unique to the market. Been awhile since you created one? Here’s a quick review: