Fixing startup problems in the right place
When you build a startup, it can feel like you’re constantly solving new operational problems within your teams. Many startup leaders address these growing pains as they arise without thinking about what the root cause of any given problem can tell us about where we should solve it. By solving each problem in the right place, you can build a simpler and more operationally effective business.
Startups operate as a series of interconnected value chains, all of which start with product. For example, the sales value chain starts with product (i.e., chosen market, chosen problem, and chosen solution with all its implementation details), moves onto marketing (i.e., messaging, brand, digital, and the resulting quality and volume of the top of funnel), and finishes with sales (i.e., deal prioritisation, sales pitch, and the resulting won and lost opportunities).
Every layer of the sales value chain is constantly working to compensate for the shortcomings of the previous layers. Through excellent marketing (notably messaging and targeting), even an imperfect product targeting a small market can be easy to sell. Through enormous sales grit, an inadequate product with poor marketing can grow, though it is incredibly challenging. Startups that build a perfect solution to a huge problem for a massive market don’t need to do much marketing or sales.
Similarly, the customer experience value chain starts with product (i.e., chosen market, chosen problem, and chosen solution with all its features, usability, and technical debt), moves onto reactive customer support (i.e., customer support tickets), and finishes with customer success (i.e., account management of escalated customer issues, churn operations, activation of new customers). It is also, of course, downstream of the sales value chain.
Just like with sales, every layer of the customer experience value chain is constantly working to compensate for the shortcomings of the previous layers. A high-performing support team can compensate for a difficult-to-use product and make life very easy for customer success by making customers happy before customer success gets to them. Great account management from customer success can result in low customer churn, even if a support team is struggling. A product with no bugs and a fantastic UI that is targeted at a market that is technical might not even need a support team.
The takeaway here is that most of the growing pains experienced by startups can be solved in more than one place. For example: a startup that is struggling with customer retention due to a massive support backlog could fix this problem at almost every stage of the value chain. This startup could:
- Hire more (or better experienced) customer success people to better manage customer complaints and convince customers to stick around.
- Hire more support team members to reduce the support backlog, reducing the need for as many (or as experienced) customer success managers to deflect churn requests.
- Change focus (or invest more) in product development to improve the usability or reliability of the product, reducing the need for as many customer support and customer success resources.
- Prioritise leads differently in sales to target customers who have in-house technical resources, reducing the need for customer support without significantly changing the product.
- Target a different market segment in marketing to target businesses who are better suited to the current product.
The best way to solve a big problem is at the top of the value chain. If you can adjust your targeting in marketing to remove a problem in customer support without slowing down the growth of your business, you will build a business that is stronger and easier to operate. Every problem you solve by hiring new resources or implementing new processes makes your business more complex and difficult to operate.
Of course, not every problem can or should be solved this way. Small problems are perfectly fine to fix deeper in the value chain. Additionally, changes at the top of the value chain (i.e., marketing or product) usually take a long time. So, sometimes it is easier to fix something in support or success temporarily while you change course at the product or marketing level. The critical takeaway is not to solve everything at the top-level, but rather to always consider your options and make the conscious decision of where each issue should be rectified, rather than solving problems on autopilot within each individual department.
19 September, 2022
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