Ali Tajsekandar - CEO, Wishpond
There are many avenues that can lead to a business struggling to find a foothold. Things like not finding a product-market fit, misjudged pricing, the inability to effectively market or sell to potential customers, expedited burn rates and more can all leave a business in a bad situation. But before that stage is reached, there are a few key indicators to watch for and simple strategies to adjust.
The biggest hurdle a business faces early on is finding a product or service that resonates with the target customer. If this is an issue, a business could either shift its interest to a consumer base that has a bigger need for its product or pivot completely and change the product offering. This is difficult and time-consuming, but sometimes necessary.
A second warning sign arises when the company is unprofitable despite having a large number of paying customers. Running a series of A/B tests to determine your customers’ thresholds for spending will help you balance cost to conversion and make sure you’re not only attracting customers but also generating a profit.
Finally, a company may need to adjust if it costs more to find customers than what those customers generate in revenue. The key is to be aware of what isn’t working and to be flexible enough to make the adjustments needed to move the company towards a profitable outcome.
Darcy Hughes - Chief marketing officer, Skio Music
I’m often asked, “How do I know if I’m heading down the right track? When is the right time to pivot?”
Not easy questions.
The old way: There are hundreds of metrics out there that can give you a read on where your offering is succeeding or falling short. Unfortunately, most businesses believe traction to be the key indicator in proving a model.
Surfacing advocates: You won’t truly know if your central marketing message is effective until you have a top layer of customers advocating on your company’s behalf, driving referral acquisition with their own social capital. Their time, money and personal data prove you’re on to something, but ultimately you want customers out there working for you to get traction with other high-value customers, not simply playing the quantity game.
Face the truth: If you don’t foresee a healthy ecosystem like this in your near future, it is time to re-test those value propositions. Be ready to pivot to meet more top-tier customers. Ditch the ego, walk away from sunk cost.
Stay lean: Testing quickly and often will ensure that you optimize or pivot at the right time with solid qualitative and quantitative insights. Many startups tend to pivot too often because they can, and in the end lose the customers they’re seeking the most.
Jonathon Litchfield - Principal, Litchfield
The benefit of being a small retailer is that you can be incredibly nimble and have a very direct relationship with your customers. When gauging the appeal of a product offering, I have the opportunity to read reactions in the eyes of my customers, overhear what they say and even engage in conversations to test out how things are working. I’m then able to take that information and make changes accordingly. I delve deeper into some product categories or scale back on others, slant the offerings to accommodate repeated requests or reposition products in a way that speaks to my demographic.
Litchfield today is a few steps to the right of what it was when I opened, and that is as a direct result of observing and adjusting. In the beginning I envisioned a store that was more focused on exceptionally executed, functional tools for everyday life. As it turned out, Vancouverites are generally not inclined to spend money on handmade horsehair brushes, brooms or titanium camping dishes the way that other markets are, so I scaled back those areas and focused more on unique accessories such as waterproof backpacks and personal scents as opposed to “tools.” From that point on, I knew the shift would continue to happen – the evolutionary aspect is inherent to the business model in many ways and is one way I knew I could keep the business fresh for myself and the market.
