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Know your customers to grow your customers: designing a Value Proposition for the Early Majority

 

Post written by
Sarah Seyr

Rocking the hockey stick, when the customer base grows steadily and sales develop momentum is what startups and investors aim for. But what does it take to take off? Often, the idea of business development is to simply do more of the same. But is it possible to “just scale”? For the growth phase, we have to rethink our understanding of “the customer” in order to deliver a compelling value proposition for the early majority customers.

Growing in quantity vs. growing in quality

To move beyond family, friends, innovators and early adopters and to tackle the early majority customers it takes a solid value proposition. The challenge, however, is that what we have learned so far about our customers may not apply to tomorrow’s customers. Entering the growth phase, startups often know little about the majority customer and on how to redesign the value proposition accordingly. 

Shifting mindset from “problem / solution fit” to “product / market fit”

When starting a business we are usually particularly concerned about getting to know our customers and understanding their needs. We work hard to achieve the “problem / solution fit”, as it is referred to in the lean startup approach, and try to create something that people actually want. Eventually, we can call our mission a success, when our first customers, the early adopters, respond to the value proposition and give positive feedback.

This is usually the point where the mindset shifts. Since we proved that our solution solves a problem, tackles a customer need, we shift focus to the next level of company building and try to achieve the “product / market fit”. This means testing the growth hypothesis and finding out whether and how we can scale our business model. Unfortunately, this often comes along with a certain saturation regarding customer feedback. We think we know enough about the customer now, and that can mislead decisions to the point of developing a strategy based on wrong assumptions.

From early adopters to early majority

In order to develop a successful customer strategy, we have to get the base right. We need to take into consideration that the majority of our target customers might be different from your early adopters. There are some patterns, for example, customers in later stages are more risk averse and less willing to try new things. If we don’t take that into account we might hold on to old beliefs, even though they do not apply for the new circumstances.

The challenge is to identify the differences between early adopters and the majority customers. The insights might be confusing at first and customers at this stage often seem to be a moving target. While some feedback from early adopters is helpful to improve the product in general and to sharpen the story, others might lead in the wrong direction. Therefore, shifting away from early adopters to majority customers has to be a conscious and well-planned process.

Successful customer growth occurs when learnings of early adopters are carefully evaluated, and the learning iterations continue and build a bigger, more holistic story for customers. It also means letting go of old beliefs and being ready to adjust the value proposition.

The best way to develop a successful customer strategy is to put customers at the center of your growth strategy, to keep it lean and to keep learning.

Grow with your customers: In order to create added value for your future customers, let customer feedback drive the development of your brand. It is always important to work with what your customers give you and exploit the feedback you get for your customer strategy. This is the best opportunity to give an additional emotional charge to the brand and improve your value proposition. Pay attention to additional qualities, especially those important to majority customers such as reliability and trust.

Keep it lean & keep learning: It is fair and necessary to develop a growth mindset, but make sure your organization doesn’t lose out on the learning mindset on the way. Continue testing hypothesis from iteration to iteration. Make sure that you tell no more than one story at a time and collect feedback from your customers with every iteration. Check more holistic indicators for customer engagement and retention along the customer journey beyond sales KPIs.

The bottom-line is that customer growth requires an initial clarity about the value you promise your customers. Above all, it requires a better understanding of majority customers and openness to adjustments. Make sure you don’t get overwhelmed by a growth mindset and hold on to the learning mindset.

Feel free to reach out and connect! I am happy to answer follow-up questions on how to build a value proposition that appeals to the early majority and rocks the hockey stick.