Today’s conventional wisdom is skewed towards the “build it, and they shall come” ideology. This is driven by the overwhelming focus on product which is a direct result of technical founders at the helm of startups. Not to forget the lean startup movement and the MVP framework, both of which are focused on bettering the product by incorporating user feedback.
Although it is ideal if your product is viral and you do not need to spend a dime on customer acquisition, it is not always the case. Early in the life of a startup founders should explore ways to accelerate viral growth through referral programs, and focus on providing a ‘wow’ customer experience.But eventually, every founder must have a paid marketing/sales strategy that weighs the LTV of a customer against the CAC (cost per click/conversion).
Let’s talk about the graphic at the top. This scale is a great way to understand the magnitude of spend on acquiring customers broken out by customer segment. Businesses seem to have a good grasp of the techniques to reach consumers like you and me, referral programs, fb/twitter ads, SEO, etc. On the other end of the spectrum you have pioneers in complex sales like SpaceX (NASA deal), VMWare (b2b), and Palantir (US gov deals).
The big opportunity though is in the middle. Small business is a tough nut to crack. They are highly fragmented and no great strategy exists to cater to these companies. How do you convince a mom-and-pop store to buy your order management software solution?
This begs the question, if you build it, will they come?