Startup Revenue Strategy: Sell Last, Bond First
Most entrepreneurs have heard and said, “People buy from people” at one point or another but few founders actually apply the quote to their startups. Often times, you stumble on a website or service that you have never heard about and within a few clicks, you are presented with payment options. In such situations, unless you are desperately in need of the service, you are very likely to decline all payment requests. As often as this happens, one would think that all entrepreneurs would have learned about this mistake in Marketing 101 and they all would have taken steps to avoid this mistake but no, it continues to happen.
Why is it a Mistake to Sell First?
I will answer this question with my experience in our own company; we built a digital content site, we were eager to sell, our content was ready and we gave potential users the option to make payment. That was what all the incumbents are doing so why not? Well, we learned the hard way that everyone who wanted to subscribe to our service wanted to talk to us before making purchases and so we began to ask ourselves “why”? For most calls, they just needed to hear someone’s voice, they usually don’t have any important question to ask. Why, then, do they want to talk to us before making payment? We later learned that the phone call creates the initial bond which without, site visitors will not convert to paying customers. Therefore, founders must make conscious efforts to establish the connections first before presenting payment options.
Bonding with the Customer
Making connections with your customer does not necessarily need to be done by phone, especially if you are trying to scale your business. The ultimate goal is to gain your customer’s trust and it can be achieved using different methods. In-person appearance and phone conversations are just two ways of gaining customer trust. Presenting endorsements, referrals and free samples are also very effective in gaining customer’s trust. Before you attempt to present/discuss payment with your potential customer, ask yourself whether or not you have gained the customer’s trust. This is especially true for startups where the company has not yet built a brand that the customer can relate with.
The Small Company Strategy
While it is good to try many different ways of bonding with your customer so that you can find the most effective approach for you, small companies are generally known to have fewer resources and, as such, encouraged to offer free small services as a way to bond with customers. Why? The reason is that “People love free!” The strategy is that while everyone is coming in for free service, the business uses that opportunity to test demand for its product/service and the business also carefully identifies interested customers so that the company can embark on targeted marketing to interested customers. Whichever way it is calculated, there is a cost to customer acquisition and free/trial service is, by far, the most effective for small companies as long as the business is able to “bond” with the customer during and after the free/trial period.
After the Bond, then Sell!
The ultimate goal of the company is to sell. Not only is the bonding step needed for getting close to the company’s customers, it should also serve the purpose of helping the company understand the customer’s perspective of the company and its services or products. The company must carefully present payment options to the customer after the bonding and that serves as a “true” test of the customer’s level of satisfaction with the service/product. Traditionally, companies use surveys to get customer feedback but statistics has shown lack of correlation between expected customer behavior derived from customer surveys and actual customer behaviors. Therefore, in addition to increased conversion rate, presenting payment options immediately after bonding with the customer also helps the company in two ways: 1. Generate revenue for the company and 2. Measure customer’s interest in the company’s service/product.