Over the last couple of years I’ve helped more than hundreds of entrepreneurs, founders, employees and other people involved in startups and corporate projects. While I strongly believe that the overall quality is improving, I’m still surprised to see how often founders are making the same mistakes. I can’t tell you how to start your startup, but I will share some piece of advice which I think could help you along the way to avoid the most common pitfalls of running one.
1. Analytics is everything
Let’s keep this one short and clear: Data about how your users are (not) using your product or service is everything. Without it you will be shooting in the dark while driving a Ferrari without brakes. Not cool. If you still haven’t set up your stack of analytics, make it your first priority tomorrow and think about the most important KPI’s for your startup. And if you think you could still get away with Google Analytics, think again, it’s not 2014 anymore. Event based tracking helps you and your team understand your user’s behaviour much better over time. Focus on the most important events on your website or app and make sure you track the entire funnel to the end. You wouldn’t be the first one to make decisions by looking at the wrong numbers unfortunately.
2. Leaking funnel? Yikes, fix it
When the data starts rolling in, make sure to focus on the biggest drops first and make sure to fix your leaking funnel. This means that you optimize the steps in the funnel where the highest percentage of people are slipping away first.
If you keep spending money on user acquisition while having a leaking funnel, you have a better chance of winning by putting all your money on red in the closest casino.
3. Retention
In addition to the leaking funnel above, I want to quickly share something about retention, the most common overlooked thing amongst most founders I’ve met.
If you could choose between 1 million visits on your website or 100 paying customers, which one would you prefer?
I hope the latter, since this means so much more for your business in general. The 1 million visits is what we like to call a vanity metric. It doesn’t say anything nor does it help you to pay the bills (yes, advertisements could help with visits though).
If we all agree on the above, why do so many founders focus on user acquisition and marketing only? Optimize your product with a small group of highly retained users first and then try to scale the product into the next big thing. Finding the difference in a pattern between users that stick and the ones that churn is what separates the men from the boys.
4. Always run experiments
To be honest, this is probably the most difficult one and therefore even more important. It takes most teams a while before this becomes weekly routine, but the ones that do are always improving.
I can’t stress the importance of running experiments, always. Whether it’s a simple A/B test with a huge difference or a very detailed pricing strategy, please try to move the needle all the time. Since most startups are depending on results fast, you can’t afford to waste time by only talk and think about how you will gain those new users.
If you are not running any experiments, you’re not learning.
5. Channel independency
So you’ve found a scalable channel that works for your business? Awesome, you found yourself something pretty cool. Now it’s an option to spend all your time and money to double down on this channel, right? Unfortunately that’s only half of the truth…
Yes, you should spend some of your money to double down and squeeze everything out of the channel as fast as you can. But, you should never put all your eggs in one basket. You don’t want to rely on SEO only and then become the victim when Google decides to change their algorithm over night. Therefore you should aim to always have at least two or three customer acquisition channels that work well. When a channel becomes less profitable or saturated, you start being creative and find a new one.
Make sure one of your channels is controlled by you to become less dependent on others. This could be your own blog doing content marketing or growing your Instagram account.
6. Growth is always a team effort
Growing the product is probably the most difficult thing for every startup. Therefore you should embed growth into the core of your business DNA. It’s not only the responsibility of the marketing and growth department, it should also be a priority in the development backlog.
Every single person in the team should be involved in growing the company on a weekly basis. Challenge each individual to come up with experiments within their own responsibilities and let them challenges others ideas.
7. Money makes the world go round
Money is the only validation to find out whether your business is sustainable in the long term in my humble opinion. I see so many startups focus on user growth only. Yes, chances are that you end up becoming an unicorn and don’t need to worry about a business model for the short term. But this only happens to a very lucky few, so please start with a business model from day one.
Charging users isn’t a crime. If your product or service is good enough that it makes their lives easier or more fun, they’re happy to pay for it. If your users don’t want to pay, maybe you’re targeting the wrong audience.
8. Topnotch customer support
Many new startups have grown a substantial part of their user base because they understood the value of outstanding customer support. By now this piece of advice should be a no-brainer, unfortunately it’s still not for most startups.
Even if you’re a new startup in a very competitive market, customer support could be a tactic to win over your competitors customers in the long term. Putting your customers first always wins, period.
9. Stop pretending you’ve got this
A typical question when I meet (new) people is to ask them how things are going with their startup, product, service or job. Being both interested and polite. During the years I found out that the smartest founders I’ve worked with always answered this question honest and sincere. They drop the sales pitch, share their challenges and let me think along. It gives me the opportunity to help them, and if I’m not able to help them myself it gives me the ability to happily connect them with some of my peers.
As a founder it can be necessary to pretend that things are working out better then they actually are. Never lie, but you can leave out the ugly parts sometimes. I do want to note something though, since I never understood why some founders never share their challenges or will always tell you how well things are going.
First of all, no business ever founded didn’t ran into challenges neither were they home runs. It took hard work, time and persistence. If you’re not willing to share for some reason, be my guest. Asking for help and advice is not uncool, not asking is.
