The trick to growing your startup is learning when to say No to customers.
This might sound counter-intuitive, because when you’re a startup, you’re so desperate for cash that you are happy to take money from anyone and everyone who is willing to buy your services. However, you will soon learn the hard way that some customers are just not worth the money they pay you. This is especially true of customers who want a free trial, but will refuse to pay for your product. They drain your time, suck away your energy, and stop you from focussing on growing your company.
Careful Customer Selection Matter
The trick to being successful is careful customer selection. You need to pick customers from whom you can get recurring revenue because these are the ones who are worth their weight in gold.
A mature founder is one who has identified what his sweet spot is – someone who knows what the right customers for him are , so that he can go after them in a very targeted, focused fashion. He then can learn to say no to all the rest of the world , because they will just end up distracting him from serving his ideal customer.
Start by listing all the existing customers you already have , and then ask yourself why they’re not using all the services which you have on offer. You need to start making sure that your good customers are consuming more of the services you offer.
The more the value you add to them, the deeper they will be embedded in your system and the more the money they will be happy to pay you.
Targeting desirable customers is extremely important, and you need to become a reliable business partner for them. If you delight them, they will become your brand ambassadors, and will be happy to refer their friends (who are very likely to also be good customers just like they are), and this will create a positive virtuous cycle.
[This post by Dr. Aniruddha Malpani first appeared on LinkedIn and has been reproduced with permission.]