Businesses that are yet to turn a profit are facing unprecedented pressure to start sales. With fundraising becoming hard or unattainable and cost-cutting measures doing more harm than good, entrepreneurs are left with growing profitable sales as the only viable options.
For most businesses at this stage surviving will take two steps: 1) achieve product-market fit and 2) extend the runway enough to get to profitability before money ran out.
Achieve product-market fit
Product-market fit is usually seen as a two-step process:
1. Determine that there’s a customer with an unfulfilled need and money
2. Create a product that solves a problem and can be bought by the said customer
Or vice versa.
This is usually seen as a theoretical waterfall-style exercise: determine who is the customer, what the needs are, what the channels are, measure the market and if it’s big enough and the model is viable – execute.
There’s nothing wrong with it, but this process has a huge omission: once there are sales, any sales, researching each individual customer gives much deeper understanding of the product-market fit needs than any prior market research.
Especially in the early days, understanding improves significantly with each new customer listened to.
What’s more, this allows to weigh responses by listening to people who bought the product, especially if it’s still incomplete and flawed.
This is not to say that the feedback should override focus and product vision. On the contrary. But paying customer behavior often gives unique insights to how the vision should be achieved and how customers see the problem from their perspective.
Part of this information can be obtained by talking to customers: asking why they purchased, what they value and what they are missing. But, as often the case in research, observing provides results otherwise hidden.
Customer journey mapping is one of the tools available to extend understand of who buys, why and how.
Collecting details about the entire customer path, from the first interaction to the purchase allows to see how the customer discovered the product and what website content may have made them buy.
This not only applies to attributing conversions to paid ads, but also to understanding what landing page and what other content on the website enticed the customer to buy.
Able CDP does it by mapping the entire customer journey, starting from the first website visit, then associating details entered in the lead or sign-up form and finally attributing all future revenue from the customer, including Stripe recurrent payments or CRM conversions, to the original visit.
This allows to see how customer interacted with the website before making a purchase and what is in common between the existing paying customers: what landing page they found when coming from organic search or what ad they clicked, what other content on the website they’ve read and what likely made them to purchase.
Understanding customer journeys allows to reinforce the focus by expanding approaches that work.
Extend your runway
Extending runway is on everybody’s mind in early start-up stages. When prospects of raising more funds become questionable, spending the existing capital most efficiently is paramount for survival. From the customer acquisition point of view, it usually comes down to two needs: understanding ROI from different marketing activities and customer segments and improving return on ad spend.
There are tools like Google Analytics or proprietary reporting platforms that everybody uses but the data in them are not necessarily reliable. If sales funnel spans across different domains or subdomains or conversions happen off-line, they’re often either not reported or a significant portion of them is attributed to ‘direct’ marketing sources. What’s more, ad platforms such as Google Ads and Facebook Ads would often severely limit conversions reported when a tracking tag or pixel alone is used due to privacy limitations.
As a result, marketers feel forced to operate within the old principle of wasting 80% of the budget, but not knowing which 80% that is.
Able CDP first-party customer tracking solves this problem and report return on ad spend without gaps in the data, attributing almost all purchases to their actual sources. Correctly attributed sign-ups and payments are then sent to Google Analytics and proprietary reporting platforms.
It also sends detailed customer information, such as privacy-friendly click identifiers and first-party customer data, to ad platforms such as Facebook Ads and Google Ads, allowing to report many purchases that would be unreported otherwise. This affects ad ROI directly by allowing ad platforms’ machine learning to better understand the ideal customer.