Scalability Can Wait: Unconventional Customer Retention

Scalability Can Wait: Unconventional Customer Retention

Scale, Scale, Scale. Everyone in the startup world always talks about “Does it scale?”, “We need to do something that scales.”, and “What’s the scalability?”. Whether something was scaleable or not was all the startup world talked about. Then Paul Graham came out and flipped the whole scalability thing upside down.

 

The thing is, scalability doesn’t matter when you have nothing to scale to. It’s one of those things that if you build it, they won’t necessarily come. Unconventional things that don’t scale keep the personal touch, and make a lasting impression on your customers. Ultimately, it’s something that can turn an engaged user into a lifetime customer.

 

nyc scale

Scalability

The thing with startups and things that scale is that the whole purpose of scalability is to make it so that it’s as low-touch as possible. The problem with this in early stage and small businesses is that in itself. The sure-fire way to generate loyal customers is to not automate everything and touch everything as little as possible, but quite the opposite. Scaling may work great when the rest of the business is a finely tuned machine, but when you start out building things for the purpose of scaling, you won’t have anything to scale with. You should treat your customers as the only things that matter, not just a number in your system. At the end of the day, nothing else matters except your customers/users/etc..

When people talk about scaling, they often talk about 1:2 or 1:3, whatever is more than 1:1.

Customer retention

When most do a startup, they have the idea that if you build a product, people will come. Though this may be true in certain cases, and some of the time, people will come, it isn’t the primary issue. Generating new customers is a completely different ballgame than keeping customers and creating returning customers. This is extremely important when it comes to SaaS companies, as the viability relies on creating not-one-time customers. If your average LTV is low compared to others in your playing field, it should, and will trigger many red lights.

This is the sole reason why customer acquisition and customer retention teams are different people in a marketing team. The ideas are completely different, as well as, the goals. Someone who is great at acquiring customers, might not be great and retaining them. If you try to automate this process too soon, or if you try to build it so that it’s scalable off the bat, you won’t pick up on the situations where doing high-touch, non-scalable things, matter.

Things that don’t scale

It is necessary to do things that don’t scale. It may not be completely obvious, but the majority things out there don’t scale, but people see them like they do.

Sales Teams – Though you may be able to scale the ‘sales process’, the whole concept of sales teams is something that doesn’t scale. Each salesperson can only handle X deals and X customers. If you want to handle 2X deals and 2X customers, you need to hire another salesperson. As you grow, your sales team can’t suddenly handle 1.5X or 2X without growing. Sales will always be 1:1 growth.

Help Teams – The same thing applies to help teams. If you want to provide support to Y customers at Z quality. You can’t do 2Y and 2Z without growing the team. It’s a 1:1 scale.

If you noticed anything similar about Sales and Help, it’s that they are both front-line teams. Most front line teams don’t scale. This applies towards every industry that has a front-line staff, retail, service, etc..

The concept applies outside of teams as well. At Stride, we hand-write thank you cards to our customers. This involved looking up addresses, physically writing each card, and putting stamps on each one. The commitment will be very visible. And again, doing something at this level of commitment and quality, doesn’t scale. A person writing a card at 10.0 quality, can only write 1.0 cards per minute. They can’t write at 10.0 quality and 2.0 cards per minute, something will have to give.

Putting it all together

It’s extremely important to place the customer at the top of the priority list in any startup and small business. They are what makes or breaks your company. So, before you go and build things for the purpose of scaling, think twice to determine if it’s a good idea. All of the things that involves directly interacting with customers should be things that “don’t scale”. It stands clear; why does customer service at company A suck, compared to company B? Why do we hate used car sales people? It all has to do with scaling, and people doing it in the wrong way.

And, don’t go out there automating things that shouldn’t be. Why do some companies go out of their way to to make letters and cards look like they were handwritten, but blatantly fail? We always try to do too much with too little, because it is demanded. But the truth is, you will make more of an impact by doing less, with “more”.

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  • http://www.salesportal.com/ SalesPortal

    “Most front line teams don’t scale.”

    That’s a good point. You have to reach a certain amount of new business to justify hiring new sales and customer service help, but until you reach that point you have to make the most of what you’ve got. That could mean your existing team is running tight for a while to deal with an influx of business.