In my book, The Entrepreneur, I explained that entrepreneurs need to answer two important questions when it comes to starting, managing, and growing a business successfully.
The first question is “Can I build it?” followed by “Will someone care?” While technology seems to make us believe that we can build anything we want, the crucial question is:
“Will anyone care about what we are building?
This raises another important question about how a business can create value before growth. At the early stage of starting a business, founders are qick to think about how they can take their business to the next level, instead of figuring out exactly what customers want. In business, value is the glue that keeps customers coming back.
We all know the importance of keeping cost of customer acquisition low and increasing customer retention. This culture of creating value before growth tends to be the secret that constantly drives customer retention, profitability, and growth in any business.
Let’s take a company like Costco for example. The company creates value before growth by offering three types of ingredients – quality, price, and speed which consistently enhances its customer retention strategy and grows the business.
Like Costco, entrepreneurs can create value touchpoints from day one of starting their business. This is what it takes to build a profitable sustainable business that outlasts competition.
How do you create value before growth?
There are many opinions about how entrepreneurs can create value before growth in business. What I discovered after many years of coaching and mentoring startup founders, entrepreneurs, and corporate managers to start, manage, and grow their business is that value has to be captured first in a company’s value propositions. This is an important responsibility that entrepreneurs cannot overlook. What is it that you are creating for the customer? What steps are you taking to ascertain that they are exactly what the customers want? You see, no customer wants to waste money on a product or service that does not resolve his or her pains, or satisfy their needs.
You need to capture value from day one of starting your business, and the only way to do this is by talking directly to your ideal customer segments. For customers to care about what you are creating, your product or service must be able to address their pains and needs. There is no magic for finding what customers want, than getting outside the building and talking to them. There is no facts inside the building.
Once you’ve figured out the right quality for the customer, think about your pricing model. This is still an important element when considering how entrepreneurs should create value before growth. While many schools of taught recommend different pricing models (cost+markup or value priced), I’d recommend for you to test what works and stick to it. When customers feel that they are getting value from your offerings, they are more likely to buy more and pay a little more. Likewise, you cannot force an unsatisfied customer because he or she will leave even if you lower your price. Think win-win. Set a price that leaves your customers feeling satisfied, and at the same time maximizes long-term return for your business.
When considering how to create value before growth, delivery of value at the speed of light is crucial. You cannot afford not to deliver your product or service fast, otherwise you may lose customers. It might be useful to consider collaboration with key partners to compliment your work, if you do not have a structure that supports fast delivery presently.