When starting a startup there’s NOTHING more important than your customers. Not your product, not your pitch, not even fancy VC funding…
The ONLY thing that matters is making money.
For Kickstarters the concept’s the same. And whether you dominated your launch or are prepping for the most EPIC crowdfunding campaign ever, it’s important to plan for success.
Not only what happens but HOW.
How are you going to build the business, get sales and keep the company going?
We can do this the easy way or the hard way – thing is it’s almost entirely dependent upon the business you’ve built to date.
There’s good news, though, there’s still time to change, time to evolve.
The Customer Business Dynamic
Whether you’ve funded a Kickstarter or already had a business, you’re in the business of satisfying your customers. You add value to their lives, businesses…whatever it may be and in return you’re richly(hopefully richly) rewarded.
It’s the nature of the business.
But back to that customer…
Where did they come from?
How much did it cost you to acquire them?
What’s their lifetime value to you as a business?
Crap, crap, CRAP. I know that’s what you’re thinking, I’ve done the myself. You’ve stumbled into a trap, the trap of not knowing and realizing this shortcoming despite the fact you’ve heard it all before.
Don’t worry, thing is –
Everyone screws this up, especially starting out.
Put the past in its place, let’s get serious about building the future.
So yeah, it’s GAME time. You’ve probably realized your mistake, forgetting the numbers, the same mistake I and almost every entrepreneur that’s come before has made.
But now it’s time to look at why, and more importantly how to turn these all-important metrics into the drivers of your company.
Two Types of Customers
For every business, there’s only 2 types of customers: repeat buyers and 1st-time buyers – that’s all you need know. Either new in town or been around the block.
And you know what, as entrepreneurs all heard the mantras of building business around repeat backers. That’s where the money, the moolah, the massive, long-term, sustainable success comes from.
But is that always case… and what makes comeback customers so valuable?
The Customer Conundrum
Joe’s a man, an all-American, red-blooded man. All Joe’s other attributes, ideologies and physical traits aside, Joe’s hairy – really hairy.
See that’s a problem, though. Corporate America’s busting on his bold beard and his boss wants it gone.
Suddenly our manly man is faced with a decision, a decision he’s never before been forced to make:
What type of razor should I use?
Imagine the impossibility, a full grown bearded brother whose never shaved…well that’s Joe – just bare with me.
And when all hope appears lost and his corporate career lies in the balance, Joe’s suddenly struck with an incredible idea.
He recalls a superbly suave and manly message a particularly popular beard removal brand barraged him with earlier in the week. He races to the internet, buys the beautiful, manly razors and saves his career from crumbling, bearded banishment.
Acquiring the Customer
So we’ve analyzed the incredibly daring story of Joe, the bearded bro…what’s it mean for you and your business?
Well, Joe represents our typical target customer for XYZ industry. He’s the persona we’re targeting with our message to and the man most likely to purchase our products.
But what’s it cost to acquire Joe,? He’s clearly quite a catch, a sexy, manly man in need a shave.
Well whether you’re doing PPC advertising, creative content marketing or even soapy Superbowl commercials, you’re spending something in the form of time, money or both to get that sale.
And get that sale you did – Joe pulled out his pocket book and dropped $10 bucks on that razor.
Wait, only ten dollars? All that effort and you only got a single purchase?
That puts some serious pressure on you, the founder to find creative marketing channels. Heck $10 bucks is a pretty pathetic, and that’s not even profit…material costs, shipping…shit, you might be out luck.
You’ve lost money, my friend.
Or have you…
Rocking the Repeat Customer Business
Margins and profit, they make or break your business.
And in an industry like disposable razors, a dime a dozen product, you live and die by the repeat buy.
But companies somehow make it work. Juggernauts like Gillete, Schick, these guys are doing untold millions, probably billions each year in disposable sales. They’re making their money on the backend. The brand and buy-in of their customer bases combined with the crazy recurring sales of rapidly returning stubble built these two once meager businesses into titans of industry armed with incredibly large ad budgets and ever increasing customer LTV’s.
Big brands aren’t the only ones forging foundations upon the repeat buyer, however. Smart startups everywhere are starting to grasp the importance of customer costs and trying to stretch their sales to the max.
The main question, though, how do you do it? If you’re not shaving day in and day out or your product’s pretty damn good and not so in need of constant replacements and upgrades, can the power of post-purchase purchases still be harnessed?
The 6 Strategies of Successful Repeat Revenue Businesses
1. Obvious Upsells
I don’t know about you, but the first thing that comes to mind when contemplating increasing customer value each and every single buyer is always the upsell – the oldest trick in the book.
Joe needs to pull off the cleanly shaven, professional businessman look to make it in corporate. The razor alone, it just does not cut it…pun intended. Razor bumps, constant nicks, blood everywhere…he’s going need shaving cream, maybe even an appealing aftershave for the ladies…
Either way, it’s an awesome opportunity for you.
What other complementary offerings can your company provide? From rocking rewards for your Kickstarter to additional items at checkout, it makes sense to add those awesome accessories as value-add, high margin upsells to raise the all-important profit per customer.
Increase your LTV and open up a world of new acquisition channels.
PS. This works extremely well when paired with powerful sales funnels and email marketing campaigns.
Selling something replaceable or consumable?
While it’s not the wheelhouse for most crowdfunding creators, some startups out there are building brands and making bank around the concept of convenience.
Consumers crave what you’re putting out, the ease and accessibility of a subscription service and you’re able to set yourself apart on this alone.
Want an incredible example, no not Netflix, not some SaaS anything like that either. Those are great options but… back to the beards!
DOLLAR SHAVE CLUB!!!
3. Cross Promotion and Affiliate Offers
Thing is –
You can’t offer EVERYTHING your customers need. It’s simply impossible. But darn it anyway that’s not going to stop fool-hardy and focused entrepreneurs from trying.
Stop the madness.
There’s actually a better way, business partnerships and affiliate offers – win-win-win scenarios.
And I know what you’re thinking, this probably sounds dirty, you’re not an internet marketer right? Well that’s where you’re wrong.
Customer acquisition’s quite a feat. It’s a long and often expensive process and not all entrepreneurs out there want fight to find their own buyers.
But what happens when businesses in your niche, your vertical begin offering awesome, completely complementary products to your own?
It’s like Kickstarter campaigners cross-promoting each other, you both win – PLUS your backers get exposed to the new and exciting inventions and ideas they’re so stoked about getting their hands on.
Wicked awesome for all.
But, it’s all about the offer. Unrelated products, potentially damaging partners…weigh all the risk factors before pursing partnerships, affiliate offers and cross-promotional products. You’re building a business afterall.
4. Powerful Product Lines
What takes 9 months to arrive, gets everyone excited and has an air of mystery surrounding everything about it?
…it’s not a baby.
It’s like clockwork – every 9 months a new iPhone, iPad, iPod…the list goes on and on.
Sales, sales, sales. Apple addicts absolutely MUST get their hands on the latest, greatest and most up-to date Apple products – they literally line the streets for a launch.
And sure, you’re not Apple. Buyers won’t kill friends and family to be the first to get their early adopter hands on your product, but still…you get the point.
Creating versions and iteratively improving upon your products has a profound impact on your profits. Can you get customers all jazzed up for repeated buys and the newest version?
If so you’ve cracked the code…
5. Consecutive Kickstarters
Just crushed a Kickstarter, do it again.
Seriously, nothing sells better or succeeds faster than funding follow ups.
You spent weeks, months…whatever working to learning crowdfunding. You clearly found a groove with Kickstarter and created something backers and buyers responded to.
And well, I’ve always heard if it ain’t broke, don’t fix it.
And while stupidly oversimplifying the strategies of your startup going forward, here’s why consecutive Kickstarters can kill it for your business:
- You’ve already got the backers – You’ll launch to a bigger, better list of people who want your products.
- You’re not as dumb this time around – No more rookie mistakes, only efficiency.
- You’ve got credibility – You crushed your campaign and delivered your rewards, extra assurances for backers.
And heck, it’s kind of fun right?
We won’t too deep into the power of post-Kickstarter crowdfunding, but if you’re serious about success and aim to accomplish what numerous Art of the Kickstart guests pulled off to profitable perfection then check out our crowdfunding article on the power of small wins.
6. Customer Referrals
As a backer, I bet I’m not all that important to the success or failure of your startup. But who says value’s only a monetary measure?
Okay, okay…we’re talking business – the making money business.
But where does exactly does indirect sales come into play?
Look, there’s two primary ways backers and buyers contribute to the success and long term sustainability of your company: sales and referrals.
It’s the 100 true fans concept come to life and it’s playing out before your eyes. And the companies that dominate the market, they get it.
Referrals rock – there’s nothing better than a $0 customer acquisition cost, it strengthens the stability and longevity of your startup.
But how, how’s the all-important thing we’re looking for isn’t it? You know sharing is caring and it can freaking profitable as hell but what’s the best to blast off the virality and brand building power of organic customer referrals?
That my friend’s a post for another day. So be ready for real world strategies and ridiculous brand building, referral generating tips and tactics to transform your startup in another post.
I’ve taken enough of your time and hopefully forced you to fill your startup success To-Do list.
And if this articles allowed you to look at your business in a new light or helped you in any meaningful way I’d love for you to share it around social media so other inspired entrepreneurs can benefit as well. I invest a great deal in each and every single article and only hope Art of the Kickstart can positively impact as many kickass creators and worldchangers as possible.
If you’ve got any questions, comments or awesome insights into customer acquisition…heck even if you’ve got a bold Superbowl prediction, whatever you’re feeling, thinking or excited about, leave something special in the comments.