As a founder and a freelancer, I have gained some experience in what can help to build a business. I also learned the hard way about some things that make entrepreneurial life difficult. And about some of these things you should start to think long before you even consider printing a business card. This article is a perfectly subjective lesson I would like to share. If you try this at home - I will not assume any liabilities!
I believe that to be sustainable, you have to make your customers grow. There are many reasons why it is smart to aim for generating value for your customers, long before you aim for generating profit for yourself. And only one of them (albeit a very good one) is that it will make the world a better place. But not only will it make the world in general a nicer place (just imagine how wonderful it would be if everybody thought like that and made sure to improve other people’s well-being - everyone would be taken care of by somebody. It is a sweet fantasy to indulge in, isn’t it?), it will also make your world a much nicer place to live in. I don’t mean to get philosophical , and there’s other places to talk about the proverbial what goes around comes around topic. Nonetheless, I will say that it will improve your emotional well-being, if you think about other’s and it will improve the vibes floating around you. Just don’t overdo it. I am not suggesting you should expend all your energy for other people’s benefit - please do not misquote me here! I am actually a very firm believer in the rule „put on your own oxygen mask first“ - because only then can you help others.
Create Value for Your Customers
Yet, even if you are not the philanthropist type of person, there’s is some good arguments pro being interested in creating value for your customers. For one: value carries you much further than profit ever will. This is because focussing on it makes you think much more about what actually makes your business happen and grow. In an extreme example, you might sell a product or service at a price that is a multiple of its actual value. This would provide you with a very high margin - for as long as it lasts. Which most likely won’t be very long. But chances are, you would never again find another customer that is naive enough to pay the same price. On the other hand: when concentrating on creating value for your customer, at a fair price, this generates demand. Happy customers do talk about their experiences. So: if you really provided some benefit for your customers, they will let others know about it. The bottom line is that even for your accounting books it will pay off if you deliver more value than necessary. Your customers will carry it further by word of mouth. That might even save you some marketing expenses. And in the end, you will sell more. Sounds like a pretty good deal to me!
It’s the Better Lens
The desire to create value for your customers will help you understand them more deeply. It’s simply the better perspective to work from. Your customers are the ones paying your bills. That’s why it is worth it to know what goes on behind their forehead. It helps you take a look at what you can do tomorrow to make sure they stay loyal next week. It supports you in staying attuned to their needs (see also my article on listening skills, so that you can tune your product or service to follow changing needs of your customers. And that is truly valuable - as it might give you the cutting edge information about your customers that your competition does not have yet.
And there’s another aspect to it: it will help you stay young! Much more so than any beauty cream, magic potion or the likes can accomplish this feat, changing perspective and staying awake will keep your braincells sizzling. It will get your creative juices flowing and enable you to better problem solve (not only concerning your business - this effect actually spills over to other areas of your life). Yes, thinking about how to create more value for your customers serves as a preventative measure to keep you from running into some dead end: you can react to your customers’ demand directly when they occur (instead of clinging on to old solutions).
Major Changes in Your Business Model Will Not Puzzle You as Much
Unforeseen challenges and inevitable changes to your business model can let you question your whole endeavor. But with the right perspective, your mind stays focused on customer need, even if you have to pivot1. Of course changing central elements of your business model canvas2 is a tough thing to do. Especially if you grew fond of e.g. these features, channels or revenue models. But these changes are a lot easier to make, if you keep the end in mind - in this case: providing your customers with genuine benefits. So even if your business model changes, you still know what you are aiming for: the value for your customers will serve as a compass to navigate difficult territory. You can reflect all your necessary steps in the light of your understanding of your customer. New approaches to your business don’t leave you standing like a deer in the headlight - you have a very hands-on guide on how to proceed. You can ask yourself questions like whether the value for your customer is the same after the planned change or not? Is it bigger or smaller? How can you turn the necessary shift into an advantage for your customer? How can you let your customer share the benefits of the modification? What do they want? And with the answers to these types of questions, you start modeling your change.
A Flexible Vision Will Help You in Tough Times
Yes, the headline needs some explaining. In this case, a flexible vision is one based on the value you are providing for your customers. Don’t get me wrong: this paradigm is not negotiable. What I mean is that if you realize that your customers need something different than you thought before, or when you figure that you should be providing a different value than you set out with, that’s ok. So, how you provide the value is flexible. That your goal is delivering value for your customers is hard and fast.
Starting and running your own business is not always easy. There will be times, when you are not sure why you are putting yourself through all this. Customers might not come along as numerous as you thought, production is slower than planned, the bank is giving you a hard time. In short: the world seems to be throwing itself in your way and trying to make you stumble. And stumble you will (every successful entrepreneur does!) - the question is, will you fall? And if you do: what can help you get up again? Frankly, I believe that in those times, seeking profit is not a good motivator to pick you up. It’s not even a good buffer to break your fall, let alone a safe railing to clasp to keep you from going down in the first place. Value for your customers on the other hand will provide you with a solid foothold. It will give you confidence that there is a solution out there because you know that there is a value that you are providing that just needs to be delivered. Then necessary amendments to your strategy or your business model will make a lot more sense to you. And you have a fairly objective measurement to check your next steps against: is this really a move in the right direction or am I running around like a headless chicken because I am afraid that things are going down the drain. Additionally: to me it is always highly motivating to know why I am doing stuff. Thus reaching the goal of customer satisfaction or providing them with a benefit helps me achieve „supplier satisfaction“3 as well.
Sowing Help and Reaping Good Relationships
If you think about it, it is quite obvious. If you seek to help others, this is a much better basis for a healthy long-lasting relationship than wanting to make a profit off them. (I wrote some stuff about business relationships and networking in other articles - do check them out!) If you believe otherwise, ask yourself how long you want to stay friends with people who only want to take advantage of you. Now, in my book, someone genuinely interested in making my life better (it doesn’t matter if this concerns my work life, my leisure life, my family life…) by giving me or selling me something that is valuable for me, is someone whom I want to stick around. I will have a much more positive attitude towards this person, be much more forgiving e.g. when it comes to flaws in their product, and I will be much more likely to look their way when it comes to buying more stuff. And when the occasion arises, I might even be willing to return the favor.
On the other hand, if I am in need of a product or service and have the impression that someone is asking theater prices, I will quit the relationship as quickly as I can. This means, I will never be a fully committed customer. I will always be on the lookout for a better, i.e. cheaper deal, because I will have no positive emotional connection to the product or its supplier.
So, it does make you wonder how there are so many companies out there that truly believe in their strategy of closing adhesion contracts. Will their customers ever become loyal followers? No. Might this lead to or at least contribute to a price war in the sector or market they are messing around in? Yes. This means, nobody wins. In the long-run, the company trying to milk its customers will earn a smaller margin than if it had sought to provide extra value to the customer. There is a difference between delivering (extra) value to the customer and giving away your product or underselling it. The former levels the path to a good relationship with your customer, the latter levels the way for your bankruptcy. Just like in the oxygen mask scenario mentioned in the beginning: We don’t want the latter to happen, so make sure to take care of yourself, too, okay?
For those of you who are familiar with Eric Ries’ „Lean Startup“ this term does not need to be explained. For the John and Jane Q. Publics among us: the term pivot describes a substantial shift in your business model. Usually this shift or turn hinges on a change that directly influences your customer - e.g. in your value proposition or your delivery channel ↩
Again for the normal folk among us: there is a great book on how to model your business. To stay on top of the factors that are essential to your business, the authors of Business Model Generation suggest that you use a canvas consisting of eight fields. These fields or components are sufficient to describe any business model and also help you understand how the different pieces play together. And the canvas is really good as a visual summary of what makes your business your business. That way it keeps you from going insane. ↩
by which I mean my own satisfaction, just to spell it out! ;-) ↩