3 Reasons Savvy Startups Prioritize Customer Experience
Gregory Smoragiewicz

You need more than grit, grind, and Gary Vaynerchuk quotes to grow a successful startup these days.

Now, don’t get me wrong. I’m not here to knock #TheHustle. I know it’s a vital resource every startup must rely on from time to time. But what you don’t want is a culture where acquiring customers by any means necessary is seen as the cure for every business ailment.

Because as more founders are finding out the hard way, the customer experience you deliver before and after a buying decision, is quickly becoming more important than that moment when money first changes hands.

Loyalty Is Your Best Strategy

Strong acquisition rates make your startup popular. Strong retention rates make it profitable.

This logic is particularly true in the tech sector, where more businesses are embracing freemium and subscription pricing models. Significant (and ideally recurring) revenue will only appear at one end of the equation if consistent engagement and long-term loyalty are at the other.

Strong retention rates also brighten your financial forecast by generating fresh sales. The easiest prospect to close, is a person who has literally bought into your value once before. While some analysts pin the probability of successfully selling to existing customers at 60-70%, the odds of converting a new contact are just 5-20%.

Of course, if those happy and committed customers also become an extension of your sales staff, that second percentage could be much higher. Customer advocacy is the most persuasive marketing channel, after all, with 84% of consumers now trusting online reviews as much as a personal recommendation. And those free referrals are a crucial complement to the expensive, hustle-heavy tactics most startups have to employ in the early days.

So how do you inspire the kind of loyalty that launches this virtuous cycle?

Well, you can honor the Hippocratic Oath and pledge to “first, do no harm.” More than half of consumers have switched service providers within the past year as a result of poor customer service, with 80% insisting the company could have done something to convince them to say.

But avoiding bad experiences, while appreciated, is not nearly as valuable as delivering great experiences. In one analysis of subscription-based businesses, customers reporting the highest experience score stuck with their providers nearly five years longer than the average customer reporting the lowest experience score.

Feedback Is Your Best Friend

Remember Burbn, the social check-in app that launched in Spring 2010? Yeah, me neither. But you probably have heard of the photo sharing app it ultimately pivoted into later that year. (Hint: It’s the one where entrepreneurs can lay a Valencia filter on top of their latest #TheHustle pic.)

Few startup journeys end in a Facebook acquisition offer, of course, but most successful ones share a similar origin story. Initial ideas fall short of product-market fit, feedback reveals which features are worth saving, founders reset their focus, and the organization eventually finds its winning formula.

More often than not, the feedback that steers startups away from failure and around early obstacles comes from a customer. But that can’t happen unless the company creates an environment where customers are encouraged to share their opinions.

An intimate customer experience, then, doesn’t just protect your business against unexpected churn. It protects your business against bad strategy.

The insights gathered by savvy support agents and success managers can and should be shared across the organization to help make your marketing more relevant, sales more efficient, and products more delightful.

Experience Is Your Best Differentiator

A blue ocean business strategy sounds great in theory, but out here in reality, most of us chose to enter existing markets. That means we face competitors with better products, competitors with faster operations, and competitors with cheaper prices.

And with the increasing availability of information and the decreasing cost of switching, there’s little hope of stopping today’s customers from discovering and selecting alternative solutions unless you offer a distinct value.

But what do you do if your startup can’t consistently deliver on the promise of a better, faster, or cheaper product? Your best option and your most realistic option are one in the same: Compete on customer experience instead.

The kind of customer who prefers to buy from a startup is interested in the people as much as the product. They’re willing to tolerate certain imperfections in the latter as long as they see sufficient value in the former.

Customers may not mind simple software bugs, for example, if they’re invited to live training and feedback sessions they know will influence your next release. Alternatively, customers might be willing to forgive your lack of industry-leading features if they feel part of a community that’s purpose goes far beyond the product itself.

These personal and continuous connections are especially important if you’re selling a solution that doesn’t deliver its full value at the point of purchase. Whether it’s installing updates, changing personal habits, or transforming corporate workflows, most tech providers need customers to remain engaged for a long-term process rather than a one-time click.

Designing an excellent customer experience won’t be easy, of course, but there’s little reason to doubt it’s the right differentiator to pursue.

Customer experience leaders end up better positioned to build delightful features, accelerate innovation cycles, and charge premium prices. So if you set your sights on following in their footsteps, don’t be surprised if quality, speed, and cost suddenly vanish from your list of competitive concerns.

Greg Smoragiewicz is the Head of Content at Aircall, the NYC startup that finally built a phone system flexible enough to meet the needs of modern sales and support teams. Aircall is also a proud sponsor of TechDay Los Angeles.