Which approach is best suited for a startup?
As you may imagine, there is no “one answer fits all”. However, considering that all investors look at the product or service as one of the most relevant variables to consider when evaluating a startup for investment, this is a worthy topic to consider.
In the last twenty years or so, with the increasing sophistication of the users and the consumers and the communication channels available, it became increasingly necessary to develop different approaches to sales. Some companies concentrated on the product, I will call them product centered startups, others have taken on a sales approach, I will call them sales driven companies.
I wish to point out that according to recent studies, 42% of startups fail because there is no market need for their product or service. Therefore, the marketing first approach can and usually is a great way to test the market before undergoing huge development and production costs. However, one of the most common problems with marketing first startups is that they are often unable to switch to a product and customer focus, hence annihilating the long term value of a customer.
Achieving sales is the only way to keep your startup alive, however keep in mind that an investor will want to see the ability to serve your customers beyond the initial sale and increase the long term value of each customer. This can happen when sales driven companies manage to transform into service organization.
Product driven companies are often the most successful startups, they focus on their product and on the value they give to the customers. Their drawback is one of presumption in thinking that a great product will sell itself. That is not the case in today’s business environment. The key to long term success is to incorporate sales-driven mindset over time.
What is the conclusion then? Know that the two approaches exist, know what their drawbacks are, if possible strive to adopt both approaches in your startup, or at the very least strive to balance the two drivers over time. Awareness brings success, presumption is the mother of failure.
