Eric Ries: Whatever You Do, Make the Customer King
You might call Eric Ries the kingpin of start-up analytics--he's a big promoter of constant company analysis. Known for his book The Lean Startup: The Movement That is Transforming How New Products Are Launched And Built, and for popularizing the term "pivot" in business, Ries is also a popular speaker. I caught up with him by phone to get his advice for building brand new companies.
Say someone has just created a company. What's your ﬁrst piece of advice?
I always try to get founders not to do the big launch to get attention for the start-up. A common mistake is that you are building the wrong product in the ﬁrst place. There's a possibility you have built the wrong thing, and a big launch brings in the trafﬁc and attention but you don't get the opportunity to learn and adjust.
There are smaller ways to get initial trafﬁc--especially from the media and press. Then you can use the early customer feedback to reﬁne the product, to get the engine of growth turning. Whatever your growth strategy is--get the product ﬁt then do the big launch.
What then is the best way to build interest?
You want to use mechanisms that you have complete control over, such as cost per instance of advertising. In my ﬁrst start-up, I had an initial advertising budget of $5 per day total. That would buy us 100 clicks per day. At $5 per day, marketing people scoffed and said that is too small to matter. But if you think about it, to an engineer, 100 real humans everyday giving your product a try means you can really start improving. Something with good analytics at a small scale is invaluable
You advise making the customer king or queen. What's a practical way to do that early on?
It is a strange royalty--you are making them experimental subjects. One practical tip is to use a Net Promoter Score (NPS). It's a survey method--you can get customer feedback from indirection--you can't just ask what they think and do what they say. You might ask, do you think, on a scale of 1-10, you would refer this product to a friend or colleague? You pretend you are interested in the referral--but they are telling you what they think about your product. They imagine a friend or colleague and project their own behavior on them.
Imagine you ask 100 customers per day and get a Net Promoter Score every day, with a score of -100 and +100 as a scale. If you don't make any changes, then your NPS score won't change--if you have a 25 now, in three weeks from now you will still have a 25. You have not made the product any better even if you think you have. You need qualitative feedback early on.
What else can start-ups do to make the customer king?
Give people the opportunity to give feedback at every moment--don't make them call up a separate help line but build it into the workﬂow. In a Web app, you might ask during the registration, how are you feeling? You might list emotional states like confused or angry.
More people ﬁll that out than basic questions about what browser they are using or issues they have. You can infer the tone, so you are not misreading them as angry or confused--they actually are confused, or maybe you haven't done anything wrong.