Startups often offer something unique, different and better for customers. The challenge is to convince enough customers that the risk is worth it. Here are five guidelines for startups seeking to introduce something new to consumers.
We bid a sad farewell to several promising startups in 2018. Take-home security company Lighthouse AI, for example. Its unique combination of 3D technology and artificial intelligence didn’t catch on, despite raising $17 million in funding and being positioned nicely to capture the rising public interest in home security products. It delivered something different and arguably better, but it often takes more than that to make it to the top.
Startups have to constantly be on their toes. It’s critical that they have enough funding and time to take on learning curves and innovation. If not, they risk competitors swooping in and doing it better. It’s equally critical that they use that funding wisely to ensure they have cash when they really need it.
How exactly do you become the right kind of different?
Apple is a great example of a company that has been at both ends of the spectrum. It launched the Newton personal assistant in the ’90s, but dropped out of that arena when the Palm Pilot became a commercial success. In a classic role reversal, Palm’s lack of innovation allowed Apple to dominate a decade later with the iPhone. People were happy to wait hours in line and buy Apple products because being the first to have them outweighed the risk of spending $500.
That said, how exactly do you become the right kind of different?
Fear and Shopping: What’s the Connection?
All brands risk being so innovative that consumers feel wary of buying in. The mainstream and conservative shopper will patiently wait until the innovative startup learns from its mistakes and innovates again.
Consider Tesla. It didn’t make the first electric car, but it was the first to offer a product so compelling that it developed a cult following, which continues today. Early adopters of the Roadster were willing to overlook the manufacturer’s lack of experience and spend $100,000 or more on its first car because of its ludicrous performance. The lesson? Generate enough desire to outweigh the risk.
This is difficult to do in light of the fact that most consumers are careful about purchasing new, unique products. Entrepreneur Kevin Daum outlines three fears that prevent people from spending money: fear of waste, fear of extravagance, and fear of poverty. You can begin to break through customer resistance by offering something unique, but a combination of other qualities will also increase your chances of making it to the finish line:
1. Financial resources: Every move has an associated cost, and the faster you make moves, the higher that cost will be. Slow down and create a detailed business plan to lessen that risk. Do market research, and determine how much time and money you’ll need. Then, go for it.
2. Persistence: The willingness to keep trying when others give up can be a defining factor in your success. This means looking failure in the face and saying, “Let’s do it again.” Virgin Group founder Richard Branson wrote, “I’ve been failing for as long as I can remember…and I have learned and loved every step of the way.”
3. Innovation: Being in business without innovating is a stale and boring existence. Customers, technology, and ideas are constantly evolving. Because of this, 84 percent of executives say innovation is important to their growthstrategy. Nearly as many fear that their current business models are at risk of being disrupted. Innovation is the only defense. Are you set up to innovate, or are you structured to keep doing what’s been done in the past and play it safe?
4. Flexibility: While persistence and determination play a huge role in business, so does knowing when to adapt. Apple built an entire corporation on this very principle by designing sleeker and arguably better versions of what was already on the market. It looked at MP3 players and smartphones and thought, “How can we evolve this?” Clearly, asking this question paid off. At the same time, it was flexible enough to upend its business by launching the iPhone and dominating the smartphone market.
5. Leadership: A business is a collection of people with the potential to make wonderful things happen. With the right leadership, you can unlock that magic. Sports offer so many great examples of legendary coaches or team captains taking a collection of average players to amazing heights. Your company can do the same thing and overcome seemingly impossible odds.
Startups often offer something unique, different and better for customers. The challenge is to convince enough customers that the risk is worth it. It’s an exciting journey, and with a magical combination of luck, leadership, and persistence, you can overcome these fears as you establish your brand.
This article first appeared in www.digitalcommerce360.com
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