What are some common reasons why new startups fail to acquire customers?

I come across startups all the time that appear to have awesome products. Why is it that these amazing companies fail due to lack of customer interest?


I've lead the marketing team for 3 VC funded startups that all successfully acquired customers en mass, but along the way I've certainly observed a fair share of startups that failed due to inability to acquire customers fast enough. Here are some common reasons startups fail:

1. They incorrectly think their product is so good that the customers will just show up and pay
2. The product is "cool" but doesn't solve a pain that valued in the market
3. Users like the tool enough to beta it for free but not enough to actually pay for it
4. Company acquires customers but the lifetime value to customer acquisition cost isn't sustainable, or requires such scale that the company never gets there
5. Most companies waste a ton of money on Adwords until they realize they should hire an expert
6. Startups acquire traffic but can't convert it into repeat purchases or usage
7. The market just isn't big enough
8. There's another solution that is more compelling

There's a ton of other reasons too. If you're having trouble acquiring customers, feel free to give me a ring. Happy to chat any time.

Answered 10 years ago

The sad fact is that lots of startups don't know how to acquire customers. You'd also be surprised at how many assume they don't need to 'acquire' users - they subscribe to the field of dreams way of thinking - 'build it and they will come.'

I've lost count of the number of amazing products I've found that are incredibly useful and yet have a tiny userbase. In too many cases, it's because they haven't done any media or user outreach. In many cases, they have an overcomplicated onboarding process. In a lot of cases, they don't have simple social hooks baked in to encourage people to invite their friends.

Why does this happen - in many cases, companies don't have a strong marketing person on board early on. Those are the people who will drive that initial stage of customer acquisition. They're the ones that will be going out, tweeting, connecting with journalists, bloggers, potential partners and anyone who might be interested to get them to write about the service, suggest it to their friends or just try it out themselves.

A lot of the time, people aim for moonshots instead of doing simple, effective things to launch a product. I've met a lot of companies who have pinned everything on a massive partnership with a global brand or outlet without ever looking at something smaller or local as a test case.

You'd be amazed how easy it is to get media coverage in papers, radio, TV and on blogs with just some simple approaches. You'd be surprised how easy it is to find potential users and partners on social media and other channels with some simple searches. It should be easy to get to several hundred or several thousand users with these simple approaches.

To scale from there - simple things like a really easy onboarding process, social hooks (invite your friends, rewards for getting other people on board etc) and a level of activity that encourages repeat visits is massively important. To give you an example - the reason that you need to follow about 8/10 people when you sign up for a Twitter account now is that they lost lots of people after they signed up, didn't follow anyone and then logged back in to find an empty screen. Once you follow people who tweet regularly, you'll have fresh, interesting content when you go back. Having that freshness or activity is really important - social proof and little bits of feedback matter to people.

I'm happy to talk through some more specific examples of where people have gone wrong and how you can do simple things to help acquire users if you're interested. Feel free to get in touch.

Answered 10 years ago

Horrible marketing and not treating marketing like an investment instead of an expense.

That's what my award winning, Forbes listed expertise says but you can argue it with me if you'd like.

Answered 10 years ago

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