ENTREPRENEURSHIP / SEP. 20, 2015
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8 Reasons Start Ups Fail to Get New Customers

There can be many reasons that startups fail, but all startup failures ultimately boil down to one major thing: the cash coming in from customers didn’t meet the company’s expenses, before the start up money ran out.  

Customers are the lifeblood of any company (old or new), and if you cut off the vital stream of cash from the customer to the business, every business will fail; but, start-ups face unique issues that long standing or better established companies don’t face. Start-ups must often wrestle with other well established companies to vy for their customers, and they must also fight to become a name that is known in the industry.

See Also: Top 10 Inspiring Start-up Quotes

A lack of customers will always be the number one reason that startups fail, but if you are thinking of launching your own project, have no fear, because we have put together a list of the top 8 reasons that startups fail to get new customers; take some notes and you’ll be the next Steve Jobs in no time!

1. A Lack of Pre-Launch Buzz

A successful pre-launch is key to becoming a successful startup. A pre-launch builds anticipation, builds lists of potential customers, gets you a little bit of branding, and it gives you an opportunity to fine tune your target market and figure out what marketing practices will best match your audience.

Buzz is a magical thing that happens in the age of the internet; buzz is when friends share your message with each other, when your advertising campaigns go viral, or when people blow-up reddit because they are so excited about your product or service. A prelaunch doesn’t have to be a complete smash to win new customers, but it will certainly help ensure you have people ready to buy as soon as you set up a shop.

2. Poor Customer Service

After launch, poor customer service can cripple a new start-up. We have all heard the old saying that a happy customer tells 1 friend, while a disgruntled one will tell 6; the old saying has some truth to it, as unhappy customers will more often leave bad reviews or tell friends rather than the happy ones.

Especially in the start-up phases of a new business it is crucial that customer service is A+. Customers who are sent away unhappy will end up being huge roadblocks to long term success, and ultimately if a business wants to make it long-term then the customer has to be put first. Happy customers make repeat purchases, they refer new business, and they leave good reviews that attract other customers; while unhappy customers ask for money back, tell their friends how awful your business is, and leave 1 star reviews anywhere that they can find on the internet.

3. Bad or Mistargeted Marketing Campaigns

A start-up has to fight for their own share of the market and must often fight against large and well established brands. Take a look at Dollarshaveclub, this startup company went into an already populated market filled with shaving giants like Bic and Gillette, and through clever advertising and a unique service and product they distinguished themselves, and in 2014 had about 60 million in revenue.

Successful start-ups use pre launch buzz to fine tune their marketing efforts and focus their marketing campaign so that once the product launches there are already buyers in line. Then to ensure success, they add in a clever and powerful marketing program to get its products seen by the maximum amount of people, in the shortest amount of time.

Your marketing campaign needs to match your demographic, for example: if you want sell to retirement age seniors a product, the marketing strategy should be done in print or on Television, not on facebook ads. While your ads need to be correctly targeted, they also need to be good. Exposure means nothing if your advertisements aren’t memorable; they need to be unique and stick in people’s minds.

4. They Have a Bad or Inferior Product or Service

Unfortunately if your product sucks, you probably aren’t going to get many new customers. If you want to keep new customers coming in then you need to start out with a solid product and try to continually make improvements without jeopardizing the customers that you already have. Clever marketing techniques get customers for a short time, but once they realize your product sucks, people will stop coming back. If you are in for the long haul, make a good one!

5. They Don't Offer an Incentive to Try or Buy

People are indecisive and they often resist trying new things, especially if your company is new or relatively unknown. Start-ups can easily “sweeten the pot” by offering special sales, promos, intro prices, or freebies for new customers. Another successful strategy that many start-ups use is to offer free trial services or products to get customers hooked and to show the power of their product.

Finding new customers can be hard, so offer them a little something extra to help them choose you.

6. The Market is Already Over Saturated

Too much competition in a market can cause a startup to never gain the traction it needs to become self sustaining. If there are simply too many businesses and not enough customers, then it will always be tough to get enough new customers to make ends meet.

7. The Product or Service Costs too Much

You may think that everyone needs a gold plated espresso machine with a diamond encrusted button, but that 50,000 dollar price tag might be too much for most. A startup can offer a great product, but if the cost is too high, chances are new customers aren’t going to buy it, especially if there are more well known and established brands in a market selling the same products for less.

8. Poor Sales Conversions

In order for a start-up to bring in new customers, it needs a great sales funnel and lead storage system to make new sales. Marketing may be the smoke signals that tell people to head this way, but a sales funnel needs to be in place to capture potential customers’ contact information, and it needs to have a strong ability to get people to buy NOW.

People often change their minds; what may interest them today may not interest them tomorrow, and you want your sale process to put the kind of healthy pressure on your customer that helps them decide to buy your product or service. You can lead a horse to water, but it takes a great sales funnel to make him drink!

See Also: How To Set Up A Low-Cost Startup - Top 10 Ideas To Get You Started

All in all there can be many reasons that startups fail; it can be internal or external it can be out of their control or within their control but if a startup wants to make it, they need customers coming back and new customers coming in. Start-ups are a daunting and challenging adventure, and if a start-up wants to make it, it needs to be smart.

The eight reasons, that new start ups fail to attract new customers, listed above can go along way in identifying why startups fail to gain new customers, and there are also a few tips included to help a startup gain those new customers they need.

What do you think is the most important aspect of launcing a successful start-up? Let us know in the comment section below.

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