Don’t Take Shortcuts to Revenue

I listened to a wildly successful founder give a talk today. He said something that stood out to me: “Don’t take shortcuts to revenue. Stay focused on your vision and don’t sell things that don’t align with that vision.” His startup sells cloud-based solutions, but they did one deal to install their solution at a customer site. The team struggled to complete the project and it took ten times longer than planned. In the end, the revenue wasn’t worth the effort. It was a distraction and the client had a subpar experience.

I approached this in two different ways at CCAW. One worked out well; the other, not so well. At one point, we were overly focused on growing revenue and looked to add products we could easily sell. The problem was that it took a massive amount of effort to retool our systems and processes to sell these items. Our service team wasn’t familiar with the products, so we couldn’t provide the level of service we were known for. And because we weren’t known for selling these items, the added revenue was nice but far from material. We eventually abandoned this product category and were happy we did. It was too far from the core of what we were known for.

Conversely, we listened to our customers repeatedly ask for accessories that complemented our core products. They couldn’t use our products without these accessories and wanted to buy everything in one place. These accessories required some retooling of processes and systems too, but we made the investment. Our service team easily understood these products because they complemented our core products and were sourced from the same suppliers as our core products. These items lifted our revenue and gross margin while making life easier for our customers. We eventually began getting repeat orders from customers looking specifically for these items.

I agree with the founder from today’s talk. Don’t take shortcuts to revenue. It’s usually not worth it. Have a clear vision of what you’re doing and the problem you’re solving for customers. If there are supplemental ways to solve that core problem that align with your vision, consider taking a deeper look. Otherwise, just say no.