Lessons Learned: Knowing when to pivot
One of biggest lessons I’ve learned was knowing when to pivot. Knowing when you need to give up on an idea, or pivot to a new approach.
Man, that’s hard. Not only is there the “sunk cost fallacy” but overall you put your heart and soul into a product/feature and you don’t want to see it fail. You ignore the red-flags, or explain away the lack of results.
So I worked at this company (which is no longer alive in it’s original form so hope my ex-coworkers don’t mind me telling this story) that had a job posting product, it was a pretty good priced job posting and when candidates applied, they would take a survey that would tell the hiring manager if that applicant was a fit for the job or not. And it seriously worked, it was our competitive differentiator over the very red-ocean of job board ads.
We poured a ton of money into the top of the funnel, google ads, radio ads (yes radio), you name it, we used it to attract our target SMB customers. So while the revenue numbers were going up month to month, so was the customer acquisition cost. (Our ingoing hypothesis was that if we brought them in, they’d come back and buy from us again, thus reducing that cost over time).
But…the hypothesis wasn’t holding true. We had to keep pouring marketing dollars onto the fire to maintain that revenue. So, as a business we were evaluating our funnel, and our numbers across the board to find the problem. We had a leaky bucket. It wasn't in the first time customer funnel, it was in the return customer rate, most of our customers weren’t coming back. We did took a hard look at our customer base. Who never came back? Who came back all the time? What features did they use? Why did they buy from us, why did they stop?
After some pretty deep analysis, with data, feedback and win/loss analysis we found we had 2 customer personas (and jobs to be done): SMBs and enterprises:
SMBs- They bought from us 1.1 times per year for minimal revenue. Why? They were just looking for a well priced job posting, they didn’t care about job fit, they just wanted applicants to interview, that was it. The Job posting was a commodity to them, so when they had their next hire, they were off to find the cheapest posting on the market that day.
Enterprises- This group of customers had annual revenue of 10x of the SMBs. They used us for years, and they sometimes didn’t use the job posting. Why? They already had their own candidate acquisition tools, but what they were trying to do is assess moving team members to new roles, and other career progression decisions. This meant that job fit was way more important to them, and they saw our differentiation for what it was.
What did we do? We spent a bunch of time understanding the needs of that enterprise customer. What they were looking to do, the use cases they were using us for, and the steps in their process. We pivoted the software to focus on job fit instead, and eventually the company divested itself of the job posting business. That software was still being used by large enterprises last time I checked.
What did I learn?
Customers’ Job to be done may not be what you think it is. Figure out what it is, not what you want it to be. Get curious about why they use your solution, you may be surprised.
Look at all of your key metrics, not just for first time buyers. If you looked at our top line funnel, it was totally healthy, but we weren’t making progress as a company. Our instincts had us keep looking and we were able to find it. That data sent us to the place where we figured out what needed to be done.
Win/Loss- Customers are happy to tell you why they use or no longer use your software if you’ll only ask them. That was a key way we learned why this was happening. Data only told us we had a trend, win/loss allowed us to get to the right conclusion.
What would I do differently in the future?
Do it sooner! I’d do it all sooner :)