The Progression of Customer Focus as a Business Scales
Takeaways from Madrona’s CEO Summit
It is (literally) a multi-million-dollar question: What do you get when you put dozens of CEOs into the same room? Answer: Receptivity to learning from each other, a laser focus on improving the experiences of their people and customers, and a relentless drive toward success.
Last week, Madrona Venture Group hosted its annual CEO Summit. We invited our portfolio company CEOs, chief executives from the community, and special guest speakers for a day of inspiration, connections, and learnings. What we experienced was camaraderie, community, and bold conversations amongst peers to help each other become better leaders.
While we covered many topics, one that received outsized attention was the progression of customer focus as you scale a business. Specifically, this included strategies for how to establish initial product-market fit at the beginning of a customer journey and how to successfully scale a full go-to-market strategy when in “growth mode.” Below are 6 key takeaways.
Our first three takeaways came from early stage executives whose companies have learned valuable lessons from wrestling with the challenges of achieving product-market fit:
1. Test, iterate, and “build small fires”
Fire can sometimes bring up images of destruction, but it can also represent a light and an opportunity. When it comes to product-market fit, Mark Britton, Founder and former CEO of Avvo, meant the latter. These “fires” start with knowing your customer, trying and testing new ideas in small ways (I.e., using low-cost experiments), and then collecting and rapidly acting on feedback. If you’re an exec and you’re not constantly talking to customers and acting on their feedback, then you are failing. But, when you are engaging deeply, and you match the right customer with the right product or service, you build something beautiful: a small intersection, a “small fire.” With each small fire comes the potential to create that first “big blaze” that will help your organization achieve significant growth.
2. Microsegment and solve for the now
Eric Browne, Co-Founder and former VP of Product at Smartsheet, pointed out that “microsegmentation” is important when you’re looking to address a specific pain point for a specific customer persona. Eric Berg, former CPO at Okta, further expressed that what matters as much as the product you build is who you’re selling to. It is critical to understand how they try and how they buy, and then adopt your selling motion accordingly. If you’re able to solve for the specific pain points of a well-defined customer group — and deliver the solution to them in a way that they like to purchase — then you can find success. In addition, when it comes to product-market fit and customer adoption, solving for the current pain points early, rather than focusing on the myriad other things that may (or may not) become pain points in the future, will work in your favor. Solve for the “now” and be specific!
3. Don’t use UX as a crutch
As a new company, you cannot underestimate the amount of time you will need to spend with your target audience to both define product-market fit and then iterate on it over time. The C-suite must be engaged in this process. According to Britton, it can be tempting to rely too heavily on the User Experience team members for this. While UX can be viewed as a communication and research arm, be aware that it should not become your only resource or become a crutch for your executive team. UX simply cannot be a substitute for the C-suite being submerged in the market. It must supplement other activities happening in parallel across the organization. There is no substitute for direct customer and prospect conversations!
The next three takeaways pertain to scaling a go-to-market strategy and hitting a growth stride within a company:
4. Know your mission, vision, and values cold
We’ve all been there: when two teams have a seemingly different north star and act in confusingly different ways. This can be frustrating to experience and downright counterproductive in practice. Kelly Wright, Board Director at Amperity and former EVP of Sales at Tableau, says the first step to address this is to look inward at your leadership team and ask a simple question: What if, right this moment, you were to ask each member of your executive leadership team to recite the company’s mission, vision, and values? Would they all say the same thing? Odds are, they would not. If your leaders are not articulating the same base-level priorities to their teams then (of course!) those teams will operate with different aims in mind. There is no time like the present to hold a meeting with your leadership team to review your purpose and priorities and to ensure your greater company is aligned on its strategy.
5. Focus on people, people, people
People managers and middle managers play a pivotal role in every business. Through them, strategy is translated into execution. The issue, however, is that these managers are often the most “squeezed” and in need of leadership support. Peter Zaballos, CMO at Qumulo, calls this group the “forgotten middle.” They are often overworked, overextended, and do not get enough interaction with senior leadership. Zaballos believes people managers need to be not only trained initially, but also developed over time in order to achieve the most success. Taking care of your people is incredibly important, and when you do this right you enable your people to perform at their best.
6. Employ a “challenger sale” approach
Ask 100 people about what they think the strongest tactic is for a salesperson to employ and more often than not you’ll hear the response, “Relationship-based selling.” Wright thinks this is misguided. She talked at length with the group about an idea she believes in strongly, drawn from a book called “The Challenger Sale” by Matthew Dixon and Brent Adamson. According to this idea, salespeople are more effective when they challenge the customer and provide thought leadership. A “challenger” mindset requires the salesperson to constantly learn and lead their customers to the future, rather than getting stuck up on elements of their relationship that anchors them to the past. This approach will help companies achieve their sales expansion and net dollar retention goals.
We loved to see the sharing amongst this group of executives and look forward to great things from each of their organizations.
