In a Canadian tech hub, a startup in the telecom space had positioned itself to be bought out by a massive Canadian telecom company. The number of active customers was ramping up nicely. But their profits weren’t. The big telecom planning to buy the smaller one wanted to know why.
To figure it out, all you had to do was look at their org chart. Nearly 50% of their staff weren’t technical staff but Customer Service Representatives, and that number was growing. When Customer Service Reps outnumber your technical staff and keep multiplying, it means that more and more customers are calling Customer Service – and customers don’t call just to say hello. They call because something’s wrong.
What founders too often forget
Founders of tech startups are very often very technical. They have a great idea and tend to know other clever technical people who help them build the prototype they can use to secure more funding. Once the funding comes through, the startup needs to shift focus very quickly. If not, the common theme I often see has two parts, both of which contribute to a bloated Customer Service Department or worse, a steady reduction in new customers and a loss of repeat customers:
- The prototype can’t support the volume of new customers
- Quality Management is an afterthought, if thought about at all
The prototype problem
It’s fine to jump into the market with a prototype as a proving point. Startups need to lure investors, after all, and investors like to see a working prototype. But to capture the promise of the company’s Business Plan, the founder – with the support of the funders — needs to take a hard look at the prototype. It will likely need to be completely re-architected, redesigned, and rebuilt. Otherwise, the prototype will keep breaking and more and more band-aid solutions will be applied.
When that happens, even more failure points are introduced. Your customer will keep finding these fail points.
The question of quality management
Developers can do a bit of testing and may conduct code reviews but unless a company has proper Quality Management Framework, skilled quality management staff (not just testers) and the right tools, the product will grow weaker over time.
People who devote their careers to quality management and testing are squeaky wheels. It’s their job to point out problems, from the ground up. This means at the very early stages of a startup, possibly even during the build of the prototype, a company needs to know where the current and likely future flaws rest.
I know that for many in management, listening to what’s wrong with a product can be tough to hear but when the message is shoved too far down into an org chart it’s easy to miss key insights that can help the company avoid product issues.
What does your company value?
Most companies value profit and to secure increased revenue, customers need to be happy. At first, customers are happy because the product seems to fill a need or helps them reduce their low costs, and so on. But when customers aren’t happy, profits take a hit.
I’ve known startups that never take the time to ask questions regarding customer satisfaction because they’re racing to build the next release and secure the next round of funding. That’s unfortunate but company leadership can still get a good hint at customer satisfaction from the product defect log – how many issues are customers facing in the field? Surprisingly enough, I’ve known startups that don’t even formally keep track of that sort of information.
Strengthening product quality helps the bottom line
Over the past few years, I’ve been working with colleagues who have recently been hired by startups ranging in size from 70 to 200+ people. At each company, the CEO / Founder realizes that their product quality is deteriorating and thinks that if they just get a handful of testers involved, everything will be fine. A handful of professional testers, especially those who can automate some tests, is better than nothing. But it’s a quality management framework that needs to be established. Executives of both large and small companies need to take a look at their org chart to see where the message about product quality is being delivered, how it’s being communicated, and to whom.
That’s for a different post, but for now, if you’re leading a startup or thinking about investing in one, I highly recommend you begin to dig into a question a is just as important as the one about profitability:
- What is the company doing to protect customer satisfaction?
