This is the fifth in a series of articles on what it means to be a Five Star Startup. In my first article, I explained the five dimensions that most startups are evaluated on. In my second article, I described the first dimension, what it means to have a Five Star PRODUCT. In my third article, I described the second dimension, what it means to have a Five Star MARKET. In my fourth article, I described the third dimension, what it means to have a Five Star TEAM.
The fourth dimension is STRATEGY. In this article, I will describe the five star strategy (in my system of evaluation) and offer some of the underlining criteria by which you can score your strategy. Here we go:
The third biggest reason startups fail (behind no market and wrong team) is lack of a strategic advantage. You have a killer strategy for gaining a foothold in the market and maintaining that position, while rapidly expanding your share of the market. Your strategy capitalizes on your unique insight into the needs, behaviors or trends of the market. Your strategy enables you to out-maneuver the competition as they respond to your entry into the market. Your strategy allows you to nibble away at the edges of the competition’s position, while fortifying your own position as you advance. If executed well, your strategy will inevitably allow you to capture an unfair share of the market.
Your strategy gives customers a compelling reason to buy from you instead of the competition. Even if no other product is directly competitive, your strategy makes it a no-brainer for customers to switch from substitute solutions. However, your strategy does not force customers to undergo a high learning curve, or drastically change their habits or the manner in which their needs are met. If your product represents a paradigm shift or requires an entirely new usage methodology, your strategy provides a navigable bridge from the old to the new. Easy adoption is central to your strategy.
Your strategy includes growth hacking, with the tools and systems to quickly analyze conversion metrics and adjust marketing campaigns and budgets accordingly. Your strategy keeps everyone in your company close to the customer. It creates evangelists for your product and incentivizes them to share with their networks and attract new customers. The cornerstone of your strategy is innovation — not only constant product innovation, but devising innovative touch points that give customers an experience that continually surprises and delights them.
Your strategy has a strong branding component that accelerates market awareness and engenders customer loyalty. Prospective customers “get it” on first glance and immediately understand how your product will make their lives better. If your product is B2B, a core part of the strategy is signing marquee accounts. If your product is B2C, a core part of the strategy is testimonials and user referrals. In either case, your strategy enables you to establish credibility and relationships with the media and market leaders who influence large segments of the market.
Finally and most importantly, your strategy leverages existing sales and distribution channels and allows you to piggyback on the installed base of others. You don’t have to educate or create every new customer from scratch. You have developed some strategic partnerships that accelerates your entry into the market and help preempt or fend off alternative solutions.
As a bonus, your strategy includes being socially responsible, because you know that customers actively favor companies that contribute to the greater good.
Score the following criteria on a scale of 1 to 10, with 10 being the highest. Try not to use the numbers 4, 5, and 6. Your strategy either clearly excels in each of these areas, or it is subpar:
____ You have a workable strategy for gaining and maintaining a foothold in the market.
____ Your strategy helps you to nibble away at competitive or substitute solutions, while carving out and advancing your own defensible position.
____ Your strategy motivates customers to buy from you over other solutions, without a high learning curve or having to change their policies, systems or behaviors.
____ Easy adoption (onboarding) is central to your strategy and you have proved that it works.
____ Your strategy includes growth hacking, actionable metrics, and ways of keeping everyone in your company close to customers.
____ Your strategy creates product evangelists and brand ambassadors that increase virality and network effects.
____ Your strategy ensures continuous product innovation and customer touch points that surprise and delight.
____ Your strategy has a strong branding component and establishes credibility and relationships with market influencers.
____ Your strategy leverages existing sales and distribution channels and allows you to piggyback on the installed base of others.
____ You have signed strategic partnerships that accelerates your entry into the market and will help you grow the customer base.
Total your score, divide by 10. If your score is between 7 and 10, congrats, you have a Five Star Startup Strategy!
For additional guidance on startup strategy, see my post Awesome 1 Star Review: The Power of Product Evangelism.
Next up, the final post in this series will cover Five Star Startup Economics. Stay tuned…