How to Identify the Best Customers for Your Business

It is difficult to start a venture that gains traction with paying customers. In the first decade of the 21st century, fewer than half of all U.S. startups were able to survive beyond three years. But its even harder to grow a company beyond certain levels of sales. Of the nearly 44,000 companies fo...

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Veröffentlicht in:MIT Sloan management review 2013-12, Vol.54 (2), p.53
Hauptverfasser: Cespedes, Frank V, Dougherty, James P, Skinner III, Ben S
Format: Artikel
Sprache:eng
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Zusammenfassung:It is difficult to start a venture that gains traction with paying customers. In the first decade of the 21st century, fewer than half of all U.S. startups were able to survive beyond three years. But its even harder to grow a company beyond certain levels of sales. Of the nearly 44,000 companies founded in 2000 and listed in the Capital IQ database which includes public and privately held companies fewer than 6% achieved more than $10 million in revenues by 2010, and fewer than 2% grew to more than $50 million. Why? Once a venture reaches a critical size, its complexity greatly increases. Not only are there more moving parts, but interdependencies are more difficult to manage. Surprisingly few companies, especially entrepreneurial ones, clarify their core customer selection criteria. Many executives in entrepreneurial companies in effect tell their salespeople to go forth and multiply! By selling to anyone willing to pay a certain price, though, companies fragment their resources and make further growth difficult. As customers use the product, the company modifies the offering and processes associated with making and selling it, typically in contradictory directions uncovered by this selling activity.
ISSN:1532-9194