Eight months in a startup taught me more than I learned in a two-year MBA. It was intense. I don’t recall having a weekly routine, but I remember having one of the best times of my life.
A lesson that’s stuck with me from my startup days is that you will struggle to acquire new customers if your current customers are unhappy.
Every third customer our organization had would trash our brand on social media. They’d say we fooled them or wasted their time. That hurt us; worse, we didn’t know how to rebuild trust.
Let me share a story about how we moved from a startup many people hated to a service many saw as their best alternative.
How we delivered customer value
Selling cars in Brazil can be stressful. One needs to deal with all the tedious paperwork while running the risk of getting scammed. Two young founders noticed that and tried to solve this problem.
The value proposition was simple. We sell your car in an hour. You come to us. We put your car on our auction platform, where car dealers all over Brazil compete. After 45 minutes, we present you with an offer. When you accept it, we wire you the money, and you go home by cab. In case you reject the offer, no hard feelings. You don’t pay anything and drive your car home.
What could go wrong? Well, more than we could imagine.
What drove our customers mad
It was my third day in the office, and out of the blue, a colleague came out of the negotiating room shouting profanities. Just minutes before, a customer wrote an Apple Store review, “This company sucks! I came here to get an offer for my car, but instead, they insulted me with an offer that wouldn’t even buy an old motorcycle! Don’t ever come here! They will waste your time.”
Over the coming days, I noticed this was the norm, not the exception. Something was dramatically wrong. So I decided to investigate.
Coming from the corporate world, I realized I couldn’t get data to understand what was happening. Whenever I wanted to know what occurred during the auctions, I had to access MongoDB and run queries. I found nothing insightful. So, I tried something different.
How empathy untrapped us
At that time, I decided it was time to sell my car and rely on public transport. I wanted to live a different lifestyle and reduce my living costs. Something clicked. I worked for a startup that helps with this exact problem. So, I became the customer.
I quickly became annoyed by the inspection process. First, because after five minutes, I got no confirmation email, and after 10 minutes, I received three. I hate useless emails. Yet, it got worse. I got a call to confirm my appointment two days before the inspection, which I did. Then, another call a day before and a third call on the day. Honestly, I thought about not going at all. It wasn’t a mystery why our no-show rate was 50 percent.
As I arrived at the inspection point, a kind person greeted me, and I handed over my key. She offered me coffee and said I’d hear back in about 45 minutes. I watched the other customers while I waited. It was funny being a customer and an employee. I started observing people chatting about their waiting times, and some were clearly annoyed.
It was supposed to be first in, first out, but in reality, it was messy. Nobody kept me notified while I waited. After 63 minutes, I was called to receive my offer. My mood had deteriorated.
“Your car has seven defects that devalued the offer considerably, but given the cost of the identified issues, our offer is the best you can get,” said the negotiator. I rolled my eyes, “Is that how you start all your conversations?” Surprised, the negotiator said, “I’m being transparent with you, sir. I can offer you 55 percent of the market value.” I didn’t reply.
I took my keys and walked away. I was sure I would never come back. I already had an offer of 80 percent of the market value and felt bullshitted.
How we moved from detractors to promoters
After becoming a customer, the problems were obvious:
The no-show rate was high because we contacted customers more than we should
Our process lacked transparency, and we left customers wondering what was going on
We didn’t have anything close to the fair offers we promised
We failed to respect those who arrived earlier
I saw how bad our service was, so I shared what I learned with others. They doubted me, so I recommended that they do the same. A few people also became the customer, and the patterns were identified.
We addressed the quick wins first. Some bugs triggered multiple emails, which was a quick fix. We also adapted the process to avoid calling customers three times. The no-show rate immediately dropped from 50 percent to 25 percent, a massive gain. The operations managers changed the inspection process to respect those who arrived first, contributing to fewer angry customers.
Yet, we had a big problem: unfair offers.
To understand what was going on, I looked to the car dealers. They barely engage with our auctions, and the reason was simple. They missed almost all of them because they simply didn’t know when auctions took place! Solving that was also simple: we created a wish list and updated dealers as their desired cars became available. This feature increased our average bids by 300 percent, leading to better offers.
Another challenge we had was the “pointing fingers” issue. Nobody likes hearing their car is bad; customers feel fooled. So, we added transparency in two ways:
TV: A dashboard with all cars, status, and a continuous update on auctions (without numbers). We also showed the number of dealers online and bids per minute
App: We added a feature so customers could see how many dealers were looking at their cars, how many placed bids, and the defects encountered. That helped customers know what the car looked like
When people saw dealers attending auctions but ignoring their cars, they understood something was off. They became open to talking about their vehicles. Also, negotiators would ask customers what they thought about the auction instead of telling them how bad the car was. On top of that, we increased dealers’ participation and could finally offer a fair offer.
Ultimately, our conversion rate more than tripled.
With the above actions, we no longer had 30 percent detractors. Instead, we had 30 percent promoters. You may wonder how long that took. That’s the beauty of startups. It took us just two months to do all the above.
Wear your customers’ shoes to understand their real pains
Uncover pain points, prioritize, and act immediately
Break out from siloes and talk to everyone around you. Don’t let processes or abstract boundaries block you from learning from others
Observing other customers using your product or service can be pretty revealing. Our mistakes are often trivial, but the compound problem becomes considerable
Listen to detractors because they represent your best chance to improve your product or services