January 4, 2017
Getting your elevator pitch down for investors is one thing. But what you might not know is that your customers can sell your product a lot more effectively than you can. However, without specific training, they might not be getting the pitch right.
Recently I sat down with Moisey Uretsky, cofounder of DigitalOcean, and talked about the elevator pitch. Moisey said that founders and investors often focus on their elevator pitch, and that’s fine. But what most don’t know is that it’s not nearly as important as the customer’s elevator pitch. He explained that it is the elevator pitch that a customer of a startup would give on behalf of a startup to a prospective customer.
That elevator pitch becomes a kind of litmus test for how well the company is doing, and it’s also an easy shortcut. That is, the customer elevator pitch embodies both – a successful product and customers that are so happy, they talk about the product to prospective customers.
First, a Product-Market-Fit is achieved when most sales succeed and most customers don’t feel sick after a sale. This is called the Magic Moment, and once a customer reaches that state, the probability of the customer returning in the future is dramatically higher. The Magic Moment leads to a viable long-term business and you get to Product-Market-Fit – customers buy and stay happy.
However, the Product-Market-Fit by itself isn’t always an indicator of a great business. If people keep buying the product or service, but don’t tell other potential customers, the cost of acquiring customers would still be high and margins of the business may suffer.
Case Study: DigitalOcean
DigitalOcean found Product-Market-Fit after they launched a simple, affordable hosting service using SSD drives. They poured a ton of love and exceptional support on top, which eventually lead to its success. This offering strongly resonated with developers, and they flocked from other providers like Amazon and Rackspace to DigitalOcean.
The product was so great that developers started recruiting other developers with this elevator pitch: simple, affordable, and super cool hosting service. In turn, this elevator pitch resonated with new customers and the referrals started pouring in.
DigitalOcean took advantaged of this dynamic and put more gasoline on the fire by introducing a double referral program that gave credit to both existing and new customers. That strategy drastically lowered the cost of customer acquisition and lead to a great business and great margins.
As a result, DigitalOcean helped create a perfect customer elevator pitch: a seemingly simple but incredibly powerful way to look at your business. What is your customer’s elevator pitch?
This article is courtesy of Techstars, the best global ecosystem for entrepreneurs to bring new technologies to market. From inspiration to IPO, Techstars empowers the world’s most promising entrepreneurs throughout their lifelong journey by providing a global ecosystem made up of tens of thousands of community leaders, founders, mentors, investors, and corporate partners.
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