Even if you’ve done your market research and feel you have the best product or service in your category, sometimes you need to make a change. It could be something as simple as a price change – or as difficult as changing your business model.
So how can you determine if you need to change course and, if you do, what steps to take to successfully pivot your business? Entrepreneurs and business experts share their six top tips for pivoting your business and questions to ask yourself before making a course correction.
1. Determine if your product or service is reaching the intended audience (or any audience). “If you're not confident that your product has found its audience, you may have created a product before addressing a real need in the marketplace,” says Ross Cohen, cofounder & COO, BeenVerified, a provider of online background checks.
To determine if that is the case, “take an honest look at revenues, subscriber growth and especially direct customer feedback,” he says. Then ask yourself, “Is your product serving its most vital audience in terms of size and growth? If not, can you tweak it to realign with the customers who most need it?”
2. Pay attention to what your customers are telling you. “Understanding who your customers are, what their biggest pain points are, and how your company’s solutions and skills can address market demand will help you understand if there needs to be a business shift,” says Brad Hunstable, CEO, Ustream, an HD streaming video platform that changed from a consumer-facing, ad-based model to becoming a SaaS-focused business, offering live streaming for companies around the world. “It could be [they’re] using your existing product in ways you never thought, or requesting new or different features.”
“Disengaged customers are early indicators,” says Tom Drummond, CEO, Heavybit Industries, a community for developer-focused entrepreneurs. “All too often companies are selling the product they thought customers wanted, not the product that customers need,” he says. “The early way to tell if you need to pivot is to look at your engagement metrics. When 50 percent of your customers don't engage with your product on a regular basis, it's time to look at a pivot.”
“A single customer may not always be right, but when all of your customers are mentioning the same feature as something they really like, you can bet that that feature is a keeper,” and should maybe even be your focus, says Daniel Russell, founder & CEO, Attentiv, which recently pivoted from a meeting management tool to a team collaboration platform. “Similarly, when all of your customers are mentioning the same roadblock or annoyance, you can bet that that aspect of your product is something that needs to be reworked.”
3. Communicate course changes to employees before you make them; then help employees make the transition. Before you start making any course corrections, “make sure your team knows what's going on,” says Amira Valliani, cofounder & CEO, Zomida, which delivers home-cooked meals. “A pivot can be confusing, even if you only have a small team. Before making your pivot, let your team know what you're doing and get their feedback,” she says. “They will execute much better if they know what they're doing and why they're doing it.”
“Pivots are disruptive to any organization, and they're only successful if your teams are on-board,” adds Drummond. “Great managers will use pivots as an opportunity to create a more open dialogue with their teams and increase overall trust and employee workplace satisfaction.”
4. Assess your existing skill set(s) and make adjustments (and hires) as necessary. “When in the preliminary processes of pivoting a business, all the pieces may fall into place, but that doesn’t guarantee that the skills and internal insights required to make it a successful pivot are possessed,” adds Troy McAlpin, CEO of xMatters, a provider of communication-enabled business processes, who took his business AlarmPoint and pivoted to create xMatters in 2010. “Whether it be architecting new technology, creating a new corporate brand or defining new processes and workflows, don’t be afraid to bring in new employees, introduce new roles or reach out to external specialists to handle the job,” he says.
5. Set short-term goals. “Transition is hard, and it takes a long time,” says Joel Grossman, COO, Location Labs, a developer of mobile security apps. To help employees successfully navigate the pivot, “set short-term, achievable goals to get people moving and motivated toward the longer-term goals,” he suggests. “Sustained excitement requires getting successes early and often.” So “it’s vital to [set], acknowledge and celebrate [milestones].”
6. Test your new business model before pivoting. “No matter how small [or large] your business is, pivoting is a time and resource-intensive process,” notes Valliani. “So, before you pivot, make sure you know why you're doing it and that your new model can work,” she says. “Create a basic prototype and show it to your best customers and ask if they would use it. Dip your toes in the water before you plunge into a brand new model.”
This story, "6 tips for pivoting your business" was originally published by CIO.