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Friday, April 01, 2011

IT startup - scaling up customer base

Recently I had an interesting conversation with someone who brought me a new theory that integrating sales team and development team "closely" will increase the productivity. Conversation went on like these:

Someone: Sales team and development team should work closely for better productivity.
Me: What are the IT companies having such setup? What are the IT companies that increased productivity through such setup?
Someone: (No answer)
Me: How have you arrived at that theory?
Someone: 'coz the sales team will get more technical questions and only when they closely work with the development team, they can able to answer.

Later I felt that the person is somewhat right, the problem lies with the customer base and the person's inability to bring better solution. Then, I come to an analogy of Waiter, Cook and customer base in a hotel.

Waiter, Cook and customer base in Hotel



Here, the Waiter can be compared with the IT salesman and Cook can be compared with the developer. For this example, the Hotel can be taken as Saravana Bhavan, where Cook prepares the foods like Dosa and Waiter acts like a salesman.



  • Customer base #1


    These kind of customers will order foods and won't taste all dishes. They'll pay the bill without any complaints, but you can't understand why they didn't taste all dishes and wasted some food that they paid for. These people will usually be rich and may not come often. Usually may comprise of 5-10%.


  • Customer base #2


    These kind of people will order foods by name and will taste everything. They'll pay the bill without complaints and will usually be happy. They'll also visit often. Usually will comprise 30-40%


  • Customer base #3


    These kind of people would try to taste new dishes. They'll inquire the taste (sweet, sour, spicy) of the food and would love to try new ones. They'll be happy or sad based on the taste. But, they'll pay the bill and visit again. Usually will comprise 50-60%.


  • Customer base #4


    These kind of people will usually be extremely good Cook themselves or some of them will even pretend to be. They'll ask micro details about the ingredients of the food, from where the ingredients are sourced, why particular ingredient is not added,... and any questions that can be answered only by Cook--not the Waiter. For whatever thing they get, they'll usually complain and would fight to pay the bill. Usually will comprise less than 1%.



When dealing with "Customer base #4", people will usually think that the Waiter can better be trained by Cook to give "necessary answers". Also, people would usually keep Waiters above Cooks socially. But, the real problem is that Waiters are cheap and replaceable than Cooks. When the customer is trying to outsmart the Cook, there's no winner.

When coming to IT startups... they should constantly improve the customer base--so that the "Customer base #4" is always below 1%. If such customer base takes 100%, then they can't scale up well.

2 comments:

abu said...

Nice comparison

Followadream said...

It's a wonderful analogy and presented so well. I am becoming your regular reader Bro! Keep blogging.

Actually, a Neyar Veruppam.. "From your point of view, how a leader should be or what skills should a leader should posses!"

Thanks!