Earlier, I've said my next startup would be scalable, i.e. acquiring a customer should be fast and cost effective. Or let's just call it ... keeping the customer acquisition cost as low as possible. I'd like to explain it a bit more in detail what I think it means, since I've made the mistake and I want to learn from it so it doesn't happen again.
When we talk about customer acquisition cost, it is all about how much time and additional money it takes to get a new customer for your product.
What is time spent on?
1. Searching, reaching out and talking with a prospect to ultimately turn him into a paying customer: If you have to do this on an individual basis, god I hope your product is expensive. Well, I guess it depends how long it takes you to do it. Could be 30 minutes, but could also be 5 hours, or more. And time is money. Remember, working at a 9-5 job would get you e.g. $60/hour. I hope the product that you are selling can cover this cost. Though there are ways to get new customers in bulk, and that's what you should be doing. E.g. send out thousands of emails to prospects, or partner with organizations that will bring in a lot of new customers.
2. Handing over the product to the customer: E.g. setting up the customer on your platform. Preferably none of that is required. Make it so that this process is automated. If not, you're going to have a hard time scaling. Just forget about your shitty unscalable product if you need hundreds or thousands of customers before you can become ramen profitable.
3. Teaching the customer how to use the product: Preferably no need to teach at all, make the product intuitive or provide some sort of manual. If individual communication is required, be sure your product is expensive enough to cover this cost. Again, remember, working at a 9-5 job would get you e.g. $60/hour.
What is "additional" money spent on?
Stuff like delivery, outsourcing certain things, and Idontknowwhat that needs to be paid for to get and keep a customer. Don't really have much experience with it. Though I guess in my case, with Spotia, we offer a SaaS, which means there are hosting costs that need to be taken into account.
How I made this mistake
Spotia offers a subscription-based web builder for small businesses.
1. Offering a website also includes making a personalized design that is exactly like they want it. Didn't realize that "templates" wouldn't cut it. So there we are, having to talk for customers for hours (and meeting them), then spend hours building a design. And that for like $50/month. Anyway we ended up doing web design as an extra service so that customers would have to pay for that too. But either way, this is mistake number 2, our product was basically unscalable.