KISS for Your Customer
Firstly, I want to thank all the people that have taken the time to reach out with words of encouragement for Artha Venture Fund – I. I have been trying my best to reply to each person individually but if I have missed you out, please do know that your encouragement means a lot to me and my team and due to your support we are more motivated than ever to prove to be ‘the’ investor that an Indian startup founder is looking for.
Last week I connected an investee company in the lending space with an investee company in the product space that was coming up with a higher range of products and wanted to provide a financing option for their customers. The objective was to create a symbiotic relationship between the two parties to create more business for both, so it was a no-brainer from my perspective. However, a week after they were introduced, things were moving much slower than anticipated. Therefore, on Monday, I set up a lunch meeting with the founder of the fintech company to understand the roadblocks that were holding things up.
In an attempt to keep things transparent (his intentions were good) the financing company founder sent over a detailed excel sheet to try and educate the product company founder on how his financing model worked and how the interest that was calculated and collected was accounted for. This excel worksheet completely broke down how this product loan worked. Unfortunately keeping things transparent is not the same things as keeping things simple.
The financing excel sheet became the epicentre of confusion for the product startup and its team and no matter how hard they tried to decipher it, were unable to make any sense of it. This is just like how you or I would look bewildered if a Maruti dealership handed us a bunch of bills detailing out the price of each component that went into our car instead of the final price that we are supposed to pay, the spreadsheet led to little panic at the product company HQ.
Therefore, the financing startup founder, the AVF team and I brainstormed over lunch to bring the loan product to a maximum of 4-5 points. Thirty minutes later we were able to achieve our mission in only 2 points. To test out whether a simpler product would move things along quicker, I reached out to the production company founder yesterday and the interaction you see below is self-explanatory.
Founders make the common mistake of overestimating their customer’s sophistication levels and instead of making the decision to purchase easier – they end up making things more complicated without reason. Founders want to “sound” smart and therefore start to make simple things complicated instead of dumbing them down. This leads to a situation where the customer is overloaded with information that he/she cannot process so they are compelled to ask for time to “think about it”. Although the founder may feel that a person asking for time is a good sign, this may be a clear signal that the customer feels overwhelmed with excess information.
Therefore, I believe that any product’s or service’s value proposition (big or small) should be communicated as simply as possible. The other person should understand the proposition clearly enough to make a quick decision whether he/she wants to purchase the product or not. There shouldn’t be a period of pondering over it, wherein the customer is actually just trying to understand the deal. You can sound smart and make your customers feel dumb (no have no sales) or you can sound dumb so that the customer feels that they are making a smart decision. The choice is yours.
33/2018
