Like in this article, how my most recent business strategy shift came from a pumpkin farmer of all places.
You see, at our local software startup Carrot (onCarrot.com) that we launched in 2013… we’re growing at a good clip and just crossed the 2,000 active customer mark (we sell a software as a service, so those customers pay us a monthly or annual fee for access to the software).
Several months back we hit a bit of a cross-roads.We have a small staff… 8 full-time team members (including myself)… and it’s important that we all focusing on the things that help our company and our customers get the best impact for our efforts.
We found ourselves creating new services on the fly to help some of our customers use our software better. And it was taking up way too much of our time and energy.
So we decided that we had to do one of two things:
1) Hire someone else to help take care of the extra services we were offering those customers who needed more hand holding than most. The services were high profit margin, but a pain and took our eyes away from our main priorities each week.
2) Eliminate this service all together and focus on the customers who didn’t need this hand holding.
It was a tough decision, because as a small company any revenue is good revenue, right?
We were finding that by taking on these “customization” projects for that small percentage of our customers, we were actually neglecting our best, most profitable, and most fun customers who didn’t need as much attention.
So overnight we made a switch.
We immediately stopped trying to make everyone happy, we stopped trying to save “problem” customers from leaving our service, we decided that we weren’t taking on any more big customization projects (even though they brought extra revenue), and we decided to shift all of that same focus over to identifying our best customers, helping them succeed even more, and finding more new customers just like them.
As a result, we raised prices this month (by almost double) and are eliminating some features (that our best customers never use, but that confused other members).
We have also shifted to focus on finding how our best customers use our software and how we can help THEM use it better. Then we share their stories on our website which attracts more customers like them.
We got the inspiration from a book I read recently called “The Pumpkin Plan” by Mike Michalowicz . Find it on Amazon.
In this book the author explains how he was at a similar cross-roads in his business. Working too much, taking on every customer and every request from every customer in the name of “bringing in revenue”. This quickly led to low profitability and frustration for the owners. Then he met a pumpkin farmer who grew the New Jersey state record pumpkin. He asked the farmer how he grew such big pumpkins.
The farmer replied…
First, plant great seed.
Next, water, water, water.
As the pumpkin vine begins to grow, trim off everything that isn’t a pumpkin plant. Trim off all of the leaves, dead pumpkins, everything.
Next, as the pumpkins grow… you’ll notice a handful of them are growing better than the others. Trim off all of the pumpkins but those most promising few. Water and tend to those pumpkins.
Last, you’ll notice one pumpkin that shows more promise than the others. Focus on that one. Trim off the rest of the pumpkins from the vine so all of the water and nutrients goes to that one pumpkin. That pumpkin will grow so fast you can almost see it the last week.
Pumpkin farmers discovered that the smaller pumpkins on the vine were harming their chances at growing a really great pumpkin because they were sapping up valuable nutrients. Once they started trimming off everything that didn’t help the most promising pumpkin grow… their results exploded.
Transfer that over into business (and everything in life for that matter)… and it’s a recipe for success.