As entrepreneurs, we all love a good challenge. If we didn’t, we wouldn’t bother trying to start a business in the first place. But starting a business is one thing, and bootstrapping one is another; especially when competing against corporations with multi-million dollar budgets. While it may be a daunting challenge, it’s not an impossible one. In fact, it’s the exact challenge we’ve endured over the past five years while bootstrapping our cloud phone service company. The telecom industry in which we operate is heavily monopolized, but we’ve managed to succeed by implementing transparency in all of our business processes, from product development and pricing to company culture.
In doing so, we’ve learned that whether you’re bootstrapping or not, there are major incentives to making transparency a key pillar of your business.
Lower customer acquisition costs
For most companies, acquiring customers is an extremely time-consuming and expensive endeavor. And for bootstrapped startups with limited resources, it’s an even more formidable challenge. As such, it can be tempting to adopt a “sell at all costs” mentality at the expense of transparency with your customers, but there’s plenty of reason to think twice with this tactic.
In our experience, we’ve learned that rather than tricking customers into getting their business, being honest and upfront with them about what they need and what you can provide pays far bigger dividends in the long run.
Sometimes, this might even mean turning down business by explaining that your service is not the right fit. At the end of the day, this transparency will not only lead to higher quality customers, but it will also help your company build a strong reputation and ignite word-of-mouth referrals. These can significantly reduce your advertising expenses.
Higher customer retention
Transparency with customers doesn’t just help you acquire customers, it helps you keep them, too. Considering that acquiring a new customer can be anywhere from five to 25 times more expensive than retaining an existing one, customer retention is a crucial factor to consider for both bootstrapped startups and major corporations alike.
From what we’ve seen, transparency in regard to billing is a particularly effective way to retain existing customers. In many cases, customers don’t know exactly what they’re paying for, nor what they actually need.
In the telecom industry, for example, this has led many companies to upsell their customers on unnecessary (and expensive) packages. But the same problem persists in a number of other industries as well, and ultimately results in a low sense of trust and high sense of dissatisfaction from the customer.
Considering that your customers are the ones who determine your success as a company, it’s imperative to treat them right. This means working closely with them to better understand their needs so as as not to put their loyalty at risk. By being open with your customers and using your expertise to help them decide what is best for them, they will consistently repay you with unwavering loyalty that keeps them from running to a competitor.
Deeper understanding of customer needs
Apart from transparency with customers, there are also major benefits to making transparency a part of your internal company culture. Often, there is a huge disconnect between outward-facing and inward-facing employees, which ultimately comes to the detriment of the customer. Salespeople and support teams typically lack the proper communication channels to share what they are hearing in the field with the developers responsible for building the appropriate solutions.
For this reason, we strategically decided to keep all development and support in-house, as well as eliminate private offices and conference rooms as a way of facilitating internal communication to build the best possible solution for our customers.
For other businesses, this same strategy can bring everyone on the team closer to your customers, and help you work together toward a shared goal. While internal solutions like Slack can facilitate communication, the major benefit of working in a shared space is actually being able to talk to one another and easily share information to always ensure a positive customer experience.
By making transparency the cornerstone of your business, both you and your customers will see a clear path to success.