The One Metric Silicon Valley Is Missing
A friend just recently helped raise money for a fin-tech startup. Exciting times with lots of numbers to watch. Especially when it relates to having money in the bank to push that end-of-business death cliff out another 18 months. But all he could talk about was that it was an “up round.” (Barely, but still up.) I reminded him that for private companies there is one number that people obsess over, often causing more harm than good — valuation.
Do not get me wrong. I can understand the excitement of founders and early employees as they watch the company’s valuation rise and rise. And the V-word comes with plenty of media buzz too — the crazy-huge numbers in the headlines about the Snap valuation are proof of that.
Sure, valuation can indicate a certain upward trajectory. But is it worth chasing at all costs? My experience as a company founder and 20-year Silicon Valley veteran has taught me that the answer is “no.”
Companies are often so busy chasing valuation that they overlook what really matters — customer love.
We quickly learned this after we founded Aha! — our goal was to create a product that would bring value to product managers and help them to build better products. But then something surprising happened. Our customers had an emotional reaction and told us that they “loved” our software and support. What? Nobody loves enterprise software. You are lucky if customers tolerate it, let alone express love.
But as the love grew, so did our business. So we made a pact to stop chasing empty numbers and start tracking how often our customers told us they loved us. And guess what? Those expressions of love correlate almost exactly with our phenomenal growth over the past few years.
The lesson seems obvious in hindsight — if you want to achieve long-term success, you need to earn genuine, heartfelt love and loyalty from customers.
How do you earn that love? Build a product that will make your customers’ lives easier. And then add to that value by continually meeting their needs with product improvements and service. I write about this extensively in my new book, Lovability. And I provide tools to help you discover how lovable your company is today and what you can do to improve its lovability in the future.
Even better, the love you earn is measurable. To get you started, here are three ways to quickly assess how much your customers love you:
Hugs This is when customers share affection for your product and company — they feel connected. And so they want to get closer. They will prioritize spending time with your product, and they will advocate for its use at their organization (they may even apply to a job at yours). You will hear from them more and more as they share feedback, acknowledge that you “get” them, and cheer on your success.
Love notes Now customers are not just talking about how much they love you — they are writing it down. Love notes are when customers send an expression of delight for your people, products, and service. These notes will come in everywhere from email and social media to instant messages and review sites. It could be as simple as, “Thanks for the wonderful support. Our team loves you!”
Megaphones That love is growing louder. Customers are telling their friends and colleagues how wonderful you are, and those people are telling more friends and more colleagues. Your customers have become your most powerful marketers and advertisers. This leads to the ultimate expression of love for business customers — adopting your solution again when they change companies.
When you can see the signs of love, lasting growth and success follows.
Of course, love is not the only metric that matters. But it is a big one — one that should not be overshadowed by headline-making figures. So instead of chasing valuation, chase value and grow it through love. When you do, you will create a ripple effect of loyalty, profitability, and growth.
What is the most important metric in your organization?