9 Things That Tell You To Pivot

by Jon Leighton, Director of digital agency iResources and founder of neatly.io

‘Pivoting’ is spoken about a lot in the tech world. Indeed some of the biggest names out there started off as a completely different business; including Twitter, Nintendo and most recently, Slack. But pivoting applies to all businesses and the theory behind it is exactly the same.

Executing a successful pivot is not easy. The fact you have focused on a specific strategy for such a long time to suddenly shift requires ‘buy in’ from the whole team. Simply changing your mind as what you are doing ‘just doesn’t feel right’ is likely to end badly.

Having been involved in a few and led one or two, they are difficult decisions to make, are you pivoting too soon?  Have you interpreted the data correctly?  Is the choice to Pivot based on the correct interpretation of the data – the list goes on!

Running our own platform neatly.io and also being involved in other startups I have seen a number of pivots, some of them worked well and others in hindsight probably needed some more thought, but all have been a learning experience!

With that in mind, here’re 9 ways to identify when you need to pivot, and 10 ways to do it:

1. Your Beta testing does not go well.

OK, so testing your product with an initial audience is always going to be a nerve-wracking time. We do this because we want our product to the best it can be and, most of all, used by the customers we built it for. Their feedback is therefore crucial to the long-term success of the product.

It’s not always hard to get feedback, particularly when dealing with early adopters, you’ll find that customers are often very willing to share their thoughts.  It is important to discuss this feedback in detail with both your customer and your team.

You need to ensure the feedback and any problems are fully understood to put in place an effective solution. There may be a scenario where you just haven’t got it right and you need a rethink.  It’s always better to do this kind of thinking early on instead of 6-9 months down the line. You don’t want your customers to still be saying “it doesn’t solve a problem for me”.

2. Your revenues are declining or you don’t have any revenue at all!

Revenues don’t appear overnight; even the greatest success stories had to work hard to start getting traction and growth.

Yet if revenues start to decline, or after a few months customers are still leaving you for other solutions, then you may have an issue. Trying to get quality feedback from customers who have lost interest in your service can be tricky, but you should persevere. These people hold the knowledge you need on what is happening and why.

3. Your customers don’t use your product.

You have lots of sign ups, you’ve smashed your acquisition targets and the first slide of your pitch deck looks great! But if you have lots of signups and very few are coming back or using the product at all, you’ve got bad news!

If this is the case then you’ve got a big issue. Identifying why your user base is not coming back and where they are dropping off is critical to moving forward and addressing any issues.  

It could be a combination of small issues that can be resolved or a rethink on how you are presenting your product. The important thing is to identify the issue quickly. Do not bury your head in the sand, thinking that everything will be okay in the end.

4. An element of your product is used more than the product itself.

So your customers are using your product but only a small part of it and not as expected. Have all those months been spent on features and services that are not been used at all?

If this is happening or happened, it might be worth identifying the particular element to focus on making it a bigger part of your overall offer.

I spoke to a founder recently about a pivot; they offered an ad tech solution to enterprise clients and had just spent six months on a new feature. But when they launched it, it was completely ignored.

So they decided to speak to their customers to find out why. It turned out the majority of the customers were just using a very small part of the product and weren’t really interested in the other features! Once they had identified this, they focused on this small problem to provide a better solution.

If they had identified this before they would have saved themselves six months of work, a decent amount of money and more time to sleep!

5. Growth is weak.

This is one to analyze carefully as slow growth can be caused by a number of reasons and pivoting is not always the solution.

Assuming you have tested the product and have some users, it would be a good idea to review your channels to market and how effective they are. It might not be that your product isn’t required or of any interest, but that the right people don’t know about it.

So if your product is not getting a decent amount (or any) traffic, then it’s worth looking at your marketing strategy before changing the focus and strategy of your entire company!

If you are getting lots of traffic but no one is signing up to your service then this will need more thought. However, it is worth reviewing your content and message you are sending to your users. Is it clear? Will your customer understand your proposition?

I always think it is incredibly difficult writing about your own product or service. Therefore I tend to create bullet points and work with a couple of colleagues who help me ‘flesh it out’. This makes it much clearer!

When your user growth is weak and returning users (the ones that actually signed up!) are on the decline, then this is an area to address and NOW is the time to find out why.

6. You spend more time educating your customers than they do actually using it.

You may be ahead of your time and the market isn’t quite ready for you yet. Or you may have solved a problem with a complicated solution that provides the end user with a different set of problems, so much so they just don’t bother.

In this case, you could argue you haven’t provided a solution to the original problem or it is so complicated, your customers move on to the next promise offered to them.

7. You are burning cash.

Cash is king, always has been and always will be. Even if you are running on the lowest of outgoings and serving on pasta power, it will eventually come to an end. Managing your cash position when forecasted sales aren’t being achieved is tough, and if you are spending more than you are generating and cash piles are dwindling, now is the time to address your financial position.

Your Pivot is likely to cost money and time. So it’s important that you do not leave the decision until it is too late when you have no money left and are unable to raise any more. Once you have identified the need to pivot and the direction required, you should act upon this quickly. One of the great benefits of a startup is their ability to be agile and adapt quickly to a changing environment.

8. You no longer feel passionate about your product.

Things are not going as planned, it isn’t the product you had originally envisioned and nothing seems to have gone right for you. These are all pretty common feelings at one time or another and your next course of action will vary depending on your individual circumstances.

You have other products and services that are doing well. If this is the case, you might want to wrap this one up and focus on your other interests. If this is your core focus then it might be time to pull the whole team together and have some frank conversations about the future of the business. Lock yourself in a room somewhere put your cards on the table and start to plan for a different (and brighter) future!

9. A by-product makes more sense and has a greater opportunity.

When you were building your product you might have realized that some of the tools out there weren’t quite right for your requirements and in your spare time you and your team put together something that will solve your problem.

Without realising it you may have solved a common problem that not only you were suffering with. There are some really cool examples of this happening.

Basecamp started out as a web design agency but created a project management tool for their internal projects as they could not find anything that solved all their problems. It is now one of the most popular project management tools out there!

Or Slack, the company which started out in gaming and built an internal chat tool to cut down on email and maximize team communications. Once they realized to pivot away from gaming and focus on their chat tool their growth has been huge. It now has a multi-billion dollar valuation.

The Different Ways Your Business Can Pivot.

Once you’ve identified that your business needs to pivot in order to grow, it times to decide how.

According to the Lean Startup, there are 10 different types of Pivot. The type of Pivot required will depend on your business and where it is currently positioned. It will also be heavily influenced by the signs that led you to the pivot decision. Some of these have been briefly covered above but here are the 10:

1. Zoom-in pivot.

This is where you identify a single feature of your product to become your whole product and new core focus. You might decide on this tactic when you’ve noticed that customers are only using a particular subset of your product rather than the tool as a whole.

2. Zoom-out pivot.

The opposite of a zoom-in pivot. This is where your initial offering may not be comprehensive enough to address your customer requirements and your product becomes a feature of a larger product offering. Perhaps customers are all asking for the same features to be added to your product?

3.  Customer segment pivot.

Your product has customers, but not the audience you originally visioned. So you have solved a problem, but for a different audience.  This would require you to pivot and optimize your offering for your new target market.

4. Customer need pivot.

You have feedback from your customer and it’s not as hoped. You have solved a problem but is insignificant and as such there is no budget to pay for such as product. This will require repositioning or possibly a complete overhaul to find a problem people truly care about.

5. Platform Pivot.

Identified as a change from application to a platform (or vice versa). A lot of platforms suffer from not having that ‘killer app’ that makes people want to use the platform.  Customers buy solutions rather than platforms.

6. Business architecture pivot.

There are two types of business architectures: High Volume, Low Margin which is a volume-based business and High Margin, Low Volume which is a complex business model. You are not able to do successfully do both at the same time. This type essentially involves switching from mass market to a sales funnel – or vice versa.

7.  Value capture pivot.

This refers to your monetization strategy and how you plan to generate revenues. The methods used can have far reaching effects on your business and how you promote it to your target markets.

8. Engine of growth pivot.

This is how you grow your startup. There are three main strategies used today which are viral (word of mouth), sticky (they keep coming back) and paid growth models. Implementing the right model can have a significant impact on growth and success.

9. Channel pivot.

The channel is often referred to by sales teams when identifying the route to their customers. This type of pivot normally entails some custom pricing and/or bespoke features.

10. Technology pivot.

This can happen when a startup discovers the ability to deliver the same solution more efficiently (and quite likely cheaper) by using a different technology.

As you can see, there are many ways that a business can pivot, but not all of them will be suitable to you, should you ever find yourself in that position.

In any of the scenarios above, one of the most important elements to success is surrounding yourself with people who will tell you the truth and not just agree with you ‘because you’re the boss!’

Being able to speak frankly is difficult but equally important. Everyone will have some form of emotional attachment with what you are doing. It is enviable with the amount of energy it takes and it is important these feelings do not get in the way. Identifying the underlying cause of your problems is key to the future and survival of your startup.

Jon Leighton is Director of digital agency iResources with over 10 years of experience in web and ecommerce. He is also the founder of neatly.io which allows users to view all their business data in ‘neatly’ in one dashboard in order to track and achieve their goals.  Jon focuses on helping business to grow whether that’s crafting the right online experience for their customers or suggesting new workflows that will improve their processes.