Next month I’ll be giving a seminar at Alpha Loft about startups finding their first 100 customers. While prepping for the talk I thought it would be helpful to write about early customers a bit more broadly. How can you sell if you don’t understand who you are selling to?
As a founder you may not necessarily have a functional product by the time you are selling. In fact many startups begin sales and promotion to determine interest and drive product development. By the time you start selling, though, you should have a strong idea about who your customers are and how your product solves those customers’ problems.
So let’s talk about your customers. A startup is naturally different than an established business. Not only is your business organizationally different, your product, market focus, capital and personnel resources also differ. You have many unanswered questions about price sensitivity, product and market fit, and possibly an incomplete product. This is all normal. Your job is to answer questions, prove your hypothesis and find a path to success. That path will probably not be the same as when you initially set out.
Due to all of this, and more, your first customers are also inherently different. Because a startup has very limited resources, including time, it is best to not waste time on customers who are better suited to your business once it is more established. Instead, you need to find your early adopters. These early adopters are more likely to tolerate hiccups in service or an incomplete product. In addition, they are often champions of the business and business model and are invested in the success of the startup. Because they are so special, they are frequently difficult to find and require sales efforts that don’t scale well.
How do you find these elusive early adopters? First you must identify your customer segments. Your customer segment is a description of a group of customers that can be categorized in ways that make them identifiable, such as mid-size manufacturing businesses that consume a lot of energy and have aging facilities.
Identifying a customer segment, or a few, will help you focus on your next few questions. Is the segment large enough to build a viable business? Who are the decision makers you need to talk to within that segment? Is their need aligned strongly enough with your product or service to make a compelling case for your business model? Will they pay, and will it be enough to support your business model? If your answers to the above questions are not strongly positive you need to adjust your business model, target customer segments, and/or product. Ultimately, you need to make sure that your customer segment has a top-tier pain that your startup can solve and that the size of the market is large enough given your pricing strategy to justify building a business around it. If you don’t have a strong product or market fit or if your market is too small to justify spending time in it, you need to adjust.
After your startup has found its early adopters there is yet another pitfall. Don’t make the mistake of thinking your early adopters are the same as your typical customers. The typical customer may not respond similarly to solutions that require technical or habit change. Your methods of finding and communicating with your early adopters may have to change as well. In short, make sure that early adoption success isn’t confused with broad customer interest. Many a startup has found the chasm between the two customer types to be impossible to cross.
Finally before you make the shift to grow and scale your startup, you must first make sure your customers absolutely love the product. If you took it from them right now, would they strongly object? Would they even notice? Is your offering something your customers can’t stop talking to their peers about? All of your efforts in acquiring customers are for naught if they leave out of ambivalence or a better competitive offering. Once you have found the love, then you can focus on scale.
Joshua Cyr is the director of education and acceleration at Alpha Loft. Joshua has previously worked in marketing agencies and co-founded a commercial CMS startup, Savvy Software, serving as its CTO. Joshua also serves as City Councilor for the City of Portsmouth. He can be found on twitter @jcyr or email email@example.com