Debunking theories about your first startup customers

 

When working with countless startups over the last 10 years, I’ve found a few interesting theories early stage founders have about their potential customers: who they are, where to find them and how to scale their efforts. 

It has been demonstrated to me time and time again that often the founding team without realizing it is unrealistic about the initial type of customer that will allow the company to grow and scale.

Here are a few of the scenarios I've seen and debunked in my day as first sales hire: 

The first customer is someone in the founder's immediate network

I’ve been in a few situations where I have walked into the first sales role as the head of sales, and the initial one or two existing clients are someone that is in the founder's close knit network. Clearly in any sales set up, if you can obtain your first lead and close them with minimal effort, it will be beneficial for everyone involved. However, the methodology of building a pipeline based on the first few customers who were not obtained via a friends network no longer works when a salesperson is tasked with building a pipeline of potential customers. It is then my job to interpret why the original customer signed up and develop a steady stream of customers using best practices that would be most beneficial for the organization with minimal investment and maximum results.

When starting to build a pipeline of potential customers for a given product, it has been my experience that the original set of customers obtained through the founder's personal network is not going the identical to the first 5, 10, or 50 customers, the first few are often an outlier who we can not use to model a business building roadmap. 

Let’s look at a case of an an ad tech solution I was in charge of developing the initial network of partners for. When I started helping this company develop their sales best practices and scaling their sales efforts as the first salesperson the founders were still finalizing their pitch which I helped them refine. After a few iterations, we were able to nail down the value proposition that resonated with our target base to begin to grow our network. 

One of our first signed partners was a highly ranked website due to the traffic numbers is demonstrated which was of interest to our partners, however, the number was inflated since video views we garnered from it was not substantiated. Given the founder's relationship with this publisher, the assumption would be that this is a good type of customer to go after, however, it was not necessarily the ideal type of customer that was a. highly interested in our product and b. that where we could easily duplicate our efforts to scale. 

As I grasped the still pivoting value we offered our partners, I discovered that our ideal customer who was looking for the type of exposure we were able to offer was, in fact, a small premium site, very different form the type of initial customer the founders signed on. I find that onboarding the first 5 customers is one of the most difficult jobs in sales because simultaneously you are disproving the founder's idea of who, how and where their customers are, but you are paving the way with signing up the very first few early adopters of the product.

In my experience, the concierge experience founders are able to provide to the first handful of clients within their network is often a different type of setup then what lies ahead for the person put in charge of substantially multiplying the sales efforts. 

Market research network is not necessarily your ideal customer  

Recently as a Portfolio Growth Director at a Business Builder in London, I had the challenge of evaluating a product market fit for a YouTube ad optimization solution we were looking to bring into our portfolio.

In my research I interviewed an entire ecosystem of people who would potentially have an opinion on our given solution. My cohort included strategy executives at Fortune 500 companies, agencies and consultants who may be using similar tools, and CMOs who would consider a similar solution for advertising of their product. 

I find evaluating product market fit and uncovering fit within an organization for your solution are two different approaches. While determining your customer segment you end up talking to a large range of potential customers and people that would generally have an opinion on value proposition, structure and best channels.  

Many of the folks I interviewed was to better understand the value they would derive from such a solution, the price point we were considering and if they would pay it, the frequency with which they would theoretically use our product and if they consider the product a nice or a need to have are not the same folks that would buy it. 

After my research, we determined that the ideal companies interested in such a solution were a niche market of audiences we were hoping for, nor the wide range of type of contacts that are in my professional network. Our target was growth marketers with substantial spend on the YouTube platform in search of their ideal audience so this solution was interesting for them because of the capabilities it offered and they were willing to buy it. Bingo. 

Founders want their product to fit a certain customer type

In my experience, it is generally a good idea to go after the marquee customers in the early stage of a startup looking to raise capital. However, the big brands sales cycle maybe complicated and does not reflect the needs of  your bread and butter customer that will have a real need for a solution and is eager to partner with you. 

Going after a range of different types of a customer has proven to be ideal in most of the sales scaling efforts.

I often help identify who are the businesses out there that are:

  • most engaged in the solution provided and are willing to share their perspective  
  • have been building an in-house solution to address a similar need 
  • ready to provide extensive feedback on features and roadmap 

Given my experience with the current state of the market it is best to go after a niche sector instead of blanketing any and all potential users. Identifying three or so potential types of customer within a vertical and then honing in on what they have to say, flow of feedback, initiative to engage, understanding the problem and offered solution, and open to close ratio is the best way the approach an early stage growth focused startup initiative. 

Problem solving and figuring out ways around a challenge is in my DNA. If you have an interesting B2B or B2C product and are looking to test your theories and gather feedback to gauge interest in your product, let's talk. 

hello at brand experience dot com 

 
Valeria