Customer Development for Early Stage Entrepreneurs
How to build a strong customer base from day 1.
Aspiring entrepreneurs often have a false sense of security when it comes to creating, launching, and running a business. A successful business needs a solid foundation of customers and that’s often the hardest in the beginning. However, finding a niche, even if it’s a small one can open opportunities to help budding founders and founding teams gather enough confidence to push forward. Stories of startups finding overnight success can plague initial customer development experiences and plans in many ways. On the flip side, stories of startup failures can detract founders from customer development plans prematurely simply because starting a business can be so tough.
Avoiding confirmation bias
A few years ago, before co-founding Reamaze, I started a wedding photography and videography studio with a good friend of mine. Finding our first customers was a mixture of market research and customer research. Some typical questions we asked others and ourselves included:
- How was our service/product different?
- Was there enough demand for the uniqueness of our service/product?
- Are people willing to pay for this?
You get the point… Unfortunately, we were not wise founders back then. The process of seeking validation was driven by our inherent bias to think our service was somehow special or different or better than the rest. The people we asked? Too close, too familiar, wanted the service to begin with. Confirmation bias. Typical n00b move. If you’re in the process of hunting down your first customers, be sure to keep your own biases at bay and not letting it influence your customer research. Don’t ask questions or people that you already know will result in a yes.
For the first 8 months or so, we on-boarded exactly 2 customers while pouring significant amounts of resources in developing a growth plan for our business based on biased information. Avoid my mistake by steering clear of over confidence. The best way to do that is to not assume anything about your idea. It’s neither the best idea nor the worst idea. It’s simply an idea that needs proving out. All you need to know if you’re headed in the right direction or not.
Finding early adopters
Once your head is in the right place, the next major goal is to search for customers far and wide. If you’re well funded already, the “in” is much easier and probably already laid in front of you. Your mentors and investors will have provided you with a close-knit community of other founders and friends to try your product/service, giving you the much needed tinder. If you’re not well funded or completely bootstrapped, you’ll have to dig a little deeper to find your first core customers. The common misconception is to look for companies that you believe should be good fits for your product. Sure, describing the perfect customer can help you weed out the nonsensical ones but limiting yourself too much in your scope and adversely impact your reach.
Rather than focusing on one particular type of user, expand your search into other groups so you can pinpoint at least 3 or 4 different types of users. Different types of users will use your service or product differently and can potentially give you insights into how things may need to change in the future. I like to call these pivoting points. Or, think of them as crossroads that offer different paths for the future of your business.
Compartmentalizing feedback from adopters
Great! You’ve now on-boarded x number of customers and they’ve been using your product for y days. It’s time to see how much value they can contribute back in terms of making your product better. Keep in mind that the questions you ask and the data you collect will directly impact what we talked about in part 1:
“It’s simply an idea that needs proving out. All you need to know if you’re headed in the right direction or not.”
Interpreting feedback and cutting through the bullshit is a skill that requires years to perfect. People with experience will almost always tell you that listening is the key skill to develop. Sure, great listening skills can help you spot feedback miles away even if the conversation isn’t about getting their feedback. However, the more important skill to learn early on is to ask the right questions.
Stay away from questions that apply to all of your users. If you’ve on-boarded various different types of customers, asking all of them questions about how they like your product or how they use your product will not be very effective and likely to contribute to confirmation bias once again. Instead, target each group of users with a unique list of questions that focus on their problems rather than your product. Ask questions about their workday, their usage patterns, their team and how others interact with your product, questions that focus on them rather than yourself. Collect their feedback and compartmentalize accordingly.
Because you’re in the early stages of customer and product development, it’s plausible to not have a clear picture of what the best way forward is. This is even more true for your early adopters. They’ve taken a gamble and don’t always know what they want or where you’re headed so it’s important to ask the right questions. Remember, listening for answers is only as effective as the your ability to ask the right questions.
Not all feedback is created equal
It’s natural to weigh feedback from larger customers more heavily than smaller customers. This methodology is certainly logical and convenient if you’ve already defined your business niche but not always true and best if you haven’t. Smaller companies and individuals give you a different perspective of your service/product and one that larger customers might not be able to.
At some point and at some crossroad, you’ll need to determine how you cater your services to specific customers. Whether that be enterprise or SMB, their feedback drives business decisions.
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You can also find our multi-brand, multi-channel customer service platform at https://www.reamaze.com. Follow @reamaze.
