A Step-by-Step Guide to Hooking your First Customer

Is your startup a customer virgin? These steps should help get things moving.

The majority of people don’t like selling, or don’t think of themselves as good salespeople so push selling down their list of priorities. Doing this can result in you finding yourself in the position of having invested lots of time/money into building your offering, only to find there’s nobody who wants to pay for it. You can try to pivot, but wouldn’t it have been much easier to talk to target customers earlier to find out where to focus your efforts?

"I may not have any customers, but look at all the shiny bells and whistles on my product."

“I may not have any customers, but look at all these bells and whistles.”

Whatever stage you’re at with your startup, if you haven’t started approaching potential customers, now is the  time.

  1. Define your target customer. What type of organisation do you think would be a perfect fit for what you’re offering. Try to be as specific as possible in who you’re targeting, as it will be much easier to find the people responsible for making a decision. What size/style of organisation are you targeting? What sector are they in? Where are they located? What department or role in the business is responsible for the problem you can fix? Why do you think they’re a good fit? Is your offering irresistible to them, or can you make it so? Can they afford to pay? Then create a list of organisations that match the ‘perfect customer’ definition, which you’ll need to test.
  2. Understand your competitive advantage. Are your target customers already working with someone else in this area? If so, what are you offering that’s different and better? Don’t be intimidated by larger competitors – just find what’s unique about your offering. For example, as a small startup with 3 people, how can you compete against a large multinational company that addresses the same problem? Look for the differences – you’re passionate, agile and highly responsive. You give the Managing Director’s phone number to them and they can call any time 24×7. Does your large competitor offer this? Probably not. Does your competitor have a hugely feature-rich product? If so, perhaps you offer a budget version with 80% of features the customer will actually use, but at a third of the price they pay today. The most important thing here is to align your competitive advantage with an area of pain the target customer has. If you can find and access an under-served niche market with little or no competitors then this is obviously ideal.
  3. Document your value proposition. What is the unique benefit that your customer will get from paying for your offering? You need to focus on the benefits from the customer perspective. As the customer, what benefit will I get from paying for this? How will it impact my bottom line? Why should I care? Try and turn this value into a concise, jargon-free, easy to understand marketing message. Focus on making the offering compelling and low-risk for the target customer – remove barriers to why they would choose your offering. Understand the target market customer, the unique differentiator you have for that market, the sector you operate in and your proof point. FedEx has a great value proposition that ticks all the boxes: “For deadline oriented business people (target market) FedEx is the most reliable (unique differentiator) overnight package delivery service (the sector it operates in) because of its sophisticated package tracking technology (proof point).”.
  4. Create an initial target list. This will depend on your offering and the target customer profile from Step 1, but start by building a list of ‘low-hanging fruit’ opportunities – i.e., a list of customers that are highly likely to match your sweet spot definition of a perfect customer – either because you know they are very likely to need your offering, or because you will find it easy to access them and convince them to work with you. I avoid buying marketing lists as the data is usually out-of-date. Invest the time in building a list using contacts/friends/family, with LinkedIn and by researching websites, brochures or by calling the target company to ask who’s responsible for your area of operation. This can be time consuming, but the end result is so much better and more useful.
  5. Work out your approach. Trying to make a traditional sale in this situation can be difficult. It may be easier to ask target contacts to provide feedback on your product idea or to participate in a free, limited-duration pilot of the product, or to work in partnership with you to address their area of pain, given that you are building a product to meet their exact needs. Remember to make sure other target customers have the same problem though, otherwise you’ve just built a customised solution with a worldwide market of one customer. It’s also important to remember that people don’t value things they get for free. You can end up setting a precedent for your offering as a low value commodity, which will force you to compete on price. Be careful to ensure there is a timetable agreed to allow them to evaluate the offering for a trial period, during/after which they give you a testimonial/feedback on their experience and either discontinue or start paying.  The best way to sell to big organisations is to sell to other big organisations – it gives you credibility. Do whatever you can to get a reference client – even if that means losing money on the first deal.  Be confident, truthful, don’t exaggerate but passion is contagious – if somebody sees that you’re genuinely passionate about solving a problem they have, they’re much more likely to want to help you and work with you.
  6. Get contacting. Send emails to your target contacts and follow up a couple of days later by phone. Ask for meetings. Be shameless about using family, friends, former colleagues and associates to get warm introductions into the organisations you’re targeting. Always remember to treat introductions with the value and respect they deserve, as someone is risking their reputation by recommending you. Get out there and hustle – go to networking meetings, find events that your target customers attend and go along. Get your elevator pitch perfected, and don’t be afraid to pick up the phone and ask for what you want.
The phone book: not a well-defined target customer list.

The phone book: not a well-defined target customer list.

When you secure a meeting/call/demo, prepare for it thoroughly by thinking of what questions they will ask and having good answers for them. Remember to think of your offering and the value you deliver from the customer point of view. Why will they get excited, or even care at all? How much are you charging? What’s the total cost for the first year of service? How much will they save by using your service? Why is this a low risk proposition for them? What are the easy next steps they need to take to begin working with you? Keep to the point and know what you want out of the call/meeting, then don’t be afraid to ask for it.



A Simple Formula to Find Winning Ideas

6 Simple Steps to Follow to Validate Your Idea

So you’ve got an idea for a business. This one’s stuck in your head. It’s an exciting feeling – your new business is starting to take shape and you don’t see any major roadblocks that you can’t envisage being able to overcome. So what next?

One thing should take priority at this point: validating the commercial viability of the idea. Or in short, find out if it’s a winner.

“But wouldn’t it be faster to just not bother?”

To do this, I try to answer these questions:

  1. What problem is being solved? Looking at it from the buyers perspective, what problem do they have that your offering will fix?
  2. Who, specifically, would pay money to have this problem solved? People and organisations have lots of problems, but is the one your proposing to solve big enough to make them need/want to spend money to fix it? Do those people have the money?
  3. How urgent a problem is it for those people? If it’s a problem that’s way down their list of priorities you may have trouble getting and keeping their attention long enough to make a sale.
  4. Who else solves this problem, or similar problems? Who are your competitors, or who could easily become a competitor when they see the opportunity you’re exploiting? What indirect competition is there for the budget you hope is spent with you?
  5. Why would somebody choose this solution over the alternatives or what they use currently? What is truly unique about your idea that also gives a compelling reason for your target client to buy from you? This is usually the hardest question to answer. What unique advantage do you have that someone else couldn’t easily replicate?
  6. Where are those people located and how can they be accessed? If you can’t connect with your target customers, it’s pretty difficult to make a sale.
7 billion people and all I need is for each of them to give me a penny: not a commercially viable idea.

7 billion people and all I need is for each of them to send me a dollar: not a commercially viable idea.

After answering all these questions carefully, with some research to back up your assumptions, you should have good initial insight into the scale of the opportunity. The trick is to minimise the risk of starting up and chasing that opportunity, while not over-researching and becoming paralysed by a fear of getting it wrong. Risk is inherent to startups – it’s an essential and exciting part of any new venture that you need to embrace and accept, but you also want to be reasonably sure you have good odds of putting together a sustainable business that can thrive and grow.

It should become fairly obvious if the idea you’re looking at is truly great, or just OK, or worth assigning to the ‘Maybe Not’ pile. This approach isn’t just for startups – I use it to validate almost all new ideas. It’s also important to revalidate the idea constantly over time using the same formula as you move into the startup phase, learn more about your market, target clients, competition, etc.

Gordon eventually realised his idea for Stay Wet Paint wasn't a runner.

Gordon eventually realised his idea for Stay Wet Paint wasn’t a runner.

This approach also gives you confidence that your idea is worth hearing about. When you speak to potential partners, clients and funders you’ll have the ability to answer the questions they’ll inevitably ask, while managing to sound relatively clued-in and intelligent!