There comes a point in every startup’s life when you finally have a product of value that can be offered for money and it’s time to start selling!
One of the biggest mistakes any startup can make is to wait until this moment has arrived, before asking the question “where are the paying customers?”.
Building a solid customer base should start long before a product ever comes to market. By neglecting this area in your planning, you’ll be playing a dangerous game. From the off, you need to have someone on board whose sole purpose it is to get out there, start building relationships and forming a network, ready for when you can finally press go.
This will also help you avoid another common trap, which is to build a product that nobody wants or needs. If you think you have a great idea and lock yourself away to work on it without ever interacting with the world, then your chances of success are slim. Just because you think everyone will want your product, doesn’t mean they will.
Many promising startups have folded because they failed to find customers, so here are some top tips for you to think about, while you’re busy with your product development.
Taking your product to market
Which strategy is going to be best for taking your product to market? There are no definite answers here, but there will be lots of examples you can look at. See what others have tried and had success with in the past.
Start by thinking about who your target market is. If you ultimately want thousands of customers, each paying a smaller amount, then a strategy like the freemium model could work well – whereby you give a core product away for free to a large group of users and then sell premium products to a smaller fraction of this user base (Skype is a great example). In contrast, if you want to sell to big corporates then freemium is never going to work.
Step one is to determine exactly who your customers are ultimately going to be, then to tailor your strategy around that. We say ‘ultimately’ because it’s likely that there’ll be some movement along the way before you settle on a final product. The target audience of that product may end up being very different from the one you first anticipated.
Keep in mind that no matter what strategy you use, in the beginning, you need two key things: data and money. Think about how you’re going to get both of these things. If you have paying customers, then you will immediately be a lot more interesting to later-stage funding firms.
Selling to corporates
A word of warning for B2B startups wanting to sell to the big fish – it’s a whole different ball game and you need to know and understand it if you’re to be successful. If you’re not up to speed – and don’t have the time or energy to be – then find someone who does and get them on board.
Key to success with the big boys is building trust. They need to believe, not only that your little startup is going to help them, but that it can deliver on its promises. Credibility is crucial, especially in the beginning, so start working away at this early. If you run a trial, don’t run a free trial. Big corporates have money to do tests and expect to pay a fee. If you aren’t confident enough to ask for money for a trial, perhaps you’re not ready yet to play in these waters.
Big corporates will also usually come with long sales cycles. You’ll need to stick it out if you’re to survive. Start with smaller commitments and always deliver, using that as your tactic to slowly build up trust and credibility.
Who is going to sell?
A fantastic developer is unlikely to be an equally fantastic salesman. While there will always be exceptions, they will be rare. Along with the technical talent you need to develop your product, you also need people with skills in sales if you’re to get your product out there. Look at your team and make sure there is at least one person who knows how to sell and importantly, can do it! If you don’t and budgets can’t stretch to adding anyone else to the payroll, then consider working with someone on a commission-only basis. In this kind of set-up, the commission will need to be high, but the investment may be worth if it gets you the right kind of clients early on.
Cost of customer acquisition
Many startups fail because the amount it costs them to get a new customer – their customer acquisition figure – ends up going through the roof. You must have a plan in place and be constantly across all your costs.
Try to keep your fixed costs as low as possible and focus any money you have on your top-performing model – i.e. the one which finds you the most valuable customers, within the shortest timeframe. A lot of trial and error needs to happen in this phase and it’s not going to be easy, as you need to avoid wasting precious time and money.
Another thing you won’t be able to survive without is expertise in demand generation. Along with a great salesperson, you need to be regularly generating leads and keeping things ticking along and interesting. If you have no budget allocated for this then it will be much more difficult to achieve, but not impossible. Just bear in mind that the rate at which you grow your business will depend on the rate at which you can generate interest, pull out the right of kind of leads and land them as paying customers.
Understand the pain point you’re solving
Customers don’t just magically appear out of nowhere, it takes dedication and hard work to build a database and keep growing it. The process starts with a deep understanding of the pain point that your product is solving. If you’re still in the development stage with your product, then take the opportunity to gather user feedback and use it to enhance your offering. If there’s anything you’re unsure of then ask people. Reach out to peers and your network. It’s not about selling; your aim is simply to gather valuable insights. Make this clear to anyone you approach and you may be pleasantly surprised by how many people are willing to help by answering a few questions.
Throughout this process of market research, you will also be building your network. Don’t just think of any new contact as being a potential customer though. They could also be useful as multipliers or brand ambassadors. What you need is a lot of people to start talking about your product to get the whole process moving.
One way to find out what people are genuinely saying with regards to the pain point you’re solving is to jump on social media. Twitter and Quora are excellent tools for this. Do some searches and post questions, then see what answers you get back.
When you are ready to ask for money
Now you’re ready. You’ve done the legwork and have a base of people to distribute your launch-news to, so it’s time to get the word out. A classic PR approach will help you get some traction and start things moving. Many startups also use content marketing, as it can be tailored, according to the resources you have available. If you go down this route and start a blog, then just concentrate on the core topics in the beginning. That’s the best way to position yourself as an expert in your field.
Be proactive and encourage open channels of communications. Build-in systems to ask for feedback that are really easy, then take any comments you receive on board and adjust what you need to. It can often be difficult for a small startup team with limited resources to provide outstanding customer service, but it’s a vital element if you’re to be successful. Aim to resolve all issues quickly and to always operate with transparency and integrity.
When you launch, make sure it’s easy for people to share the news across their networks and always treat your early adopters as one of the most important groups of people you interact with. They can make or break your product. Stay in regular communication with all customers and be thankful for their willingness to try what might not yet be a finished product.
Educate yourself about guerrilla marketing techniques too and think which could work for you. What you choose to do will depend on your industry and the target audience you’re aiming at. There are some great ideas out there, so have a look and decide what could work for your business model.
Plus, check out these general pointers:
- Your customer mix may change over time, meaning you need to adjust what you’re doing
- Analyze, analyze, analyze. Look at your data, make assumptions based on it, then analyze again and keep repeating the process
- Find a clever system to ensure you’re offering the best customer support, even without being able to afford a dedicated team
- Learn everything there is to know about email marketing and drip-email campaigns, as they’re going to be your new best friends
- In the beginning, focus on engagement and not revenue. You need to get the product mix right before worrying about scaling. Build a loyal fan base and it will carry you through to the next phase
- Look at your early adopters and analyze them carefully. Are they the ones you really want to sign up in future?
Finally, be positive and just go for it. There are many examples of startups who have done well and had great success in securing paying customers. One example is Buffer, a company that is very transparent and open about its journey. Another one is HubSpot, whose VP Mark Roberge has shared the secrets of their success and how they built their company so fast, in a book called “The sales acceleration formula”. Take a look, get inspired and see what other pointers and top tips you can take away from their experiences.