November 30, 1999 in Uncategorized

Getting The Right First Customers

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Getting the right first customers is critical to the success of a tech startup.  The right first customers can validate a company's value proposition, the market need, and product features.  The right first customers can also be an invaluable marketing asset when done right.  They can become part of your ongoing development team, helping you plan the product road map and the next release schedule while refining the product delivery model.

There are several competing theories for obtaining first customers:

  • Low-risk, low-hanging fruit: In this model, a company can leverage a trusted relationship to get the benefit of someone who is personally invested in your company and where the risk of imperfect delivery may be lower.  The personally invested customer can help shape and refine the product, be careful to ensure the results from these customers still prove out the unique value of the solution and do not take you off the critical path.  
  • Large, reputable leader: A win and an early reference-able customer can lead to a rapid acceleration from one to many customers through this strong reference.  The risk of chasing a Bank of America or Coca Cola is that pursuit of that one large customer can consume most of a small organization's limited resources with an uncertain result.  If you pursue a high profile, larger first customer, be sure to prioritize companies who whom you have done business.  It is also essential that your product is a must have, not a like to have with no alternative. 
  • Dual path: With sufficient resources, it is possible to pursue a large prospect while delivering value and proving out the value proposition to a set of lower profile early customers. 

Critical attributes of first customers include:

  • Eagerness to provide feedback and help shape the product
  • Participation in a ROI success story or customer testimonial
  • Willingness to pay for the product – either in full cash or through significant investment in R&D with a highly discounted product (validate the business model!)

It is probably not realistic to fully prove out your business model or to refine your sales process with first customers, but you should be able to prove and refine your value proposition and to refine your ideal target customer profile.  Moreover, you can begin to create a compelling marketing story to take to the next set of customers to prove that you can gain customer traction.

Sound strategy around pursuit of first customers can be one of the most important factors in a company's success.  Be sure to pursue them thoughtfully. 

If you have a success or failure story about first customers to share, please share with us.

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