Trying to get your first paid customer can be tough, especially when you have to do more than just sign up for Google AdWords and -gasp- engage with other humans to complete a transaction of goods, services or both. So if you’re start-up model is just getting eyeballs and selling clicks, this post isn’t for you. This article is about how to get a paying customer for anyone who is doing more than just selling advertising on a site.
When you started your company, I will assume that you had an idea for some awesome thing that would generate a ton of consumer surplus. If you don’t know what this is, please read this first. Now, back to your great consumer surplus generating concept, I assume you have. This minimum viable product is untested, so you’re not sure yet if the “baby is ugly”. Truth is, it probably is ugly, and if you do the start-up sales process correctly, you’ll learn helpful product information that will not only help you sell the baby, but get some good plastic surgery to make that baby pretty.
First things first, find the people who you think will want the product/service. You should be able to network naturally into the person with the problem. If you can’t then you probably don’t know the industry well enough to understand their problems, let alone solve them, and it was a bit presumptuous for you to quit your job, mortgage the house, and risk it all on something you didn’t understand.
Networking into the sale usually means that you reach out to friends/acquaintances, or the friends/acquaintances via direct introduction (email or face to face). Just don’t spam the universe on LinkedIn, everyone hates that and it won’t help you as much as a targeted approach on people who can get references on how smart you are, how good your company is, etc. Those references and network information will help overcome the barrier to buy your future customers face.
The barrier to buy is the cost that a customer incurs to do business with you. That isn’t just money that they pay you, but the value of their time, risk to their current business operations, etc. To make a sale, you have to convince someone that the total cost of doing business with you (time, risk, money) is far less than the benefit they will get from using your product. Since most of those factors are not money (easy to often assess by pricing) your future customer will estimate time and risk costs based upon how well you present yourself, how highly your network speaks of you in reference (your reputation) and the apparent ease of doing business with you from their own assessment.
You lower the perceived risk of these factors by responding to emails quickly, dressing appropriately for any face to face meetings, showing good manners (yes, in every classical sense of this), and not interrupting potential clients/customers.
Ok, so lets go to step two, after you’ve networked into the prospective customer, how should you introduce your company? Here are some basic rules:
1. Don’t push a product on the customer, ask them to talk about their problems first. It is sometimes easier to dig a pit and allow a boulder to fall into it, than move the boulder, since gravity is a lot stronger than even the most Popeye-esqe forearms. This means that the customer’s own emotions and desires should drive the conversation naturally into your solution, not the other way around.
2. At some point, you’ll see the opportunity to share how your company can solve the problem. When the customer need discussion opens that door, show how you solve the problem in 10 seconds or less. Brevity and simplicity gives you power. You don’t need to demonstrate every minute feature of your stuff, just put out there your solution in the simplest way, and be OK with a moment of silence after you say it. If the customer responds with curiosity, find out what specifically interests them in the solution, thus getting permission to delve into the part of what you do that they are interested in.
3. Make sure that your short explanation explains the consumer surplus they should expect from your innovation. It should be obvious how the product/service is going to be something they want.
4. Be honest that you just have minimum viable product at this time, and so you would appreciate getting feedback from them on how you can improve the product. It is important that they know you’re building the plane while flying it, so you can manage expectations. Good first customers will give you a lot of feedback and recognize it is in their interest to do so. If a company sees this as a burden, they’re not a good fit for your first sale.
5. Ask at what price they could say yes today (or the soonest their internal sales system permits). For customer number one, it is not about the revenue, it is about credibility and good feedback.
6. If they say no, then ask them why they aren’t interested, and follow up with additional questions so that you can understand how your product-market fit may not be right for this customer.
7. Before you leave, ask who they know that might be interested. Even when you’re getting turned down, they may know who will say yes. Even if they say yes, they may have a friend in the business who you can call next. Referrals are like gold.
And as a final note for some services where you generate a very massive consumer surplus, you may be able to get the customer to pay upfront for a product/service down the road. That is the holy grail, and should be pursued if you can get it, but don’t be greedy. This most often happens in industries where the customer is used to prepaying part or all of the price to get a service, but this isn’t always the case.
I once saw an innovative part manufacturer get a major industrial to pay them for the inventory cost of their first shipment so that they could go into production and deliver something that generated sufficient consumer surplus to cover the cost of capital above the cost of the part. Also, first customers may want to be investors, and the money they invest helps to not only lock them in as a customer but can also provide a potential exit for the sale of the company at a later date. Treat these first customers well!