These ten customers are unlike any others throughout the business. They help a startup understand what features of its product resonate with potential buyers, which features need improvement and give an overall understanding of the customer problems it solves. The first ten customers help how to craft a scalable sales process to win the next one hundred customers.
In this article, Swapnil Shinde, a 3x founder with two exits, an angel investor in 30+ startups, and CEO and Co-Founder at Zeni, shares his professional experiences on how to nail the early adopters and win their trust, respect, and business from the get-go.
The founder should sell to the first ten customers.
Founders understand the product, the market's challenges, and opportunities better than anyone else. Selling directly to the customers will help founders to strengthen their pitch to potential investors, partners and employees, and allow them to cultivate strong customer relationships from the beginning.
Founders also need to close early deals because that is an opportunity to understand customer pain points and where the customer feels the pain when pitching the product.
As Swapnil explained, "There is no better way to build a more robust product than talking to customers. Selling the product is probably the best way founders can force themselves to fine-tune their creation into a must-buy product."
And, once the founder has made this effort, they are ready to hire his first sales leader. They already have valuable, firsthand insights to share with them.
The best way for founders to scale themselves is to be a fantastic team player. Being an effective leader means delegating tasks to other team members to focus on the bigger picture.
In order to be a team player, you need to build a strong team around you. And building a strong team requires founders simultaneously to hire top-down and bottom-up. By hiring at the executive/director level and entry/mid level at the same time, founders can scale faster, delegate to seasoned experts, and have the bandwidth to scale and grow your business with junior resources to help execute. When founders strike a balance between senior leaders and entry level rockstars, they make their life easier while being more effective and productive.
Many founders also scale themselves by going to their initial set of customers and showing them their deck of plans. But what works to their advantage is if they can offer customers a product, show them what is coming and excite them into building a relationship with that product that doesn't exist to a level where they start recommending features. The key for founders is not to dig into how the product works until the end of their pitch. This way, prospective customers are excited about the idea, not just the company's product.
Founders should lead with the product demo instead of tech and get the first set of customers excited. Leading with the product, leading with something that delights customers, will go long. They want to know more about how the product solves problems in their industry.
One of the mistakes that many startups make is trying to build features to solve a problem. Building a business around it gives a high chance of encountering failures in the future.
The most important thing for any startup is for founders to have lived the problem themselves. If founders have lived with the pain point for a long time, how they see the problem increases drastically. They can understand the problem's roots and define a better solution to face it.
Swapnil gave a personal experience they had with his current company, Zeni, the financial operations platform for startups. He shared, "Zeni is an AI-Powered finance tool for bookkeeping, accounting, and CFO services. Before Zeni, we had consistently faced problems related to bookkeeping, accounting, and CFO services for 12 years of building the previous two startups. We know what issues you face when you hire a part-time bookkeeper as an accountant or a part-time CFO. The entire workflow is hugely fragmented. Your bookkeepers will not start working on your books until the month ends. As a founder, every single day, you are flying blind. We also tried hiring full-time individuals to do the work. We spent a bit more money on accounting and hired one of the top finance firms in Silicon Valley. But the experience didn't change at all.
For 12 years, we saw that no matter who we worked with, the experience remained the same. Even when we hired people full time, they worked the same way: work is done manually, prone to human error, and slow. We knew that this had to be solved, and the only way to solve this was by giving those employees the power of machines and AI to do their job ten times faster and more accurately. So we explored the questions: Can we use automation to modernize the financial operations experience? Can we automate some tasks that accountants and bookkeepers do for speed and accuracy? You can only know this if you have lived the problem yourself," he added.
This metaphor particularly resonates with startups trying to build a product worth developing. Any founder who has lived the problem themselves always has the advantage of creating a solution that is exceptionally unique and differentiated in the market.
It’s one thing to know what a potential customer may look like for your business, and another thing to connect and engage with your target customers. Locating the target market, capturing their interest, and converting them from prospects to customers can be a challenging series of tasks. The good news is that there are ways to overcome these challenges. The most tangible way to reach customers is through your network and connections. Swapnil shared his expertise, "If you have VC backing, you can leverage these relationships and networks to broker meetings with potential customers. If you are a first-time founder, you can think about your past roles and how you can leverage the credibility of your past work and relationships to form new connections for your new startup. Regardless of your jumping off point as an entrepreneur, it’s important to surround yourself with formal advisors who can use their credibility to help get you those initial meetings with potential customers. Use social proof as much as possible to reach out to and connect with those customers. But don't randomly reach out to customers just because they can be potential customers down the line without a good reason or pitch."
Other ways founders can effectively engage with potential customers for their startup is through digital marketing. Depending on your industry and target customer, a mix of paid advertising, social media campaigns, paid search ads (PSAs), email marketing, and/or SEO content marketing can help attract people's attention of your target audience and get your product/service on their radar. Once they know you exist, use these same strategies to engage these prospects through content promotions, engagement campaigns, and/or demos (such as videos or slideshows).
It’s paramount that any successful startup must win customers that will pay for their product or service, and become loyal supporters and promoters of your brand. If founders can find these prospects before their competitors do, success is viable in terms of customer acquisition.
Engagement levels (not revenue numbers) are the strongest indicators of product-market fit and the promise of long-term product adoption.
Swapnil said, "Any investor excited about revenue during the early stages is probably not the right partner for you because that revenue might dip depending on how your product moves around. So, you have to focus on investors who have a deep conviction of the problem you're solving and the solution you're building to the market."
Engagement is the highest priority. The first set of customers will serve as reference accounts — and the more engaged customers are, the better references they will provide. Focusing on initial customers will also help founders understand how frequently the product is used and its core use to businesses. For young companies, frequency of use is also a better measurement of initial product success. Remember, the business will only achieve success if the product can solve a real problem for your customers. Companies will eventually settle and become the most loyal product ambassadors if the product solves problems.
Engagement also drives revenue. If customers are engaged, they will keep paying for the service and opt-into new products/services as they become available.. If customers are happy and engaged, they will refer the business to other customers.
Engagement is the root of all kinds of delight for any startup - including revenue.. As your business grows and revenue becomes an important metric, retention revenue is a B2B business' financial foundation. This metric is crucial, and its roots are in customer engagement.
In the early stages of a startup, saying no is probably the most potent answer that founders can say not to distract themselves. They should only focus on the 20% product features that can have 80% impact, whether that impact is engagement, revenue, or the ability to solve the problem. Focus on that 20% feature set and say no to everything else. If a customer asks for something that fits into the product you’re creating but is not a top 20% feature, add it to the roadmap to consider down the line. Businesses cannot commit to customer demands in the next few weeks, but probably in the coming months, if other customers repeat the request.
In the first 12 to 24 months, founders should have an extremely tight handle on the product, and that should be built based on the entire understanding of the industry and pain points uncovered in honest conversations with your target market, prospects and, customers.
It is important to remember that to acquire, convert and retain customers, and turn them into advocates, you need to engage and connect with them in appropriate, effective, and meaningful ways. Remember that increasing customer engagement does not mean forcing customers into doing something they do not want to do.
Increased customer engagement often comes from making minor changes that significantly affect the business and the experience with customers.