Startup advice: define who your customers/users are
In a B2C startup, you’re going to have users/consumers using your service. In a B2B startup, you’ll be selling your service/product to businesses. In each case, it’s important to put in the time upfront to define who your customer/user is and revise it over time. For one, your customers will define what your product evolves into over time, based on their feedback and requests. Second, your sales strategy will be much more effective and focused when your sales team knows who your ideal customer is and who isn’t. Lastly, you’re doing your customers a diservice if you’re not organizing them properly and keeping them informed about where the product is headed, and how your product strategy impacts them (as hopefully they’ll come to rely on your service/product).
Some examples of how to break out customers could be how large of a company they are (based on revenue, # of employees, etc…), geo location, business model, public or private, etc… Or perhaps it’s that you’d prefer that the ideal customer have an existing team in place who could use your service and/or has previous experience with a different product (which may require research/exploration to find out). Or any combination of these.
Some reasons for doing this could potentially be needing your first few clients to be located near your office for easy-access support. Or perhaps your technology isn’t able to be operated internationally yet. Or perhaps you realize that it’s harder to scale a business to long-tail customers with what you’ve built, so you need a higher “revenue to sale” ratio (i.e., each sale you make has more dollars behind it) until you are able to build a self-service version for smaller businesses that scales better. This definition can and should also change over time as your service/product/team matures and grows (presumably over time your goal is to grow revenue, which probably means needing to support a wider group of customers).
From a product perspective, it can be very dangerous to be undisciplined at who you sell your service to and provide access. For instance, if you have a set of customers that falls into the minority, they’re going to provide feedback on what they want to see in the product (as they every right to do so having been given access), and that will ultimately affect the majority. For some reason, the clients you shouldn’t be listening to are often the most vocal at what they want in the product. Most startups also do not have a very disciplined product management process (i.e., which features should we build and under what overall product strategy), as they’re quickly iterating and still figuring things out, so you’ll often find yourself listening to any feedback you can get and building towards that. Remember, just because a customer of yours is asking for it in the product, doesn’t mean you should build it.
At Invite, we make a habit now of at least twice a year sitting down and trying to articulate and verbalize who are customers are. It’s surprising what you’ll learn by doing that. We learned that early on (pre-acquisition) we had been undisciplined with who we sold the system to and ended up having a group of customers who ultimately weren’t a great fit for where we (and the majority of our customers) wanted the platform to head. Perhaps that was because we were a startup and money was money in terms of new clients, or perhaps it was because we didn’t put the in the time upfront to define who our customer was going to be. Like any business relationship or otherwise, it’s tough to go back and fix things like that once they’re started, so it’s important to get right first and ultimately better for both to be transparent. It also should have been no surprise to us that most of the “features we shouldn’t have built” in the platform were from requests we acted on from clients who are no longer on the platform and ultimately weren’t a great fit.
So here’s what I’d recommend. If you’re doing a startup, take the hour or two with your co-founders/key folks in one room and try and articulate and write down who you think your ideal customer is. One time we asked each person in the room to write their own definition down first, and then we went around the room and started the conversation that way. There is likely to be some dissent and disagreement, which is healthy in this exercise (with sales folks typically wanting as broad of a focus as possible, and engineers wanting the smallest). The goal should be to make the definition as simple to understand and as short as possible, kind of similar to how you should be able to describe what your business does in one sentence. In a very disciplined company, this could be paired with financial and market size analysis, but startups do most of this stuff using gut and instinct (and probably should). Next, share this definition with your board and key advisors to get their opinion, and revise if appropriate (and bring back to your internal group). If you have experienced operators in this group, they’ll appreciate the need/desire to focus your attention on a common set of customers. Then, revisit this definition as needed, but no less frequently than annually, to make sure that as your product develops that you don’t need to either expand or contract the definition (again, with appropriate financial and market size analysis as needed). A strong sales org and leader will eventually instill this same sort of discipline on a larger sales team, but this is more for startups.
