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Stuart McKeownThe Startup Guide to Finding Customers

  • Monday, April 29, 2013   - Get post updates via email + a special bonus growth hack here
Finding Customers For Your Startup / Business

After several months of development we have finally released a beta version of our first application Gleam.io. But now the fun starts, we’ve built it – but will they come?

The art of customer development helps you engage with potential users of your product, these conversations should help you in a number of ways:

Validation Of Your Core Concepts

If you’ve spent time building a product, it’s always great to speak with a potential customer who has a problem that you’re solving. It’s helps you validate that there is indeed a market for what you’re doing & you are actually building something that makes people’s lives easier in some way or another.

Valuable Feedback

It’s easy for us to bury our heads in the sand & build what we think are the right features, however there is nothing better than having clients at the cold face tell you exactly what problems they have. This can also work against you, Steve Blank recently wrote a post about how you can kill your startup by trying to do everything that your customers want.

Testimonials

Testimonials matter, Andrew Warner did a great interview with Victoria Ransom from WildFireApp recently & she mentions that having Pepsi as their first client opened the doors to so many more businesses of that size. Use the opportunity to let customers use your products for free before public launch in exchange for a testimonial or an honest review of the service.

If an investor asks you:

Where are you going to get the first 5 people that actually pay for your product from?

Do you think you could answer? Below are some actionable steps to make customer development easier & more fun.

Use Your Own Product

There is nothing better than eating your own dogfood, how can you be inspired by your own products if you don’t use them yourself?

Phil over at Close.io recently wrote an inspiring post about having Co-workers as your first customers. Since they were building a product for sales people, but also running a sales business at the same time he was able to get feedback in real-time.

Utilise Your Network

Everyone knows that it’s much easier to talk to people you know, this could be friends & family or other founders you’ve met on your journey.

One of the first activities you should start with is reaching out to your own personal network (don’t forget to get your co-founders to do that same). Even if a large majority aren’t your target market you can still get great feedback or a referral to someone who might need your product.

If you’re posting on social networks, try to ask a question instead of just “announce” the product. It’s important to try & get people to engage with your posts as quickly as possible. Ask for feedback on your logo, get people to user test certain features on your site in exchange for gift vouchers.

Here’s a list of potential areas in your network you can focus on:

  1. Close friends, think about who they might know
  2. Family connections
  3. Educational connections, school, university & clubs
  4. Friends on Facebook (including any relevant groups you might be in)
  5. Twitter followers
  6. Linkedin contacts
  7. Email contacts
  8. Users of previous products

Tap Into The Startup Ecosystem

Inspire9 is one of Melbourne's growing startup communities. Photo by @irldexter

Inspire9 is one of Melbourne’s growing startup communities. Photo by @irldexter

The startup ecosystem here in Australia has really taken off here in the last 2 years, we’re now seeing more incubators, investors, co-working spaces & startup companies call Melbourne their home.

If your product solves problems that these companies have then this is an great early market to explore. Startups typically like working with 3rd party solutions that makes their life easier, why build it yourself when you could be working on your core product?

Here at Gleam we’ve been making an effort to reach out to as many local companies as possible offering them the ability to use our product for free. We’ve also reached out to investors & incubators offering them the ability to use our product for their entire portfolio for free. Using this to leverage initial traction will make it much easier for us to not only get more customers, but iterate our product.

Another great method to drive interest is to post a “Show HN” post over at Hacker News. I’ve seen some impressive feedback (and criticism!) plus it’s an opportunity to get your product in front of thousands of people who are in the startup trenches.

Segment & Build Customer Profiles

There’s very rarely a single type of customer profile that your product fits, understanding your customer profiles allows you to do a number of useful things:

Target them better

If you’ve ever run an email campaign you know the importance of sending the right message to the right customer at the right time. Building customer segments allows you to ensure that you communicate with them in the most effective way to win the business.

Influence Their Decisions

Different people are influenced by different things: Price, features, support, ease of integration or reputation are all potential factors to consider. Knowing which factors influence certain segments will help you close more business.

Get Into The Mind Of Your Customers

Noah Kagan over at AppSumo has a few videos that are a must watch for any startup. He goes through step by step how you might find out where your customers are, one thing he stresses is that you first need to figure out who your customer is before you can do this step effectively.

Learn To Write Effective Emails

In the early stages of your launch you’ll be wearing many hats, an important one that you should master is how to send emails.

Writing great emails is a science, the trick is to use a data driven approach. You should be monitoring the following:

Open rates: Which types of subject lines get the best open rates? Knowing this information will allow you to test ideas & see what works for your product.

Clickthroughs: When someone actually opens your emails do they actually clickthrough on your call to action? This data will help you understand if your message is compelling enough to the reader.

Responses: What percentage of people actually respond? Getting someone engaged enough to reply to you will greatly increase your chances of conversion.

Closes: Which email types actually help you close business?

I’ve been using a nifty GMail plugin called YesWare recently to do most of this data collection. I’ve definitely seen my efficiency increase & also it’s great seeing how potential prospects respond to different strategies you come up with.

Be Personal, Stand Out From The Crowd

I hate getting templated emails that have no personal touch to them, it’s guaranteed to get marked as spam from me.

When contacting anyone you should always think about how you can grab their attention or make it look like you’ve put in the effort.

One of the approaches that we take here at Gleam is to mock up what a competition might look like for a customer, this process takes me roughly about 5 minutes once I get a rough idea of what channels or actions would be of the most value for them to incentvize.

I can then load the competition via a bookmarklet on the prospects website so it has a personal touch & they can visualise what it could look like:

NinjaBlocks

Having a personal presence for your company also helps with customer retention, more & more companies have a big presence on social networks, they expose their CEO’s more, the have the faces of the people who work on the product on their landing pages. 37signals have shown that adding a human photo to their landing pages can help improve conversions by 100%.

Leverage Inbound Channels

Inbound marketing helps you build a brand by earning the attention of your customers through inbound channels such as blog posts, newsletters, infographics, tools, content marketing, SEO, social marketing & competitions.

This particular point deserves a whole blog post(s) of its own as there’s so much to cover. There is a few companies I think that do this extremely well:

Buffer: Been very impressed with all of the guys over at Buffer, they write great content but not just on their company blog but on their personal blogs too. It just so happens that the main demographic for their product is bloggers, so this strategy is incredibly effective at building buzz.

Mozcast looks at Google Algorithm change history based on fluctuations of keywords.

Mozcast looks at Google Algorithm change history based on fluctuations of keywords.

SEOMoz: SEOMoz are the kings of inbound marketing, a hugely popular blog – so popular in fact they get amazing pieces of content like this added by the community almost every day. They invest their time & effort into data driven posts that the community loves to reference like their Search Engine Ranking Factors or Mozcast.

Reach Out To Potential Customers

One of the most common (and effective) ways of initiating building interest is outreach to potential customers that:

Use competitors: Looking at who is talking about your competitors can give you incredible insight into what types of customers use similar products to yours. If your product adds more value there’s no reason you can’t reach out personally to these people & offer a free trial to switch. Facebook allows you to pay $1 to send a message to a non-friend, you can send a tweet to someone, contact them via their blog or if you can get a phone number give them a call.

Talk about specific issues on social networks: If your product helps users fix a certain problem then set up a few automatic searches for users that share that frustration. Get in touch & offer them a solution – this is a fantastic way to win new customers.

Are a good fit for your product: If you’re built good customer segments then knowing the value of your product to each should be fairly straightforward. If you have a specific solution for real estate agents then start getting in contact with them, once you get more than one client on board you can start using that data to win more customers – what uplift or efficiencies are other agents getting?

Embrace Freemium

Giving away something for free can either be advantageous or detrimental to your product. Give too much away for free & you potentially devalue your product when you actually decide to start charging customers money. Here’s some example of pricing pages from 50 top startups.

The trick is to give just enough away to make it useful, but make customers feel like paying for one of your plans adds enough value to make the upgrade worth it.

A great example of this methodology is Dropbox, they have a free plan & allow you to increase space through referring friends to the service. This presentation by the Dropbox founder Drew Houston give great insight into the types of things that helped them grow:

Free is also useful during beta, for example we allow all new users here at Gleam to run their first 3 competitions completely free. We then plan to use the data to deduce what value a competition on average might bring a customer, whilst at the same time getting more adoption & feedback than relying on a closed invite only beta.

Gleam now offers the ability to run completely free competitions, plus we have paid plans with more features.

Use Data To Make Decisions

Correct use of data is one of the most powerful tools we have at our disposal, this however means that we need to be setup correctly to collect data that’s actionable. We’ll do another post on site analytics but here’s some of the things you need to be tracking:

Signup funnel: Knowing about inefficiencies in your signup funnel can make a huge difference to signup rates. I once worked on a client that asked for tax & drivers licence information on their signup form (which resulted in a 99.9% dropoff rate) – not good when you’re spending 6 figures a month on inbound advertising.

Emails: Emails can help you understand how new signed up users interact with your application, what percentage come to the site off personalised emails or reactivation emails? Do your monthly newsletters generate significant revenue? What types of emails work best at achieving a certain outcome?

Conversion rates by source: Having goals or ecommerce tracking setup in Google Analytics will allow you to break down conversion rates by traffic source. If you’ve been working with 3rd parties to help you drive traffic, or getting mentions on blogs you can instantly see which ones are most valuable at driving certain conversions. Use this data to contact similar sites, or to optimise your relationship with existing partners.

This will also show you which of your inbound traffic sources is most valuable, if you write a lot of content you can see which pieces drive the most seo traffic & conversions. What types of keywords work best for your business?

Test The Efficiency Of Your Sales Funnel

Your site will have a specific outcome that’s most important to you, this could be sales, leads or actions/events. Your sales funnel contains the steps that precede these actions & it’s up to you to make sure that the friction or value at each step is high enough to get people to complete it.

We’ll go into this point in more detail in a future post, but here’s a few examples of businesses that do a good job of reducing friction on a particular action point:

Instagram: Have you ever wondered why Instagram photos upload so quickly when you hit save? This is because they start uploading the photo as soon as you’ve taken it, so by the time you fill out any captions or details hitting save is really just saving any metadata. This is a simple example that greatly improves the user experience of their application.

Instagram Upload Trick

Reddit: Reddit doesn’t require you to have an email address to signup, completely removing that friction but also allowing users to remain mostly anonymous.

Optimizely: Optimizely allow you to get in & use their product before signing up, when you try to save your progress you are prompted with a nice registration overlay. This is a great way to reduce friction, get people to invest time to use the product then they have a choice to lose that time investment or save their progress by signing up.

Optimizely

This particular method is on our roadmap at some point, I’m all for getting people using the interface before committing to anything.

Link Your Blog Back To Your Sales Site

This one is a bit of an annoyance more than anything else, but I often see startups that put a huge amount of effort into writing high quality content but then fail to mention their product or link back to it from the blog:

Include a blurb in the sidebar: Tell the reader about your product in the sidebar, make it compelling but short enough to digest.

Link back to the main site in the header: A rule of thumb I generally use is to always link back to your main product from the logo in the header. A consistent sitewide experience.

I will always show interest in the product if the article is good, this has driven me to try a few products over the years (Buffer, Evernote & Pingdom etc).

Promote a Product Giveaway

Users love free stuff, giveaways are something that startups don’t embrace anywhere near as much as more established brands. They know that the ROI on a giveaway is huge, plus it gives you reach far beyond your existing customer base.

The important things to remember when running a competition are:

Does my prize align with the demographic or users I want: Giving away 10 iPads when you want customers who are interested in web hosting might not be the best approach to get targeted entrants. Think about the types of products or services users might want before you incentivize them.

Consider giving away your OWN product as part of a competition, we recently ran a giveaway with MaxCDN who were giving away 10 x 1TB yearly accounts. The beauty of this is that when the accounts expire at the end of 1 year the users will have the ability to continue as a paid customer.

Gleam MaxCDN Campaign

What do I want out of the campaign?: When you’re giving away something for free users are much more receptive to specific actions. Do you want more social followers on Instagram? More Likes on Facebook? Perhaps you want people to tweet about your product launch? Or perhaps you want people to give you feedback about something? Anything is possible.

How can I leverage these users in the future?: Using a competition to get users onto your list so you can re-market to them in the future is a great way to increase the value you get from running competitions.

Next Post: How We Got Our First 100 Customers  
Stuart McKeown

Stuart McKeown is one of the Co-founders here at Gleam. Shoot a Tweet to @thegyppo if you liked this post ☺


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