How to Find Your First Customer
Starting your own business can be as exciting as it is nerve-wracking. Your road to future success starts with your first customer. Landing your first customer will require a mix of old school face-to-face networking and plenty of time behind the computer building your brand online. If you're ready to make the leap to entrepreneurship this guide on finding your first customer will prepare you for that first sale and future sales.
How to Find Your First Customer: Develop a Business Model
Mapping out a clear plan on how your new product or service will benefit your potential customers, should be the first thing you do before picking up a phone to begin selling your wares, says Michael Song, Ph.D., executive director, of the Institute for Entrepreneurship and Innovation at the University of Missouri-Kansas City (UMKC). Song says it's important to be able to explain on paper what your product can do for your customer.
"Make sure you are thinking about what you can do for them. Can you offer a product that gives the client something that others can't deliver, but in a measureable way?" says Song. Without a plan, says Song, you likely will not be able to demonstrate the value your product or service can offer.
For example, Song, who also teaches a course at UMKC on creating a company points out this scenario: Take a person who has developed software that for $19.99 will shut down all of the computers in a company at the end of the day and turn them back on at a certain time in the morning. The software developer first approaches the potential client saying this will help save on their electricity costs. This sounds like a good idea, but they fail to make the sale. "That's because they didn't quantify exactly how much electricity the company would save," says Song.
He says the easiest thing to do here is to look at where the company is based and determine the cost of electricity per kilowatt hour. Then your plan would look at all the computers owned by the potential client and the average kilowatt each computer uses per hour. Then, Song says, you will see how much the potential company will save if they shut down the computers for seven hours at night.
"So let's say we could conclude that the computer software would save the average amount of electricity by 1 ½ years. The electricity costs alone would be more than the price of the software which is $19.99. So you have to demonstrate the economic value of your product," says Song.
Song says a detailed plan is also important since as a new company you don't have the reputation, the history, or following to back up your claims so the inherent value of your product or service must be clearly outlined.
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How to Find Your First Customer: Think Local
Once you are set on how to proceed, it's time to actually go out and do some of the legwork, whether that's calling on friends and family, old bosses or even clients from your last job. Dharmesh Shah, chief technology officer and founder of Hubspot, an internet marketing company based in Cambridge, Massachusetts, suggests looking at the circle of friends and family closest to you for help in launching your product. "They can be a great a first customer," says Shah, who is also a founder and blogger for OnStartups.com, an online community for entrepreneurs. However, he adds a word of advice: ensure that they provide pointed, objective feedback. "The big value of early customers is not the revenue generated -- but the insights they provide," says Shah.
Another thing about friends and family—they too, should be paying customers. "Don't give the product away for free to these early customers -- even if they're friends and family. The reason is that if they're not paying customers, they [would] be reluctant to voice complaints. For example, with my startup, when we started the company my wife was one of the early customers. She paid full price and is still a customer today," explains Shah.
Alternately, other experts on finding your first customer, say there are exceptions to the rule about not giving your product away for free. "David Letterman would have no studio audience," contends certified professional coach Mitchell York. Through his company E2E Coaching Inc. in Sayerville, NY, York has advised executives on the ins and outs of entrepreneurship. "Give stuff away, and if it's good people will buy it. If it was never right to give away your product for free, the folks who make those little ice cream sample spoons would be out of business. As would all the young people in the streets of New York, giving away promotional size candy bars, cosmetics and everything under the sun."
According to York, your first customer might be someone you're already doing business with. If you've developed a rapport with your boss, you may be able to secure your current employer as a client. "Just make sure you aren't doing work on your new business while at your current job."
York also says migrating clients from your current job may or may not work out for you. Be sure to check the fine print on the contract you signed when you were hired or let go. "If you're going to 'migrate' clients from your employer to your new business, make sure you are not under any restrictions. Lots of companies have non-compete agreements and policies, and even if you never signed one, that doesn't mean your employer can't make your life as an entrepreneur very difficult if it wants to," says York.
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How to Find Your First Customer: Branching Out
After you've tapped all of your relatives and Facebook friends, it's time to widen your audience reach. A great way to do that is to find what Song calls "The Innovators," using paid market research panels if you can afford it. "There is always about 2% of the population that are innovators. Meaning those are the people most willing to adopt new products or the opinion leaders. You need to identify who are your innovators," says Song. Once you have identified those innovators, Song advises giving them a free trial with a satisfaction guarantee offer or risk free trial so if they don't find benefit in [the product], you will take it back.
Another way to expand your circle is to get out and shake hands. Mitchell says try in-person networking events often hosted by your local Chamber of Commerce. "Any venue that brings people face to face is great. The trick is to use networking events the right way to develop relationships that will last. If you talk more than you listen at a networking event, you're not doing it right," says Mitchell.
When it comes to cold-calling, Shah says, the art form hasn't completely died, but "increasingly less effective" these days. "As a society, we've become better and better at blocking out these unwanted marketing interruptions. As such, it's very difficult to reach potential customers through cold-calling," explains Shah.
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How to Find Your First Customer: Social/New Media
Perhaps one of the newest methods of finding your first customer is by using social/new media. Experts recommend social /new media tools over traditional advertising. Matt Myers, chief marketing officer of Shooger, a mobile marketing company based in Coral Gables, Florida, suggests forming strategic partnerships with media companies to help spread the word about your product or service. "We're just starting to create greater outreach and awareness of Shooger by working in partnership with traditional media outlets and public relations agencies who very clearly understand how we can help them move forward," says Myers.
And, says Myers, "Testing out a mobile marketing option like Shooger and offering special or introductory deals is a great way to entice new customers and develop a loyal following."
Social media tools like Facebook, LinkedIn and YouTube offer a great return on investment for little to no upfront costs, says Shah and York. "I've seen many businesses (of all kinds) get a great return on their investment in social media -- particularly blogging," says Shah. "Creating useful, remarkable content and sharing it online (via blogs, twitter, Facebook, etc.) is an exceptionally effective way to "pull" potential customers into a business." York agrees, adding YouTube to the list. "It costs nothing except time to create a brand using social media. Facebook is a necessity. A YouTube channel is a good idea too, as is a blog."
Whether you've sourced a client from an old job, set up a Facebook account, or asked your parents to buy-in to your service, there are a number of ways to find your first and likely most loyal customer you will ever have.
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