Investing in a new line of business requires some basic steps, including identifying the target customer and building a robust customer pipeline. Building the pipeline, however, is not enough–you also want to prioritize that list of potential customers.
How to prioritize your best prospects? When we consider launching a new line of business, we start with three core questions:
1. Which customers know us already, and are low risk?
We want to identify customers with whom we already have goodwill. With these customers, we can potentially take some risk on providing new products/services, because they may be willing to invest and learn alongside us.
2. Which customers will help us build our reputation and brand in the new business?
We want to identify customers where we can build success stories that will help us market our new business more broadly. Clearly, then, larger and more well-known customers may better serve as the best brand-building success stories.
3. Which customers will help us learn how best to operate our new business?
We want to identify a diverse mix of customers that will allow us to test our approach to the market and learn as we go. We want to learn:
- What selling messages resonate broadly?
- How difficult and expensive is it to fulfill our new product/service across a broad range of customers?
- What unique situations will we encounter? How do we operate successfully in them?
Selecting customers for the "pilot run" is a critical step in working out the kinks of a new business model, and for building the confidence internally that the new business can succeed. We take an experimental, test-and-learn mentality that seeks to lower the cost of trialing and quickly identify the key success drivers in the business.
What has been your experience in building a business? How have you prioritized your "pilot" customers? What would you have done differently, knowing what you know now? Please let us know in the comments below or email us at firstname.lastname@example.org.