Three Characteristics of the Perfect Startup Customer

As a startup, it’s hard to find customers. This is, in part, because your company poses a risk to customers. As a result, finding the right kind of customer is essential to your survival. Startups, by definition, are young. Because they are young, they are fragile. And because they are fragile, it’s not always obvious…

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As a startup, it’s hard to find customers. This is, in part, because your company poses a risk to customers. As a result, finding the right kind of customer is essential to your survival.

Startups, by definition, are young. Because they are young, they are fragile. And because they are fragile, it’s not always obvious to customers that they have the staying power to hang around long enough to deliver value in perpetuity. Therefore, the benefits your product provides must not simply outweigh your customers’ costs, but do so significantly.

So, how do you know if your customers’ costs are high enough to be a valuable prospect? Start with these three traits:

  • Your customer is in pain – and knows it
  • Your customer is trying hard (and unsuccessfully) to solve their problem
  • Your customer can’t solve the problem (and is looking for someone who can)

Your Customer is in Pain – and Knows It

One sign a customer is a good prospect for a startup is that they’re in pain – and they know it. This means they recognize that there is some problem they are wrestling with and it’s an urgent priority.

For example, my company manages several different projects at a time. We’re a distributed team and different people are constantly working on different projects. But, since I’m responsible to my clients, I need to know what’s going on. Logging in to multiple platforms, commenting in different systems, and communicating via email wasn’t cutting it. So, we started using Hipchat in order to have all our conversations in one platform, scoped to each project. It also integrates with Trello, Github, and a host of other platforms, so that I can see everything going on across platforms in one feed.

Given our way of working, Hipchat is a good fit. But it’s not for everyone.

Local teams might not struggle with scoped communication in the way that we do. Similarly, other distributed teams might not care about having constant oversight over communication.

This underscores two cases to be aware of – sometimes customers aren’t in pain and sometimes they don’t know (or care) if they are.

Both are bad for startups because it’s expensive to convince someone who isn’t in pain – or who doesn’t care that a) they are in pain and b) you can solve their pain. In these cases, you have to convince people of two things, not just one (e.g., using your product). And that’s really hard.

Is Trying (Unsuccessfully) to Solve It

When I discovered Hipchat, I had been talking with one of my engineers about building a feed that would aggregate content across platforms. As a former operations guy, not having constant visibility into production (the daily scrum notwithstanding), was anathema to me.

We got so far as to wireframe what such an app might look like.

Thankfully, I discovered Hipchat and saved myself some development time. But, that I was willing to invest in a custom solution evidenced how important it was to me that this problem be solved.

That’s a good sign for a startup.

You want customers who are thinking about the problem you solve and are willing to do crazy things to solve it – like build their own platform.

Truthfully, because we’re a software company, we could have built something workable. But, it would have been really expensive in terms of time and resources. And it would have distracted us from our core job – building great software for our clients.

Hipchat saved us from that.

That’s the kind of appeal you want your product to have – it has to be so important that it will save them from doing something ridiculously costly, just to solve the problem.

Can’t Solve it Themselves

Companies succeed because they excel at delivering their value proposition to important customers. For most companies, technology is a distraction – they want the outcomes technology produces, not the hassle of getting the technology to work.

This is a good sign for a startup.

In many cases, your customers can’t solve the problem you’re intending to help them solve on their own. That doesn’t mean they don’t have solutions. It just means those solutions are often suboptimal (hence, the pain). When validating prospective customers for an early stage startup, keep this in mind – how does your ability to solve your customer’s problem prevent them from having to try and solve it themselves? Because chances are, you’ll do a better job anyways.

There is no secret sauce to finding your first customer, or even your first 10 customers. Other factors, such as your industry expertise, ability to sell, professional relationships, and so forth are also important.

However, keeping these three attributes in mind will help you to filter through the noise of prospecting and better focus on finding those customers who will help you move from a startup to a real company.

Note Hipchat isn’t a startup – Atlassian, it’s parent company is well-established. This article intends to underscore how I solved a problem I was wrestling with. Had there been a startup out there who could have solved my problem, I’d have been open to it.

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