find your best customer

This is the second part of a five-part series on understanding your customer.

In this post we are going to answer two questions:

• Can you draw your customer?
• What are your customer’s needs?

Can you draw your customer?

Humans are very visual. We tend to believe what we see. Words on paper and thoughts in our brains are much weaker.

A great example of this is Ronald Reagan’s presidential campaign of 1984. Visual imagery showed Ronald Reagan as strong and powerful. This overpowered the reality of who he was in the minds of voters.

This is helpful to entrepreneurs. We can use visual imagery to develop our customers. When we see our customer, in reality, we can sell to them better, How do you do that before you have a customer?

You draw a picture of them. Leander is amazing at drawing little doodles of customers. I talk about who the customer is – a few minutes later there is a little grey and red man on a piece of paper in front of me. My attempts at drawing are more like bad stick figures from kindergarten. A lot of the time that is good enough.

I have drawn stick pregnant women, girls on bicycles and triathletes all as stick figures. They work.

An alternative – if you are too embarrassed by your lack of drawing talent – is to buy some magazines. Then get some scissors and start cutting out people who look like your customer. Pin them onto a cork board above your desk.

Seeing your customer is believing in them. Seeing them every time you look up from your work keeps you focused on their needs. Focusing on their needs means better marketing. It means better product design. It is also a super easy quick win. Do it now!

What are your customers needs?

Entrepreneurs have an unconscious god complex. It goes like this. “I have a great idea. It delivers this value. It meets this customer need.” The trouble is that the entrpreneur invents the need to provide demand for his product. When he launches he discovers that the need is not there. Problem.

Projecting needs onto customers is a bad idea. It is far better to start with the customer and think about what they want. A great approach is to use the Seven Whys technique.

If we start with an entrepreneur who wants to build a competitor to Facebook.

‘People need an alternative to Facebook.’

Why?

‘because they don’t like being pawns in a huge marketing machine?’

Why?

‘because what they see on their wall is not a reflection of their own desires and interests’

Why?

‘because they don’t have real control’

Why?

‘because they cannot express their uniqueness’

Why?

‘because many people want to show their originality, power or status’

‘Why?

‘because many people have low self esteem’

Why?

because seeing all those perfect lives on facebook hurts peoples self image when they feel their life is not as good’

That was a hypothetical example. As you work through the whys for any need you start reaching deeper into the inner core of what people want.

In this case people don’t want a social network. They want a social network where they appear better than all their friends….. That is the sort of powerful insight that you can test and validate. If it is true you can then use it to build a far more powerful value proposition.

So ask yourself. What is my customer’s need? Then ask why is that a need seven times and see where you end up. The result will always be more insight and deeper understanding of your customer.

How Will We Help?

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Building a startup is not simple; we managed to identify a pattern by helping many starters like you.

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Throughout our newsletter, you will be constantly gaining new insights. This insight might require you to change your approach, pricing and even your solution!

You will learn to prioritize your actions and learn faster. You are given guidance and will feel less overwhelmed. If you are eager to learn more, sign up!

This is the last part of a five-part series on understanding your customer.

In this post we are going to answer two questions:

• What do you get in return?
• How can your relationship grow?

What do you get in return?

What do you get from your customers? CASH! That’s the obvious answer. Is it everything that they give you?

It all depends on your business model. Take for example something like whatsapp. What does it get from it’s customers? It doesn’t get any cash from the users. It doesn’t sell advertising either. What it does get is information and engagement. I’m not sure how it uses these. Facebook owns it and so revenue is less important.

With a startup a lot of your early customers give you information and feedback. I worked with one company who gave their product away for free to a major multinational. This gave them the credibility of having a large corporate customer on their books.

Google gives away its search product to consumers for free. This allows it to harvest data about them, their habits and preferences. It then sells this data to advertisers.

Another way of looking at is that every customer has an impact on your reputation. A buyer on Amazon gives you a review or testimonail. The social proof slows increases you value as a company. When someone sends you a nice email or piece of feedback that can be part of your sales material.

It can go onto a bug list. You then give it back to the customer as an improved product or enhanced service.

That said you do need to get cash in one way shape or form as sooner or later your runway ends and the plane crashes

For many startups the temptation is to give the product away for free to get initial traction. If you have to give it away to get customers you have a problem. The value proposition has problems and doesn’t solve the customer’s pain. To fix that go back to an earlier stage in the innovation curve.

How can your relationship grow?

I remember doing door to door sales years ago. I managed to sell stuff because I was a good salesman. It wasn’t because what I was selling was any good. I actually made sure that I never went back. That was a business where the relationship did not grow. It was ot intended to grow.

The ten minutes that I spent on the customers doorstep had to be paid for by that single sale. It also had to pay for all the places where I didn’t sell.

That is inefficent. Much later I worked for a food delivery company. Their model was to feed people every single day. It cost two to three times the cost of the first order to get a customer. When they fed them 10 times a month and kept them for 4 months the aquisition cost wasn’t significant.

They only managed to grow the relationship though because of a daily interaction. True it was all automated. That automated relationhip was question and repsonse every day. What food would you like? I’d like this. Was it tasty? Yes. Can I buy it again tomorrow?

Your customers may not buy that often. The frequency is not the issue. It’s how you create and build that ongoing question and answer sequence. What questions are you asking your customers that deserve an answer

• Relationships in the Business Model Canvas – What Type Of Relationship Do Our Customers Want?
• How to Write Great Answers on Quora
• Find Your Best Customer and Grow Faster – Part 3
• What is a Business Model
• How to Test Your Business Model

This is the fourth part of a five-part series on understanding your customer.

In this post we are going to answer two questions:

How many of your target customers will you really reach?
How frequently will you interact with your customers?

How many of your target customers will you really reach?

It is great to know that there are a billion customers out there waiting to buy your product. The trouble is that you have $500 in your pocket. Your largest competitor spends over $1 billion on marketing each year. No one has heard of you.

You will not get those billion customers any time soon. It will take years of hard work. That big number is a great symbol of the eventual payoff. Right now the focus has to be on practicalities.

How many people can you reach with that $500? If you estimate that it costs $10 to get a customer you have got 50 customers. Perhaps.

Does this feel like a big bucket of cold water coming all over you? That’s a good thing because it helps you build a reliable financial model.

To start with it takes lots of money to get customers. You have to spend money or time. Entrepreneurs who don’t ask this question are often disappointed with their impact. Entrepreneurs who do ask it chose to focus on a much narrower segment to start with. That often delivers far more success.

Its a simple tradeoff. Do I spread my money over millions of people each of whch I have a small chance of winning? Or do I spend my money where I have a much better chance of winning a few people.

How frequently will you interact with your customers?

All other things being equal the more that you engage with your client the

• stronger the relationship
• more you sell
• greater the expense
• greater the loyalty

This depends a lot on your product or service. The stage and length of the sales cycle is also important.

Many goods have a natural sales cycle. This is due to their life expectancy or consumption rate. The bake sees me daily when I buy bread. The butcher sees me weekly. The car salesman sees me every few years.

You can play with the frequency. Often customers will have an existing purchasing habit. They will buy according to that habit. You won’t be able to alter it.

If you think it is every 6 months when it is actually every year – then your revenue takes a 50% hit! Ouch. If you can predict it and target them as they approach renewal then the equation shifts in your favour.

With some goods customers need lots of interaction upfront. They then need less going forward. With other goods there may be little interaction to start with but far more down the line. Both could be true for the same good.

For insurance. You may buy through a salesman because you have complex needs. With no claims every year is very simple. It is renew and forget. Or you may buy insurance online wth no interaction. Making a claim can involve dozens of emails and a high level of interaction.

Understanding the different patterns that you can have is important. This is because by tailoring your operations to that need you can please him far more. Often far better than more traditional companies in your sector.

• Hello Target Market
• Should a Brand be Desirable?
• Startup Problems 101: In It For The Money
• Disrupting Money: Breaking the Banking Industry
• Marketing Channels in the Business Model Canvas – How Do Our Customers Want To Be Reached?

This is the third part of a five-part series on understanding your customer.

In this post we are going to answer two questions:

• What are you offering your customer?
• How many customers are there?

What are you Offering Your Customer?

The best thing to offer your customer is what they want. The thing that most entrepreneurs offer their customers is what THEY think the customer needs. That works. Sometimes. More often the result is a failure to give the customer what they really want, love, desire or crave.

The marketer, Seth Godin, talks about Purple Cows. It’s a simple idea. Imagine being on a train or a bus and driving through the countryside. Then among all the black and white cows, you see a purple cow. WOW!

I the great sea of competition you and your customers are all black and white cows. That’s because you offer the customer what you think they want. You offer what management wants. You offer what you have always offered. There are a thousand reasons to offer a black and white cow. It takes courage to go out and paint it purple.

It is hard because you don’t really know if the cow should be purple, red or pink. You have to talk to customers.

Some lie. Some mislead themselves. Some don’t know what they want. You have to sift through all these bad responses, look behind the words to find the truth and see what customers want. Then match it.

Have fun!

How Many Customers are There?

One VC I met said that he would never invest in a market which was worth less than a billion dollars. Smaller than that he thought and it was too difficult to make a decent return when he sold the company even allowing for growth in the market.

That’s only applicable to high growth startups. For entrepreneurs who want to fund a lifestyle, it can be far smaller. The truth is though that it has to be large enough.

One of my more spectacular failures was when I tried to sell triathlon race guides. I looked at the market to see how many I could sell. I looked at the number of triathletes and figured that at least a billion dollars were spent on triathlons each year.

I went ahead and discovered that only 5 people were interested in buying my guides. $100. I’d totally miscalculated the number of potential customers that I could have. My customers weren’t triathletes. My customers were triathletes who hadn’t done a race that was important to them and who didn’t have any friends who had done it before.

I hadn’t answered the question.

There are lots of ways of getting to an answer.  Bottom-up market sizing, Top-down, TAM SAM SOM. All of those work.

Cut the crap out though. Look at the small market you can and then start counting real customers on your fingers.

If you can’t go to a place where you should be able to find customers and count them – then going further afield won’t help. It will just delude you.

• Value Proposition Design Questionaire
• What is Business Disruption?
• Customers – Who Are We Creating Value For in Our Business Model?
• Find Your Best Customer and Grow Faster – Part 1
• Find Your Best Customer and Grow Faster – Part 4