Customer Acquisition and Startup Failures
This is a post for newbie startup founders, and fresh entrepreneurs willing to land their very first set of customers. Often startups fail because of lack of customers (about 80% of the time). There are some obvious reasons for that:
- Founders are too technology/product oriented, they forget to connect with potential customers.
- The product doesn’t solve a real pain.
- The value proposition is too confusing and difficult to communicate
There maybe other reasons too, but I found those to be the most common occurring ones.
The Customer Acquisition Guide
You’re probably reading here to know a practical tip on customer acquisition, well, ask yourself these questions:
- How many potential users of my product did I talk to before actually building the product?
- Who tried my prototype?
- How many people praised my prototype? How many neglected it? How many said it’s awful?
The Steps to Customer Acquisition
- Read the questions again, and literally take a piece of paper (or an Excel sheet if you’re fancy!) and write down the names of people for each question.
- Now scratch the names of your family and friends who praise you no matter what you do, unless you strictly know they are pragmatic and objective people.
- Put an asterisk next to names who neglected your product, or said it’s awful.
- Now look at the list again, do anyone of those people made an investment in your product? An investment could be devoting their required resources to reach the goal you had for your product. For example, if you have an e-commerce app, the goal is to buy a product through your app, that’s an investment. For Instagram, an investment is to make an account and follow a few people and like their photos.
- If not, then you need to get back to your team, sketch a fresh new BMC, and start figuring out new value propositions by reshaping the problem, and the solution.
- After you’ve done that, get back to the list of people you made earlier, propose the new prototype with new value proposition, and record their feedback.
- If there is an investment, then you’ve nailed it. If not, redo the steps from all over.
Tips on Customer Acquisition
- Try to have a large number of people in step 1, since you’ll be filtering out the ones not needed.
- There is no magic number of people for your customer acquisition list.
- It’s not necessary to talk to your potential customers face-to-face, although it’s the most useful. You can use other channels such as Twitter, or plain-old Email.
- Try to expand the radius of your potential people, don’t think close friends and family. Tap into your college network, your past job, friends of friends, etc.
- It’s always better to show a product/prototype to your potential customers, than to just convey words and/or pictures. This way, you can immediately see if they’ll make an investment in your product and basically turn them into customers, rather than just get a verbal commitment that they will use your product!
The Conclusion on Basic Customer Acquisition
The idea here is to create a list of potential people around you, that you think may find your product attractive, and refine this list. Once you refine it, see if they have already generated revenue for you*, then they are already your first set of customers! If not, then the problem is either with your value proposition, your solution, or your implementation (the product). Go back to your team, refine those three things, and approach your potential customers again and see if they’ll do an investment this time. Redo until you hit the jack pot.
Also, don’t be shy to ask, if you’re too lazy to ask again or afraid you’re asking too much, then probably you need to rethink why you chose entrepreneurship!