Customer Development 101: Finding & Attracting Your First Customers

A company will only survive as long as it continues to have a strong customer base. Even the best products will fail without a steady stream of users.

Luckily, once a company has attracted its first customers, maintaining demand and continuing customer development momentum becomes considerably easier.

However, how do you go about finding customers as an early-stage startup?

In this extensive blog post, we’ve gathered some of the best and most valuable insights from Gagan Biyani, a Graduate of the Silicon Valley Founder Institute, as well as the co-founder of Udemy and Sprig.

How Do You Perform Initial Customer Research and Development?

When launching Sprig, Gagan planned the company’s development extensively, almost as if writing a marketing plan. One of the first things Biyani did during the formative stages of Sprig was to clearly outline the risk assumptions of the company, adhering closely to the philosophy of The Lean Startup.

And the potential risks that Biyani explored weren’t just potential obstacles that may negatively impact the company, but were obstacles that could potentially kill the company.

Once the risk assumptions were delineated, Biyani and his team then spent the next six months researching and testing those risk assumptions. Because Sprig was a food delivery service, the company had different risk assumptions to assess.

For example, for most companies their biggest question is “Will people want my product?” Biyani knew that people want affordable, healthy, and tasty food, so the risk assumptions he had to investigate were how to prepare meals at scale, how to deliver them in a reasonable timeframe, how to manage orders, etc.

Get Creative When Testing Your Risk Assumptions

Since preparing and delivering hot meals was such an important yet risky aspect of Sprig, Biyani had to exercise some creativity to properly test the company’s risk assumptions.

To start off, Biyani posted various ads calling for chefs on Craigslist, requesting a healthy and delicious meals to be made for him everyday at around $10-$15 per meal.

He received numerous responses from professional chefs who angrily told him that it was ridiculous to expect that healthy meals can be made at such a low cost.

However, Biyani had no intention of actually hiring chefs to make him meals; what Biyani was doing was customer research.

Through his various interactions with these chefs, he discovered that while preparing a single meal was expensive and time-consuming, preparing many meals at the same time was ultimately cheaper and took about the same amount of time.

And of course, the numbers only got better as the number of meals being made increased.

Manage Your Ego

Most, if not all, entrepreneurs have confidence issues, whether it’s having too much confidence or not having enough confidence. Because there are so many overnight startup success stories, it’s easy for budding founders to assume that their own ideas are just great as those in the big leagues.

However, there are also plenty of intelligent and hardworking individuals who think that because launching a company is so hard, their own efforts will be doomed to failure.

Unfortunately, having either kind of confidence issue can be damaging for entrepreneurs, and can greatly contribute to their own biases.

For example, if an arrogant entrepreneur receives some positive feedback on their idea, they may assume that that’s enough validation for them to continue with their company.

Or, if a less confident founder receives negative feedback on their, they may scrap it entirely instead of investigating how to make it better.

Managing your ego is a much more important task than you might think, because if you don’t, your customer research will be skewed.

Basically, if let your confidence issues get in the way of your thinking, every bit of research you conduct will be confirmatory rather than investigatory.

The most important thing about customer research is to eliminate your confirmation bias.

One of the ways you can keep your ego in check and reducing confirmation bias is to assume that your basic idea isn’t very good while also maintaining that you are headed in the right direction.

As long as you have a strong, clear mission, it won’t matter if you change the means by which you aim to accomplish it.

How Do You Separate Good Feedback from Bad Feedback?

Unfortunately, being able to discern good feedback from bad feedback is a skill that just can’t be taught, and is one that an entrepreneur must either have naturally or have the ability to cultivate it from experience.

If there is any one thing that you can do to develop a better business sense, it is to listen. Whether you’re getting feedback from prospective customers, existing customers, colleagues, employees, etc., it’s essential that you acquire massive amounts of feedback to base your decisions on as this is critical to customer development.

And when it comes to asking potential users questions, don’t ever directly ask them what they think of your product. Instead, do what Biyani did and ask questions about their lifestyle and their routines and the choices they make on a regular basis to determine if your product can solve their product.

For example, when Biyani was in the process of starting Sprig, he never once asked his customers “What do you think of hot meals delivered in 15 minutes?” Instead he asked them questions about their eating habits, why they chose one meal over another, where they like to eat, whether they like to eat alone or with others, etc.

In short, your customers don’t always know what they want, but they definitely know what their problems are, so it’s important to listen to determine if your solution is right for them.

Where and How Do You Find the Best People to Get Feedback?

Once you’ve defined the industry you’re starting up in, you have to interview people are most connected to that market.

And remember, don’t be afraid to get a little scrappy and creative when it comes to finding customers and initial users. For Biyani, it was easy. Because he was launching a food delivery service, he figured that since everyone eats, that he should just interview strangers at cafes and restaurants.

If you believe that millennials would be most interested in your company, interview people at bars, clubs, colleges, etc.

If you are looking to launch an enterprise company, interview people who work at the types of companies you’d be catering to.

How Do You FIND Your Very First Customers?

When first starting a company, you will probably have very little or no money to work with. Fortunately, a lack of funds shouldn’t stop you from finding at least a few prospective customers who are interested in trying out your product or service.

For example, when preparing the beta launch of Sprig, Biyani and his co-founders emailed just about everyone they knew who lived in the area, regardless of whether they would be interested in their company or not.

This is sound advice for budding founders as even friends, family members, colleagues, and casual acquaintances can make for great first customers. And even if they themselves aren’t interested in what you have to offer, there’s a good chance that they might help spread the word on social media.

In fact, having previous professional experience in the industry you’re starting up in can give you a significant edge when it comes to acquiring your first customers.

If you have friends or coworkers or colleagues who would be interested in your product or service, consider them your potential first customers. Or, at the very least, ask them about other professionals in their networks who might benefit from what you have to offer.

Doing so can dramatically decrease the amount of customer development guesswork needed to find where your target customers are and how to reach them.

This article was also shared on Founder Institute.