Being an entrepreneur and having a business is not just about controlling your own career or creating your own financial destiny; it’s also about serving others – your customers. Running a company is about helping others solve a problem by providing a solution that was not easily available to them before. Keep this mindset in place and you are more likely to be successful as you are building and running your company. But how do you know if your product is the right solution for your customers? It costs money to deliver services. If you can’t pay your bills then no one wins – you can’t keep running your business and you customers won’t be able to use your services. So how do you know if you are targeting the right customer? Anthropologie spent a significant amount of time identifying the exact type of customer that would purchase their clothes. But more importantly, they knew how to figure out who their ideal customer was who was willing to pay for their product. Finding your right target audience is crucial and here are some pointers on how to find your ideal, paying customer.
Identify the right customers
Too often, we think our solution can help anyone and everyone. However, if a significant amount of people are not willing to pay for your product then you do not have a business. You need to find out who your specific customer is and why they need your product. Are they college-educated women, full-time workers with young kids who are trying to balance their professional and personal lives? Or is it close to retiring men that are starting to think about their next phase in life, but are pretty financially well off to try new things in their lives? Without knowing the demographics and psychographics of your customer base and their emotional and rational reason for why they need your product, you’ll have a hard time selling to them.
Prove Significant Demand
It’s great that your mom, best friend, and a few people at your office think your idea is great. Maybe even 20 people said they like your idea. However, if you cannot get hundreds of people (unless your customers are businesses) to sign up to use your product, then you have a good idea, but not a great business. Building a product based on a few accolades is risky. You have to be able to sell your services to the masses and you need to know the demand is there before you start investing a lot of money into your business.
You only have a business if people are willing to pay for your services. This is the time to test your revenue model with your customers. Often times, people will tell you that you have a great idea, but when it comes time to pay for it those people are nowhere to be found. Don’t spend money building something people are not willing to pay for. Many entrepreneurs have had to learn this lesson the hard (and expensive) way. So before you start excessive software development, make sure you prove that people are willing to pay for it, which brings me to my next point.
Test It on a Smaller Scale
There are many ways to identify the right customer and test their willingness to pay without spending $1,000s on software development or needing to code. Leveraging landing pages (web pages with sign up options) and FB ads can save you time, money, and headaches. You don’t need to know how to code and you can test your messaging, value proposition of your solution, and if people are willing to pay through sign up pages. Tell people what you are doing and that’s it’s coming for a certain price. Then see if people sign up for it. If you have only a few people that sign up, continue to revise your messaging and testing your pricing with new or revised landing pages. If over time you still don’t have many people signing up for it, then at least you found out that your business model may not work before spending an exuberant amount of money on software development. If you had 100s of people sign up then great! Now you have more clarity and proof of demand on what your product should offer.
Finding the right customers is crucial to the success of any company and is something to spend a good amount of time on upfront. So my startup friends, what have been your experiences with identifying your ideal customers? What did you do to find them?