By Wayne Embree
Defining the “right” first customers is a challenge for every B2B (business to business) startup, even those led by serial entrepreneurs. Revenue isn’t the only goal. Sure, you want customers who can and will write checks, but for successful B2B startups the “ask” is so much bigger than that.
Here are the six key customer characteristics that can help you identify your startup’s potential MVCs (Most Valued Customers) to ensure you’re setting up your business produce early revenue and gain market leadership.
Customers who want to create true partnerships.
Your startup might be able to turn inside out to make a few first customers happy, but that’s not a recipe that will scale. True partnerships are two-way streets, based on openness, trust, and integrity. The startup brings a solution that will solve a big problem for the customer, deliver a competitive edge, or provide an entry into new markets.
In return, the customer recognizes that any new product or opportunity is evolutionary and that there will be iterations. They are willing to prioritize, compromise, and progress toward the long-term solution with the minimally viable product you have today. These “right” customers anticipate setbacks and are prepared to work with the startup to resolve functional, operational, and implementation issues.
Thought leaders and industry influencers who take risks.
At the upper levels of every successful corporation there are bold innovators who take large chances for large rewards—general managers who have earned big titles and wide-ranging responsibilities by demonstrating both the vision and resolve to shake things up. Look for these people because they are looking for new ideas; they are not afraid to upset the status quo to produce results.
Pain centers with direct lines to decision-makers.
Executives and general managers sign contracts and write checks based on the information they receive from the people in their organizations who are doing the work. Seek out the folks who are living every day with the pain your solution will cure. A person or persons in that group has senior management’s ear; otherwise the company wouldn’t be talking to your startup in the first place.
Customers who will tell you “no.”
There is only one word for “yes,” but an abundance of euphemisms for “no.” The only way an entrepreneur can learn how to crack the code of customer objections is to have early customers articulate them. No one can teach you the hurdles to closing a sale better than an early customer. Overcoming objections with early customers is a great way to learn about what to expect in the broader marketplace.
Customers who are implementers.
Vision is great, but don’t confuse dabbling and experimentation with drive. Look for people in your customer’s organization who get things done. They are the ones who put ideas in the suggestion box. They win awards. You can find them in the executive suite, the warehouse, or on the manufacturing line.
The Rule of Two.
Don’t settle for one advocate within a customer. People leave. Job roles change. Crises happen. In addition to your chief advocate, make sure his or her boss or most trusted lieutenant knows about you and your business and believes in the value proposition as well.
Once you’ve secured customers that fit the above profile, remember to leverage those wins to win more customers. Here’s how:
- Case Studies and Referrals. There’s nothing more credible than customer testimonials. Build into your partnerships early an agreement that, when appropriate, requires your early customers to talk with prospects and allows you to leverage case studies with details about the partnership (including a cost- benefit analysis) that your sales and marketing teams can use in the field.
- Map your process. Successful startups figure out quickly what resources and skills are required to sell and support their customers. From lead to demo, from cost-to-benefit analysis, to closing the deal, leverage your early customers to identify the steps of your sales cycle and how much time is required to manage the relationship.
- Build the ideal customer persona. The more you understand your best customer, the better equipped you will be to fill your pipeline with well-qualified leads that can help ensure you’re able to repeat the process and have success.
When early customers believe in your solution and your startup, you can help each other tap into new markets, delight their own customers, and leap ahead of their competitors. With that, the dynamic changes and together, both companies can build the foundation of a mutually beneficial business relationship that can endure for years and can be more valuable to your bottom line than just revenue.
By Wayne Embree, EVP, Investments and Venture Acceleration at Rev1Ventures, the seed-stage venture fund that combines investment capital and strategic services.