Have you ever had such a pressing problem that you would be willing to pay for a solution, even though it is not perfect? In this place are the perfect initial startup customers.
Startups must initially market their product to a limited group of eager early adopters with a pressing problem.
Let’s assume , for example, that your product is a piece of software that helps cash checks for banks, but it has not yet been perfected. An ideal first adopter for this product would be a bank which loses around half a million dollars per year because they have to cash their check manually. This dilemma means that they would be able to pay you half a million as much for your program. What’s more, you’ll get knowledge by downloading the software and seeing it in action for further growth.
But several startups make the mistake of not searching for early adopters and instead waste a lot of time and money designing for the mass market a perfectly designed product. These companies fall into different traps – not having enough resources to improve their product in response to consumer reviews, or selling a “great” product that is obsolete when it reaches the market.
In 1994 FastOffice had fallen into this trap. They introduced a new home office system with all-in-one email, fax and phone functionalities. They raised $8 million in funding and concentrated just right on developing the device. Even, sales were very disappointing, and it was sadly too late to adapt the product to consumer reviews, since much of the money was already spent on innovation.
Don’t be making that mistake. Get the product out of the door so you can get real consumer feedback as soon as possible and then adapt the product accordingly.
No company will forever remain a start-up. To expand it must develop a customer base on an ongoing basis. By targeting various customers over time, this objective is achieved:
Next comes the process of customer growth, during which companies have to determine whether to continue targeting early adopters-like customers, reach a small niche market, or pursue a wider range of customers. The response depends on whether they are in a new, current, or resegmentable marketplace.
A startup could find out, for example, by observing its customers that the early adopters are all under 35 years old and from big cities. The startup may then decide to either continue pursuing them or change focus, depending on the type of business.
The main point is that startups can’t target mainstream customers before they understand how and why these customers would buy the product, and have refined their product accordingly. Once the product is refined, the startup finds itself in the company building phase, in which its sales grow.
No matter how you decide to go after mainstream customers, you’ll have to adapt your strategy: you can’t simply repeat what you did for early adopters.
Basically, you have two options:
Next, the early adopters can be used as cheerleaders. They ‘re excited about the product anyway because it’s solved an issue for them, and they can sell it to conventional consumers by word-of – mouth or through public review. You can also spread the word through business experts, writers and other opinion leaders.
The second choice is to use positioning: identify and explain your product so that it is identifiable by your target customers, know its characteristics and what appeals to them. Starbucks , for example, put their product with the slogan: “Starbucks is the No. 1 spot for coffee.”
These days, companies bombard consumers with advertisements and messages every waking hour.
For a startup, it is crucial to send the right messages, because they can strongly influence the consumers’ perception of the company. A company’s messages range from how it names its products to the advertisements it uses.
For example, in 1981 Santa Clara County in California had a widespread problem with fruit flying, which prompted them to spray a chemical called Malathion, a pest control product. Had something like Bugs Away or Summer Dew been named, it may have gone unnoticed, or even missed. As it turned out people were angry, since the name of the product sounds toxic and risky.
Besides crafting the right message, it’s also important that a startup knows how to convey that message.
As stated earlier, “unpaid messengers” such as early adopters, industry experts and other leading thinkers are successful. Nevertheless, paid advertising such as ads in magazines, billboards or blogs can also be part of the communications marketing plan.
Ask your early adopters what outlets they used to educate themselves before making their purchase to find out which media your prospective customers use. You may also look at industry studies about what kinds of media-potential news clients, analysts and opinion leaders are using. Then target media outlets which get your customers’ most attention.
For example, if you find your target customers read only prestigious newspapers like The Wall Street Journal, don’t kid yourself into thinking you’ll reach them with ads in obscure trade magazines just because advertising there is cheaper.
Startups aren’t miniature versions of big companies. While big companies just implement their strategy, startups still have to figure out what their market and strategy are. To succeed, startups need to listen to their customers and have a flexible strategy.
If you’re a startup, check this out. Define the company’s soul: fundamental values, and statement of purpose.
Whatever field your company is in, one thing is for sure: you ‘re going to have to deal with a lot of complicated circumstances where you don’t know the answers. You will be guided by your core values and mission statement to keep you on the right track.
So how do you identify these main components of your business? In some way, your core principles should reflect your beliefs and include, for example, how you plan to distinguish your business from others and the way you handle your customers. On the other hand, the mission statement should explain the goals, the tasks to achieve them and why your workers come to work each day.
Check out my related post: What does pivot in business really mean?