At the Boot Camp and the follow-up sessions of the ClimateLaunchpad Moldova programme that we are currently running, our trainers and coaches focus much on the topic of identifying and finding the most suitable customer for a startup, especially on the so-called ‘beachhead market’, which represents the ‘entry-level’ market niche for a nascent business idea. It is no wonder why this topic receives so much attention: if you have read our first article entitled “Main Reasons why Startups Fail” on this blog, you should already know that lack of market need and customer for a startup is the strongest ‘startup-killer’ nowadays.
So, how to find the perfect customer for the product / service you offer in your startup? Below are some of the inputs and pieces of advice communicated by our trainers and mentors to the startup teams participating in the ClimateLaunchpad Moldova this year.
First of all, the most promising customer is the one experiencing a certain problem or ‘pain’ in the domain and market niche you focus on with your business idea. Furthermore, this is also the individual, company, or organisation that have not solved the problem yet or that is solving it inefficiently. This can be observed in the potential customer’s behaviour and specifically his/her continuous commitment to finding better solutions for the experienced problem and ‘investments’ put into this search. This commitment and ‘investments’ can be in the form of money spent on trying different approaches, products, and/or services promising to alleviate the customer’s ‘pain’, time dedicated to trying these possible solutions, or usually both. The customer may also ‘trade’ his/her reputation for a desirable solution to his/her problem, meaning that a person, company, or organisation may openly request assistance with solving that problem. So, commitment and ‘investments’ of money, time, and/or reputation into solving a particular problem you consider addressing with your startup may be very good cues that the person, company, or organisation doing these ‘investments’ fits the profile of your beachhead market customer.
Surely, the problem your potential customer is trying to solve and the ‘investments’ he/she makes into finding a perfect solution for it are not so obvious. Therefore, you will have to meet with many people from your chosen beachhead market and to interview them on their ‘pains’ and actions they perform while attempting to alleviate those ‘pains’. In the ClimateLaunchpad Moldova programme, we encourage our startup teams to conduct at least 20 interviews with their beachhead market customers in order for the teams to have a relatively good sample for eliciting useful and reliable insights. And for preparing and conducting customer interviews, our trainers and coaches recommend following the tips described in the book “The Mom Test” by Rob Fitzpatrick. These tips should help you to avoid largely useless and often misleading compliments on your business idea and instead get concrete data and reliable facts on the problem your potential customer faces and the ways he/she tries to solve it.
The above should be pretty clear if your startup operates via a Business-to-Customer (B2C) model and your potential customers are individuals. But what about the case, when your business idea is in the Business-to-Business (B2B) or even Business-to-Government (B2G) domain? Your potential customer here is not an individual, but an economic entity with many people working within it. Whom should you interview in this situation?
Just like in the B2C approach described above, you should find a person within a company, organisation, or governmental authority, who deals with the ‘burning pain’ of the entity that your startup might solve and who is currently searching for an effective ‘pain killer’. This should be your primary respondent for an interview. However, this person may not have decision-making power in the entity. Therefore, you should consider approaching and interviewing one more respondent in the company or organisation: the one who has control over financial and procurement decisions in that entity. This is important, because even if your first contact is the one dealing with the entity’s problem and the one, who would potentially use your product / service, the person with the decision-making power may put a veto on purchasing your offer on behalf of the respective company / organisation. Thus, after having your interview with the first entity representative, do ask him/her to connect you with his/her manager, financial director, or any other person standing higher in the decision-making hierarchy so that you could have your second interview.
Still, at certain point you will have to shift from interviewing potential customers about their ‘pains’ to testing the ‘gains’ that your startup promises to deliver to these customers. Specifically, you will want to put your most important assumptions regarding the value of your product / service for target customers to a reality test.
How to do it in an effective and efficient way without spending (much) money and efforts? Stay tuned to further articles on our blog to find out the answer to this question.
GreenTech Rangers and ClimateLaunchpad Moldova are organized by MEGA and Generator Hub and supported by the GEF Small Grants Programme implemented by the Global Environment Facility (GEF) in cooperation with the United Nations Development Programme (UNDP).