Since different businesses require different approaches to customer development, I want to make sure we have a wide range of startups on here sharing their stories. With that, I’m very excited to introduce Mark Horoszowski.
Mark is CEO at MovingWorlds, a B2B social enterprise that’s in the midst of its validating it’s business model. He’ll be contributing a 3-part series on discovering, engaging, and converting his customers.
Most innovative startups, by definition, are innovative. This means that their products (or services) doesn’t always have a clearly defined market (or even if one exists, the founders are likely to think otherwise). This was (is?) certainly the case for us.
In fact, one of our biggest challenges thus far has been clearly defining who are customers are, and then getting in the room and speaking to them before we built our product.
To be fair, while we have done a lot of things wrong, we did one very important thing right – develop market need and potential customers before we started building.
So how did we do it? Or rather, what did we fail at, learn from, and then get right?
First, some background on MovingWorlds. We’re creating a matching site that connects professionals that want to change the world to companies already changing it. It’s like a match.com where for-good companies go to find professionals eager to donate their expertise in exchanging for a life-changing travel experience (and vice-versa). Originally, we were going to create a white-labeled solution to sell into large corporations so that they could offer “meaningful” sabbaticals, retirements, and vacations as part of Corporate Social Responsibility (CSR) programs. Some early advisers also told us companies would eat it up as part of employee engagement, learning and development, and recruiting programs
The Failure: Unclearly Defining Customers and Misunderstanding Needs
With some simple mock-ups and a one-pager, we started going to company websites, looking for everybody in HR, Recruiting, Employee Engagement, and CSR and then proceeded to e-blast as many as possible with a blanket statement like “Our turn-key solution will help improve CSR, build brand trust, offer rich learning opportunities, and provide employees desirable opportunities.” Our stats were something like this:
- 75 messages
- 5 responses
- 2 insightful phone calls
- 1 worthless meeting
In retrospect, it’s no surprise we had minimal success getting in the room and zero success building partnerships. Lessons learned:
1. Don’t Waste Your Time and Their Time.
We (like most startups) thought our solution could do more than it really could. It couldn’t. Trying to sell something that could potentially do everything doesn’t work. When selling into any organization, it is important to note that a recruiting budget is different from a CSR budget is different from an employee engagement budget, etc. As such, it is impossible to sell in turnkey solutions, especially based on concept.
2. Segment Audience, Tailor Questions.
In other words, don’t talk to anybody that is a waste of time (see rule #1). This qualifies as anybody who does not have specific needs that your company specifically addresses (which we wrote about in a previous post). After a while, we narrowed our product focus to something much more specific: source desirable experiential learning opportunities by connecting professionals directly to world-changing organizations that needed help with specific business challenges. After some brainstorming, we settled a few key targets to answer some specific questions:
- Provost’s and department heads in universities who wanted to expand curriculum to include experiential learning
- Career service staff in universities who needed help finding opportunities for all their students, especially for internships in order to boost marketability
- Learning and development personnel in corporations who are preparing employees for global business practices
- HR Benefit Managers with a focus on employee engagement who were tasked with keeping more employees at the company, longer.
3. Be Happy and Thankful when People Say No.
From our previous list, we quickly learned that the only people who really cared were b (career services) and d (employee engagement). The level of standardization and hand-holding that needed to be done to make professors happy with curriculum modifications would be a huge time-suck, and L&D personnel needed similar assurances and very hands-on, team-based experiences.
We heard no a lot. The only thing we heard more than no was nothing. But things are shifting. My first round of cold-calls had a response rate of 1% (I sent over 100 emails). My response rate now is closer to 40%.More importantly, we have partners. Lots of them. Most importantly, we have people who said “We will pay for this”. But, we also have a big group of people in the “grey zone” who have said “I want to see the test site when it’s live. I’d be happy to give advice, and if I like it, we’ll shop it around internally”. This, usually, is a red flag that means they won’t pay for it (and you shouldn’t build it). And in truth, we’re not expecting all of these people to be our paying customers. However, many of them have said that they will promote Experteering to their constituents. So even though they’re not paying for it the way we envisioned, they are willing to help promote when we are in alpha, and the data from that will be incredibly useful to improve product and nurture customers, and we have enough people who have said they will pay in order for us to feel comfortable building.
Don’t believe the nay-sayers (unless they’re your target customers), you don’t need a product to develop customers. You need tenacity, humility, and passion. Tenacity to keep knocking on doors, humility to understand you need customers more than they need you, and passion in your company to inspire other people to join you.
In my next post on customer development, I’ll share 3 ways we successfully engaged (and are engaging) potential customers. Subscribe by email to get it directly to your inbox.
Mark – thanks for the thoughts. I love your focus on defining the customer as not only someone who’s interested in what you are doing, but also someone who’s keenly interested in paying you to solve a real-world problem that they are having. One method I use to separate the “need to have it” customers from the “nice to have it” customers is to keep on asking them one question:
“What’s one thing (just one thing) that if it existed in the product right now would cause you to pay for the product, right now?” If there’s no answer, thank them and move on. And you will find some of your most insightful commentary when you ask a potential customer to suggest one thing that they’d be willing to pay you to build. (Next: go build it and let the customer know you did, and close on their commitment.)
Great comment, Greg! It’s a really good question that you’re asking, and more companies should be asking. I know its obviius, but its worth saying – The only way you know if people will pay for it is if they pay for it. If you can’t get the money, then consider issuing invoices in advance to show seriousness and commitment.