Although winning the first customer is a memorable event for any founder, successful startups work as though that first customer were already at the table, long before that seat is occupied. Early days of a new venture are filled with uncertainty. That’s the time when just the idea of a first customer can be a powerful tool that equips you for product design, positioning, and revenue modelling.
Nearly every successful tech founder I meet describes the surge of excitement they experienced on winning their first customer. “It’s a defining moment that makes you feel as though the world is taking a note of your presence,” said one founder. To some founders, the first customer evokes a sense of responsibility. “It’s kind of like entering adulthood,” said another founder, “because once you have a real customer you need to behave like grown-ups.” Most founders remember vividly the day when they saw that purchase occur, and it’s likely they’ll tell you the whole story—often with a tinge of nostalgia.
Beyond such emotions, the first customer is special in other profound ways. But before we go there, there is one important caveat. Just to be clear, before someone buys your product, the ‘first customer’ is not a specific company or a person, but rather an archetypal profile—a picture in your mind. For example, maybe you are thinking of selling your product to the CxO of a mid-size company, or you might target a research lab with a certain budget. In the back of your mind, you think there will be a certain number of similar CxOs or research labs that could potentially buy your product. Right up to the time your cash register starts ringing, that archetypal profile is your first customer.
There are at least three ways in which paying attention to the first customer is critical.
Experiencing the Customer’s Journey Influences Product Design
Once you have a picture of the first customer, designing a product is like writing a letter to someone whom you know personally. Throughout your time at the drawing board, you will get drawn to the idea of that first customer: What are their goals? What are they trying to achieve? What roadblocks are they facing? What might be of interest to them? How will they experience life with our product in it? Once you start answering those questions, you are in a great position to customize product features based on what customers will need.
Last month I learned at a design thinking event in Silicon Valley how GE Healthcare did a complete makeover of their MRI scanners to make them more kid-friendly. The designers found that kids (and their parents) were terrified of MRI machines. The gloomy, dull interiors of the scanning room and noisy machines made the problem worse. The new design offered an environment that was so welcoming that children would think of being scanned as an adventure and not a trial. This story makes a great point of seeing the world through the customer’s eyes: In this case, the children’s.
Talking the Customer’s Language Makes Them Pay Attention
When you conceptualize a new product, it is often tempting to focus on the product itself: What will make it cool and unique? What features should it have? How should it look? That’s where a vast majority of tech founders focus in the beginning.
Although there is nothing unusual about a focus on the product, what it does for many founders is that it weakens the voice of the customer during the design process. Product-centricity at the cost of customer-centricity is a bad bargain. The key to the riddle of why other people aren’t appreciating my cool idea is to position your idea from the perspective of your target customer. Once you understand the customer’s perspective, you can describe your product in language that your audience understands best, highlighting benefits that they are most likely to appreciate.
For instance, if you’re launching a cloud-based data storage platform targeted at small businesses, you may choose to position it as a convenient, space-saving, low-cost, and pay-per-use alternative to buying data storage upfront. This kind of positioning will work better than emphasizing features such as technical superiority or global reach that might be of limited relevance to small businesses.
Learning What the Customer Values Tells You Where to Make Money
Your first customer is a great teacher. How they run their business determines what they value. Armed with this knowledge, you can tailor how you deliver value and earn revenues. You might ask questions such as: How will they find our product? How much could they justify paying for it? How might they prefer to pay? For instance, if the CIO allots fixed annual budgets instead of large capital outlays, you might want to offer your product in a subscription model rather than sell it as a perpetual license.
Tesla offered to their early customers a free recharge of batteries at Superchargers, their fast charging stations, because they thought—quite correctly—that lifetime free charging would help lure their first customers away from gasoline to electric cars. Recently, however, Tesla announced they will no longer offer lifetime free charging for their newer customers. That brings us to another important point: Product offerings change over time. As your business grows and evolves, you will need to think of ways to expand your customer base and cross the chasm between the early adopters and the early majority customers. You will need to tweak or significantly alter your product to broaden its appeal. In Tesla’s case, they perhaps believe that their new wave of customers value a lower upfront cost in exchange of paid charging later.
That being said, in the initial stages of setting up your business, you must absolutely optimize your offerings to suit the needs of your first customer. If you are lucky, you may sign up a real customer early in the game. If you are like most others, you will need to create an archetypal profile—a mental picture—of the first customer and get on with your start-up.
That’s what is special about the first customer: you need to hear their voice even before they show up for the party.