How should you choose your first few customers?

Photo credit: Binil Benjamin

“What? I’ll take anyone who is willing to buy our product,” says every entrepreneur.

Having customers in the early stage is a luxury. Some startups die without ever crossing that first important business milestone. But it’s important that you choose your customers. I am not saying this in a smug manner after having won a couple of hundred customers.

While ContractIQ has gone past that milestone for me, PipeCandy, my new SaaS startup, is still new and has yet to have an official paying customer. We have a handful of pilots, but we are going through a very deliberate exercise to pick the customers for these pilots.

Choose your customers carefully because,

1. They decide what gets built first
2. They decide the cost of acquisition and hence your initial runway
3. They represent a market – If you choose wrongly, you might be after a small market and your success in a tiny niche would not come in handy when you scale.
4. It brings the much needed focus – You’ll spend with focus; build with focus and acquire with focus

It’s easy to write anything in neat bulleted points until you confront reality – I was having a conversation yesterday with my co-founder on early customer acquisition for our SaaS product.

One of Asia’s largest enterprise travel company approached us to help them with outbound prospecting. They needed to reach as many businesses in India as possible that have over 250 employees, and pitch their cab services. Beyond that, they wanted to reach out to individuals within those businesses and pitch to them directly.

It’s tempting to say yes, because they are a $50M company and a good brand to have on our customer list. Before we do that, we need a model to decide who our first 10 ‘demonstration’ customers were going to be. It’s not about good brands or good revenue, it’s about what templates of customer segments they represent and whether they are truly engaged and are deriving value from the product.

We should give the names of our first 10 customers to investors, and each one should sing praises about us for what we delivered for them. In other words, the campaigns have to be very successful.

How to choose the first customers?

At this point, you need to understand what PipeCandy is.

We are an outbound prospecting product that automates mundane tasks related to sending email campaigns. We automate list building, intelligently find target people and their contacts, run campaigns, infer responses and help our users prioritize their follow-ups. In short, we put our users in touch with their most ‘prospective’ prospects, so that the conversations are really the equivalents of warm handshakes than cold emails.

The following are the criteria we use to pick our first 10 customers

Criterion 1: No systemic or extraneous problems will affect your product performance

In our case, no campaign can successfully sell a dud product or service or a commodity.