Let’s be honest, you need your customers more than they need you. Without them, your business doesn’t exist. To attract and keep these customers, you need a product or service that solves a real-world problem for them in an effective, efficient way.
Of course, that’s much easier said than done. “Perfecting” a product/service takes round after round of iterative work and it’s not uncommon for startups to lose themselves along the way, forgetting the most important part of the equation—the customer.
In most cases, your customer is much closer to the problem you aim to solve than you are, and enlisting them as a partner in developing the solution to that problem is more important than anything else for the growth of a very young startup—even revenue.
Last month at our Startup Scaleup event, I hosted a session with serial entrepreneur and Redpoint Ventures partner Alex Bard called, “Customers > Revenue,” where we discussed this concept at length (watch the full session below). During the discussion, Alex mentioned how he offered his startup’s product to strategic customers for free in exchange for real-time feedback, references and a user base. I credit this strategy with allowing his team to refine a product that was worthy of acquisition by Salesforce in just three years.
As a follow up to our conversation, let’s explore a few of the key questions I often get about putting your customers ahead of your short-term revenue.
Why should you include customers in the product development process?
Your customer might not be a product development expert. However, they are using your product/service every day; and they aren’t biased or prideful about it since they didn’t build and test it. That makes them your single best source for open and honest feedback.
There are also benefits to simply increasing user volume, not only to test performance, but to improve your position with potential investors or acquirers who want to see customers actively using your product/service.
And don’t forget, satisfied customers become great references, especially if they are well-known brands in your target industry. In Alex’s case, he offered both Bonobos and Yelp, where I was working at the time, free use of his customer success platform Assistly (now Desk.com), understanding that having these two brands as early customer would likely open many doors down the line.
How many customers should you partner with?
Alex and Assistly ultimately onboarded about 10 free customers in total to help them work on their product, but every company is different.
Whatever number you ultimately choose, you need to make sure you have enough internal resources available to work directly with each customer and process their feedback. Ideally, they will devote the same level of attention to you as well.
How do you pick your partners?
At the most basic level, you’re looking for the customer that needs you as much as you need them, so that each partner makes the other more successful.
Assistly came to Yelp because they wanted good feedback and a high-profile customer on their roster. Yelp agreed because the company places an extremely high value on the customer experience and saw value in having early access that could better handle and measure those experiences. It was a win-win.
How do you know the customer is actually right?
The easiest way to avoid heading in the wrong direction when leveraging customer insight is to look for the patterns. That’s why you should have more than one customer providing feedback
One customer’s opinion probably shouldn’t influence a major pivot, but if several users are all requesting a feature, or complaining about the same thing, then something is clearly going on.
How do you avoid building a product/service around one very specific customer segment?
Just as you need to look for patterns in customer feedback, you also need to make sure one particular type of customer is not overrepresented at the table. If all interests are represented, you can run feedback by multiple customers to look for consensus.
It’s also important to develop a defined process for how you will review feedback and make changes, so that you don’t run into a situation where the loudest or most aggressive voices dominate, regardless of whether their feedback is valid.
How do you know when the product/service is finally right?
As you stop receiving fewer reports of issues and requests for fixes from your customers, you can begin to feel confident that they are receiving value—especially if they have been open and honest with you in the past.
At this point, the major kinks have likely been worked out, and you begin working to convert your pipeline of free/discounted customers into full paying customers.
Remember, the focus on your customers doesn’t stop just because you’ve arrived at a great product/service. Long-term sales and revenue is often a direct reflection of your customer’s experience with your product—with bad experiences driving down your numbers and positive experiences leading to strong growth.
In case you missed it at Startup Scaleup, or just want a re-fresher, you can watch the full “Customers > Revenue” session below, where Alex makes the case for keeping your customers happy at all costs, and letting the profit take care of itself.