HatchConf:Customer Discovery Ned Lilly, CEO, xTuple
On the Launch Pad• What you’ve heard so far • Idea, Funding, Business Model, Team• So now all we need is . . . someone to buy this thing!• So where do you start?
Your Circles• Let’s start with the obvious • Is it something you use yourself? (Eat your own dogfood!) • Friends, family – anyone you know in the business that could use your product/service. If you can’t ask them, you shouldn’t ask anyone else. • Investors – anyone in the business willing to invest should certainly be willing to try your product (or help point you to someone who will).
The Importance of Beta• Never design your product or service in a vacuum – identify “beta testers”• Don’t expect them to pay – you need their input at least as much as they need your product• But define the value proposition – free for some period of time, but they will have to pay later
xTuple’s experience• Built product with one initial customer• Got it to “good enough” – now what?• Small “acquisition” of supposedly captive customers • Only works if they’re really captive!
Other Paths to #2, 3, 4• Does beta customer #1 have colleagues in the same or related business?• Don’t forget: They want you to succeed, it’s OK to ask for their help• Identify communities of interest, opinion leaders• Word of mouth is your best bet
Vertical or Horizontal?• Would you rather have customers that are all pretty similar (own a niche)? …• Or is there greater value in demonstrating a broader market appeal?• You’ll need to choose one or the other.
Back to xTuple• We opted for horizontal – but it takes longer, and is usually more expensive• Freemium distribution model reduced our customer acquisition costs• Now it’s humming, but it took 10 years!
The Virtues of Vertical• More readily available customer lists (sort by industry, etc.)• Trade groups, other marketing channels• Word of mouth is easier within groups of common interest
Finally, a Culture Note• Lesson learned: Everybody needs to sell!• Get comfortable with that, or go do something else.• Even when you hire dedicated sales people, you can never lose that focus.• If you don’t have customers, you don’t have a business.
Conclusions• Eat your own dogfood• Friends, family, investors• Beta customer #1 – for feedback and introductions to customers 2-4• Decide: vertical or horizontal• And remember, customers are everyone’s job