Great article Evan!
The First Ten (Customers)
Your first customers are critical to success because they Legitimize your offering, give testimonials and pay bills. We can talk about press releases, ads and mailers. But, in tangible terms, how do you get those first ten customers?
Your research is completed. Your development is done. Your blood, sweat, and tears have finally come to its zenith. Your forecasts for revenues are in line with your expense projections. Your hot-off-presses business cards are printed and your website is going ‘live’. All that’s left is to finally prove to the world (and of course all the naysayers) that your idea for a new business was right on the mark.
We can talk about writing press releases, taking out ads and sending out mailers. But, think about it - in tangible terms, how are you going to get those first ten customers? Your first few customers are so critical to your success because they:
- Legitimize your offering, demonstrating that yes, there is indeed a market for your products and services (“dogs eating the dog food”).
- Provide valuable feedback to help you improve your business operations.
- Give you real testimonials and referrals.
- Pay the bills (let’s not forget about that one).
The Old Way
Let’s assume for our purposes that you are not blessed with a brand name like Pepsi or Jack Welch. If that was the case, then simply cold calling a potential customer would suffice. There are a number of ‘old school’ ways to find potential customers in your immediate network – the “warm market”.
- Personal Contacts – friends and their friends, school connections, fraternity brothers, club members, church and so forth.
- Business connections – former employers, employees and customers. Your personal vendors - lawyers, doctors, accountants, insurance agents, mortgage brokers, bankers, real estate agent, contractor and so forth.
After you have built your list of contacts, send them all something letting them know about your new business. Keep in mind that you aren’t necessarily soliciting them to be a customer but rather, you are informing them that your new venture exists and with that knowledge your contacts could either decide to become a customer themselves or refer folks that might be interested in your product or service. Make it really simple for them too; what problem are you trying to solve and how do you solve it. When should you be brought into the situation? A colleague/friend is going to refer business to you in the hopes of them looking good to both you and the prospect.
In order to attain your first customers, you are relying on the trust that you have built (ideally) with your personal relationships, friends and family. While this method will hopefully drive business, if your business does not directly align with your contacts then hitting them up for business will be futile.
The Internet Way
What better way (presumably) to launch your new company than to leverage the power of the Internet to get your first 10 customers. The (now) classic steps are:
- Build your website.
- Optimize it to be visible within search engines.
- Launch a pay-per-click campaign with text and banner advertisements.
- Tweak the messages to attract your audience.
- Weed thru the clicks to find quality leads.
- Close business.
While this seems extremely straightforward and easy to launch – it is still difficult to get your first customers this way. We surveyed 800 small businesses at the end of 2007 and most of them were concerned about upfront costs on any marketing program.
While the internet will help you drive people into your store, when they look around they aren’t going to see pictures of satisfied customers – because there aren’t any. As they look around for accolades from your biggest clients, all they’ll find is smoke and mirrors. Of course you could get lucky and convince your site visitors to buy your service but this could take quite a while. It is no wonder this approach is often called the ‘spray and pray.’ Think about it; you have allocated a significant amount of money (that you likely don’t have) into Google and PPC advertising in the hopes that one of the hundreds of people who will click on your advertisement will convert to a customer. It could happen…but can you rely on it for your first ten customers?
The New Way
With the proliferation of social and professional networks, there must be a better way of ‘finding the right person’ to buy your product/service. And, isn’t that what all this marketing is really about – finding the decision maker who could authorize a purchase or trial of your product/service. The “old way” as described above, finding the right person was by leveraging your immediate network. The internet way says: broadcast your message to as many folks as possible and someone (hopefully) will be the needle in the haystack.
But, the new way, and ideally the most cost effective and efficient method is to harness the business relationships of others to find the decision maker. Here is a good visual – if you were to launch your company and have 50 independent sales people ready to promote your product/service would that be a better approach to finding your first ten customers? Think of the power of having an army of people trying to open up doors for you the “master salesperson” to close the deal.
Social and professional networks have really gotten the ball rolling on this approach. Think of your ideal decision maker – the head of sales training at a company with more than 100 sales reps, the head of marketing at a consumer good company or the CIO of a retail chain. Now, why not tap into your professional network (whether it’s LinkedIn, Xing, Ning or others) and ask them to make introductions for you to your target decision maker. I know some folks on LinkedIn (like Moshe Weiss) who have 17,000 contacts in his ‘network’. Surely, the type person that you are looking for could be found in Moshe’s network. Getting these networked folks to make introductions for you shouldn’t be too difficult even though you don’t actually know them. How, you may ask? Would you ask 50 independent sales reps to go out and find customers for you without compensating them? Of course you wouldn’t. So why not offer the same compensation you would offer an independent sales force – on performance or based on success.
Let’s assume that you stand to earn $50,000 from landing your first customer for your new product or service. If you hired a sales executive they would expect commission of 5%-7% on top of a base salary. So why not offer $5,000 to anyone that could bring you a customer. Maybe it is a residual payment of 10% of the monthly revenue. Think of what it is worth to you to get that customer and what it would cost you to drive that lead yourself – PPC ads, telemarketing, etc. Add on top of that the cost of commission to a full time sales executive. It certainly sounds far less expensive to leverage a 3rd party sales team that to build one yourself – especially if you are only paying for success. Outsourced sales and telemarketing is a huge business that usually incurs upfront fees or monthly minimum commitments. They could be very effective but it requires an investment in time and money.
Leveraging the networked folks seems like a winning combination; a broader reach than your personal contacts without the cost exposure of a full blown internet marketing campaign. Let’s not forget that money is a great motivator so why not offer money to help drive your business. I generally don’t like the whole favor business – the quid pro quo of you doing this for me and I’ll do this for you. I prefer, here is what I need and I am willing to compensate you accordingly.
So here is the question; if I was looking to meet someone you know professionally and compensated you for making the introduction a percentage of any revenue I generated from the relationship – would that create more of an incentive for you to make the introduction? That would make you the middleman just like the role of a real estate broker or even an investment banker. Now if you could only earn the fees of an investment banker – wouldn’t that be something?
Learn more about the author, Evan Sohn.
Comment on this article
Posted by Kimberly Lindsey, New York, New York |
May 09, 2008
Posted by Micah Nyamari, Bowling Green, Ohio |
May 09, 2008
Very nice. lots of advice in a page.
Posted by Ann Thurley, Seattle, Washington |
May 10, 2008
Very informative and helpful for someone new to internet marketing
Posted by H. Travis, Seattle Bellevue Tacoma, Washington |
May 15, 2008
Very sound, but the practibility for . . . say a much smaller, fee-based coaching operation is questionable.
You mention a $50K deal (w/ resid). Most of the solopreneurs and small businesses may very well be dreaming of that for an semi-annual number.
How about some counsel for the little guy, Evan?
Snag me 10 customers when I offer a 10% commision of $9.
BTW, your counsel is extremely effective Strategic Thinking. Just box up an offering for the some of us down here. ;o)
Best of success,
-- Lee The Poker Coach
Posted by Evan Sohn, New York, New York |
Jul 01, 2008
Thanks Lee - sorry for taking so long. The example is actually a $5k deal with a residual. We are driving lead/introductions for a consultant that does presentation training - sounds similar to you (in the same genre).
Let me know if this helps.
- business development
- lead generation