Gordon returns with another post on surviving and thriving as a software testing start-up. Published on the last Tuesday of each month, be sure to return for next month’s instalment.
In this month’s blog on the software testing start-up series, I’ll be covering various ideas on identifying exactly who your customer is and routes to market (how to get to them!). These are all thoughts from my experience at my start-up company, CodeFuse. For a part-by-part breakdown of this blog series please see Part Zero.
The key question here is “Do you really know who you are trying to sell to and how to reach them?” You can only start to make productive use of your valuable time once you have ascertained this.
You need to learn what really resonates with any potential customer. You also need to understand how to get your wonderful message to them, and be effective when you do so.
Where we started
These were the general thoughts:
- Target customer: Everyone who develops software will want this
- Route to market: We’re in the cloud, people will come and buy off the web
Needless to say we were suitably punished for our naivety.
In many areas of business after working on a problem, we have realised our original assumptions were wrong, none more so than customer segments and route to market.
The problem is that “testing the market” can take some time to get feedback. I would estimate that for each “test” we carried out the time taken was really 3-4 months to conceive, construct, adapt, communicate, get feedback, summarise and conclude.
Often we thought we were “done” with a stage of the process only to find that we’d taken 2 steps backwards!
Understanding your customer
Most people when they start off a business have a fair idea of what it is they are trying to build. They may even have some idea of what their customers want. I doubt whether anyone would say “I don’t understand my potential customer’s needs”.
But the real question is “how WELL do you know your customer?”
First find out the companies who could be interested in your product. Then find the key people you need to communicate with. To do this you can use a number of techniques. For example you can talk to a spread of people, utilise A/B testing on email campaigns or on your website.
You need a clear idea of how the benefits of your product align with the key issues your customer faces. Normally, the reason why they are willing to listen to you (and all your competitors) is that they have existing problems. You need to know and concentrate on the key problems.
So to find success you need to really identify:
- Out of the masses of problems that a customer has, which are the key ones?
- What are the core features you have to solve those problems?
- Who is it that has the problems that you solve and can you locate them?
If you are just starting a business yourself, it would be an interesting exercise to start with point (3) and see if you can clearly and personally identify those people you think you could sell to on something like LinkedIn. Perhaps choose 5-10 names and drop them a mail to see if they are willing to talk about their (business) problems. It’s surprising how many people want to help!
Further complicating things though is that there are some further qualifying questions such as the following:
- Have you found the best coupling of problems and benefits, rather than just an OK one?
- Do you really know the problem space in enough detail?
- Are your features good enough?
The answer to all of this is sadly for most firms that it is a cycle of learning. You understand more about all three areas through trial and error.
An interesting side-effect of all of this is that your marketing really begins to come together when you have answered these questions well. You’re informed, concise and compelling.
For those Simon Sinek fans out there (of whom I am one!) this possibly sounds all a bit too much like how and what for you. But I think going through this process you will think deeper about your WHY, and your WHY will become clearer to you and in your communication.
Routes to Market
Without understanding your customer it’s difficult to correctly identify the right route to market. Different routes provide different advantages and you need to leverage those advantages to your specific customer segment.
Certain routes to market could possibly address problems your business is suffering from. For instance there is an inherent problem with B2B start-ups gaining the trust of their customers. They have little or no references or track record.
If you can partner with a larger, respected firm in some way then customer’s confidence is likely to rise. Perhaps there is a part of your business process that the larger partner could take over to get extra revenue, or perhaps they just want to be a reseller for a cut.
Largely we have at least looked at the following routes to market:
- Direct web sales
- Direct face to face sales
- Referral schemes for resellers
- Mutual referral partnerships with those selling related products
- Aligning with larger companies where we may compliment their offering
It is worth asking yourself the question whether certain routes to market can help with any of your business’s issues.
There is another big consideration when thinking about routes to market – cashflow. While some options may not be ideal, as a start-up you need to get some revenue coming in before you run out of cash and everything comes to a grinding halt.
As someone with a predominantly technical background these two areas have been extremely steep learning curves for me personally. Not just to understand the basics, but to get a deep enough understanding to be effective.
I’ve given some of my thoughts here, but there is a fair amount of cross-over in what I am going to talk about in future blog entries around marketing and next month’s entry “Prioritising your Time”.
Find more posts from the Start-Up Series here