GUEST BLOG FROM NEIL SONI:
There seems to be a misconception out there in startup world. There is plenty of talk about “customer development” and Lean Startup Methodology (talking to and learning from potential customers) in the product development stage, which is great. But there is simultaneously a sense of apprehension when it comes to “monetizing”, as if it’s this mythical, frightening beast. I’ll let you in on a secret: customer development and early stage startup sales are literally the same process.
This comes back to a fundamental misunderstanding of what selling is. Way more than any slick sales pitch, it’s about matching your offering with a customer’s need. To create this match between product and need, you need to listen but you also need to expose yourself to failure by trying to sell and seeing what happens. The biggest mistake you can make is giving the impression that your product is free when it actually isn’t.
And once you do bring up price, always be ready to close the deal! Most people separate customer development from sales so that they are either only:
1) Learning during customer development conversations
2) Trying to sell while in sales calls with potential customers and not trying to learn anything
Yesware’s founder Matthew Bellows offers a warning of this exact symptom in one of his early blog posts where a potential customer was ready to buy licenses for their sales team but he was too busy thinking of potential features to notice the buyer’s intentions. Yesware has raised double digit millions and is absolutely crushing it (I love using horrible cliches) so if they can make a mistake like this, it’s very possible that you can too.
But what happens if you misread the potential customer’s intentions, try to sell them, and they reject you? You’ll hit an objection. Objections are great because you learn why the customer is saying no! If it’s something wrong with your product, you can now go fix that problem. If it’s related to your pricing, you can work on that. The real problems come when you aren’t getting any feedback on why the customer isn’t buying – it’s impossible to fix the problem when you don’t know what the problem is in the first place.
There’s another hidden advantage to having paying customers – it’s way easier to get useful feedback. At one of my previous companies, we went down the free trial route and got solid adoption from one of the core audience groups (high school counselors). The problem? They never used the product unless we told them to. We weren’t sure if it was because of our design, our product, or if we just weren’t solving a true need. You’ll never have this problem if you’re asking initial users to pay money to use your product – they’ll either not buy your product or they’ll quickly cancel if you aren’t solving their need.
Don’t overcomplicate things. If you’re doing customer development already, just add a step and try to close the sale – worst case, you’ll learn more and best case, you’ll have more revenue than SnapChat. And if you’re not already doing customer development and you run a startup, the time to start was yesterday