It’s been my experience that you learn much more when serving your first couple of clients that any other point in your product’s or company’s trajectory.
Before we signed our first customer in a recent company of mine, for example, we had a data request with clean columns in a well-thought out layout. But when the first data came in from our pilot sites, our grand visions immediately deflated in exasperation. Whatever product connectors we had built had to be rebuilt. And further, over time, we learned that even the idea of sending a data request wasn’t the right approach for our customers; by our fifth customer we learned enough to just send them specific scripts that they just run on their databases to generate what we need.
Should you serve your first customer for free?
Because your first few customers will be so valuable in helping you shape your product, for the right early customer, a free pilot can be a win-win. The investment the customer makes is with their time, feedback, and patience. The value of their time cannot be under-estimated; it is a form of payment. People value their time most of all and they prove they value your product by spending time implementing and using it, even if they aren’t also paying.
Who comprise the right first set of customers? I wrote in a prior article, “Market leaders who are also Innovators are the most powerful first customers: be willing to invest as deeply as you need to sign them up—their reference-ability is what will allow you to sign Pragmatists up later on.” Also, because seeing how they use the product, getting their feedback on it, and filling in gaps with customer care is so critical early on, having your first customers local may be important.
Should you offer consulting as an early “product” while you are building your real product?
It seems like a good idea but hasn’t worked well in my experience. In my current company, we needed a few months to get our MVP out the door and wanted to start interacting with customers before then. We show those early potential customers paper versions of our product and built ad hoc analyses for them that were focused directionally aligned with the product we were building. Here are the pros and cons of that experience:
Pros
- Offering consulting services before the product was ready allowed us to start talking to potential customers early in the process, before we had begun building any product
- This may work generally if you can offer analytical consulting that matches the basic types of analytics your product will do; you can get early feedback before productizing it.
- This allows you to get access to data early—which can help build benchmarks.
Cons
- It’s as hard for people to sign up for and use consulting as it is for them to use your product
- Their feedback on your paper analytics reports probably has marginal correlation to their feedback on your real product since they’d use it in a different workflow and mindset
- People respond better to products than to consulting: they can look at a product demo and imagine it and how they’d use it; consulting requires them to figure out what to do with the output.
- The largest “con”, though, is that doing this puts your potential customers (whether or not they sign up for your consulting project) in the frame of mind that you are a consulting company. It’s even harder to get another meeting later and re-frame that you have a product.
Converting a free pilot into a paying one
This has seemed harder than signing a new client. The challenge is a stakeholder who brings you in for a free pilot early on is an “Innovator” (discussed a few articles ago on building a sales engine), from Geoffrey Moore’s book “Crossing the Chasm”. They want to be the first to try out an apply new technologies but they may not have the ability or confidence to convert that type of pilot into a business case to win over others in their organization who are “Visionaries” (who need a clear business case for funding) or worse, “Pragmatists” (who need case studies and lots of proof points; who are never going to do a deal with a startup).
The solution is to work through your original stakeholder to create other senior relationships in their organization and, with them, adjust your messaging to better align with their priorities and their need for a strong business case.