20 Jul 09 So who is your customer champion?

There is a pattern of how founders of internet and media companies think. The traditional way in which founders think of a start-up is – have an idea, raise some money, develop product, release alpha and beta and then get the first customer. This has been the product development model that has been followed by most of us. But why is it then that while all follow the above model some start-ups are successful while others are not? What is the difference between companies doing all of the above in the model? Is there any way to predict success or failure? Is there any way to reduce risk in early stage companies?

Some patterns keep coming up in early stage companies. Most entrepreneurs (founders and CEO’s) are focused on one thing – Getting to launch and getting the first customer. That is the single-minded drive for engineering, the management and the board. Another pattern is that such companies hire sales, marketing and business development staff based on the product development cycle/process as above. Around alpha/beta stage companies start hiring marketing, sales, get ready for launch, hire ad agency, blog, hold launch events etc.

When a start-up gets its product to beta the entire company parties. Who is done at this stage? Marketing? Business development? Sales? Only people who are done are engineering. Most start-ups have no way of managing the risk of getting the market and customers right. Why is it that we have tonnes of methodologies to measure and to help us get the products right but no methodologies to help us get the stuff about our customers and market right?

Start-ups use the tools from product management companies that have come up with lots of tools on how to manage technology risk but have almost no tools to manage customer and market risks.

Most often start-ups think of themselves as a junior version of a large company. The tools and processes for business development, sales and marketing in a large company are not transferable to a small company. So the assumption that expanding the sales team will increase the sales in fixed increments is false. What start-ups need is a customer champion as their sales, marketing and business development equivalents. A customer champion says we do not know who our customers are and we need to go out there and find them.

A customer champion needs to do three things

• Customer creation and Company building

Customer creation is all about how do we create demand for our companies’ products and services? Any type of talking about your company is not done over day one or even when the product is built – on techcrunch kind of blogs. You hypothesis about – What your company is about, what services you are offering, pricing – will be radically different after you have some contact with your customers. Any press you get as a part of your company has to be part of a strategy and not a random tactic. Typically after you have understood what business you are in, who your customers are, and how you need to scale demand for your company.

Entrepreneurs are usually good at finding opportunities and building something from scratch but not at growing something repeatable. What a customer champion needs to be good at is running a “lean start-up” which combines customer development with agile methodologies for internal development and very quickly iterate its customers feedback and massive number of releases in a day/week.

• Customer Discovery

Listen to your customer – you might be selling something but you need to listen to what your customers actually want. To find out if customers like your idea/product or not is not an outsourcable problem – the founders need to do this. Particularly the people capable of changing strategy need to be the ones securing good news and bad news.

• Customer Validation

Customer feedback sometimes requires you to reengineer the product. And this requires engineering in as a partner to do so. But you only want to do that when you are convinced that you understand enough about the customer and market so you are not just tweaking it for random customers.

In early stage ventures – Just passion, agility, personal skills of the entrepreneur etc is not enough you need logic and ask yourself one question every morning and evening – how do I keep reducing the risks. This will in effect lead to a tailored customer development process unique to each start-up and thus a customer creation methodology. The job of a CEO is risk reduction at each and every stage till he/she makes an exit. In my personal opinion the founder should leave the job of a CEO as soon as possible and become the biggest customer champion of his company.

Tags: customer champion, start-up, technology