From business idea to first 100 paying customers in a nutshell
High-level guide on the steps from validating your business idea to winning your first 100 paying customers.
In the last two weeks, I've got approached several times if I can share a high-level guide on the steps from validating your business idea to winning your first 100 paying customers. So here we go: From business idea to first 100 paying customers in a nutshell.
Simply follow the link in each section to get more information on each of the steps.
Step 1: Validate your business idea
We all like to come up with new business ideas. And that's great. But before you spend time on actually building a product and wasting your time or money, think about ways to validate your business idea and get strong signals that are worth spending your time on.
Here is the process I highly recommend to validate your business idea:
Step 1: Write down core assumptions and hypotheses
Step 2: Rank your hypotheses (hypothesis score)
Step 3: Research the market (size)
Step 4: Market testing with customer interviews
Step 5: Run experiments around your hypotheses
Popular types of MVPs include 'concierge' or service MVP, Landing Pages (with sign-ups and waitlists), Physical prototype, Pre-sales, Crowdfunding, and Product Hunt
Define upfront what a successful MVP looks like (success metric) for you and write it down. This can be for instance #signups, pre-sales revenue, conversion rates
For most of the steps, especially for building a great landing page, doing customer interviews, or having a waitlist, it's helpful to rely on great software tools. Check out my list of Best tools for Startups and digital creators for more information.
Once you've validated your business idea, it's time to launch and market your product.
P.S. Already think about ways to build an (engaged) audience from the beginning. Great ways to build an audience are mailing lists, Facebook groups, slack channels, or simply running webinars, a youtube channel, or blogging.
I recently came across a Medium article on a playbook for building and launching a startup in 30 days. If you follow the steps you can pretty quickly validate your idea.
Your ideal customer profile (ICP) is a core element of your go-to-market strategy and crucial for your sales and marketing success. Knowing your ICP helps you to keep focused and spend your resources (time and money) on talking to the right people.
You will see that having a clear ICP results in high-quality leads that will show better conversion rates (because they resonate with your messaging, your value proposition, and your product), and in a shorter sales cycle, and more happy paying customers (with a higher NPS score). This also means that fewer customers will churn (lower churn rate) because they see the value in your product, and you will see more referrals coming in. So you will increase your average customer lifetime value.
Great ways to reduce the number of users that do not fit your ideal customer profile are:
Sign-up forms (asking for relevant information e.g. #employees or industry)
Sales commission structure (more commission for customers from your ICP)
Analyzing existing customers and identifying patterns (lead sources, countries, roles..)
I'm referring to a great model by Myk Pono (Ideal Customer Profile (ICP): How To Create A Comprehensive Customer Profile) that says, that your ICP feels the pain, has a fit to your product, and is ready to buy.
👉 ICP = Pain + Fit + Readiness
They have the problem you’re trying to solve for them (Pain). And the way you’re trying to solve their problem resonates with them (Fit), meaning your product (how) is the right solution for them. On top of that, they need to be ready for your product - meaning the timing needs to be right (Readiness).
5 practical steps to create your ideal customer profile:
Step 1: Create a dream list of 100 customers
Step 2: Collect information about the Buyer Persona and Users
Step 3: A day in the life of your customer (doing a mix of interviews, surveys, and job shadowing to get information about: daily activities, responsibilities, goals & success KPIs)
Step 4: Understand customer behavior (Knowing how they think, what they care about, and what they are doing including questions like What software tools are they using?, What partnerships do they have?, Who else is also selling a complimentary service/product to them? )
Step 5: Trigger events (The right triggers signal to you that your ICP needs your solution now)
Once your business idea is validated and you know your ideal customer profile (ICP), it's time to market your product and win your first paying customers. Step 3 (win your first 10 customers) and step 4 (Launch with a powerful go-to-market strategy) normally run in parallel at the same time.
Step 3: Win your first 10 customers
Winning your first 10 customers should be relatively easy if you follow these 8 tips:
Solve a real problem
So instead of building a product and then trying to find a customer group who is interested in such a product, start with a well-defined problem from a specific target customer and build a product/solution for them. If you don't solve a really big problem, go back to the validation phase.
Start with strategies that do NOT scale
I would highly recommend starting manual hand recruiting your first 10 customers by doing stuff that does NOT scale (e.g. Outbound Sales, phone calls, emails, etc...).
Be human and don’t sell your product in the first step
In order to win the first customers, you don't need to have the ‘perfect’ sales pitch. My experience is the more natural and human you are in your cold outreach the more successful you will be.
Find customers, who love your product
Don’t make the mistake of onboarding hard customers or just anyone who is interested but does not fit your ideal customer profile.
Avoid hard customers
If it's getting hard for you to win your first customers, this is a strong indicator that you most probably do not really solve an existing problem for your customers. Start iterating again.
Qualify your customers - don't sell to every interested prospect
Declining interested prospects can help you to focus on the right customers. A good way to do this is to ask prospects 3-5 qualifying questions - depending on their answers you can easily decide if those are the right fit or not.
Charge your first customers
I would highly suggest charging your customers from day one. Otherwise, you do not know if your customers really see value in your product and are willing to pay later on for it. My recommendation is: 'Charge your client in order to solve their problem' - if they only want to use your product for free this is a strong indicator that the problem is not big enough for them.
Ask for referrals
Referrals are a great way to grow from 10 to 100 paying customers. So ask your customers proactively for referrals.
Hubspot defines a go-to-market strategy (GTM) as “a step-by-step plan created to successfully launch a product to market”. What it means is that your GTM strategy defines how you literally connect your product with your potential customers.
Your go-to-market strategy covers the questions around...
How do you communicate your value proposition to the market (brand messaging & sales messaging)
How do you sell the product to your ICP and make them happy (product-led vs. sales-led)
What growth channels & growth activities work best for your product
How do you make money (pricing strategy)
...and is one of the 3 core elements of your SaaS Growth Strategy.
Summarized, here are your 14 tips on how to launch your B2B SaaS business:
#1 Validated your idea with a waitlist
#2 Launching is a stage, NOT a one-time event
#3 Know your ideal customer profile's BIG problem
#4 Build an (engaged) audience from the beginning
#5 Draft your Brand Message (Golden Circle)
#6 Focus on selling Values, not Features
#7 Positioning & sales strategy (product-led vs. sales led)
#8 Test Growth channels & growth activities
#9 Work on Activation (Customer Journey)
#10 Leverage virality features & referrals
#11 Analytics & Tracking of core KPIs
#12 Get customer feedback early
#13 Iterate based on metrics and customer feedback
#14 Set ambitious goals (OKRs)
Step 5: Grow from 10 to 100 customers
Here is a quick summary:
#1 Manually win your first 10 paying customers
#2 Implement your powerful go-to-market strategy
#3 Decide on your sales strategy (product-led vs. sales-led)
#4 Tips for self-service (product-led) growth
#5 Tips for sales-driven growth
#6 Test different growth channels
👉 For more check out How to grow from 10 to 100 paying B2B SaaS customers.
After you hit your milestone of 100 paying customers, it’s time to think about how you can scale your business, automate processes and optimize your growth strategy to grow from 100 to 1000 paying customers.
References: This article is inspired by TK Kader (SaaS/B2B - How to Get Your First 100 Customers) & Steli Efti (Early B2B SaaS growth: How to go from 10 to 100 customers).
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