Identifying Startup Customers

Disclaimer: I'm writing this article to serve as a sort of guide for my own startup business also to document what I've learned so far. (Disclaimer: I am a developer by trade/education). I welcome comments and discussion in the hopes of learning more and expanding my knowledge of this topic and many others.

In my experience building and working for startups I've found that some companies undervalue the importance of their customer base and the importance that each user of the product provides to your business. Many startups, begin with an idea and many of them are built based on the idea and the plan that "if you build it, they will come".

Having the users "come" and use the product is akin to Startup Growth. Proof of a successful product lies in the growth of the product. How can you grow if you do not know who your customers are? Customers can be easily qualified by placing them into 3 categories.

  • Economic Buyer
  • Technical Buyer
  • End-User

To describe the 3 categories above, let's create a fictional product, one that provides a standalone Wiki software for distributed teams. Who uses Wiki software? A software development company would! (not straying too far from what I know best, eh?)

In this company we have a programmer who is linked to this Wiki product on Twitter and immediately downloads the software onto his machine and raves about the experience. This user is classified as an End-User, he loves the software, but he cannot purchase the software. He is however a user that drives growth to the product, but financially his input is limited.

This End-User will discuss this Wiki software with their tech lead to see about purchasing the product for the team. The teach lead is now categorized as a Technical Buyer and is responsible for deciding if the Wiki software is the right fit for the team. They will assess and judge the software and while they can't be the one who says yes and purchases the software, they can say no. If we can get our software into the hands of the End-User, we also need to think about what the Technical Buyer will need for that person to say yes.

Finally, the most important customer is the one with the cash, the Economic Buyer. This person will control whether cash is provided to pay for the product or if we lose the sale. The Economic Buyer, in this scenario is the CEO/Founder of the company and will be influenced by advice from the Technical Buyer and the End-User. The CEO requires the understanding of how this Wiki software will help the reach his strategic goals (more revenue, more productivity, better documentation, etc). The Economic Buyer will usually think in the sense of "If I give you $5, can I make $20 from that investment." The return on investment for a product is very important.

The above example is a single market segment (software development company), so we should consider many different industries or organizations. Some market segments all three customers are one person, or the Economic Buyer might also be the Technical Buyer and so on. It's important to research these companies and come up with a hypothesis of the potential customer scenarios.

Now that we've expanded our idea that we originally thought would derive growth from the End-User we now know that we have to sell and market to the Technical and Economic Buyers as well. Identifying these roles will help with the sales pitch, writing website copy and more. In some cases you might be able to assume what extra features a customer needs and you can build and upgrade which will provide you with more customers and more revenue.

Don't forget this step when it comes to building your startup. It's important to remember that these buyer and user scenarios can be researched and identified at all stages of a startup. Sometimes they may lead to a pivot as a greater opportunity is found.

Thank you to my good friend Rob Lafluer for proofreading this article.