3 Questions you Need to Ask when Choosing the Right First Customer

Juanita Lott, Founder and Former CEO of Bridgestream Software shares her insights on how to choose the right first customer.

When starting a new venture one of the most critical initial milestones is to create the traction needed to establish your company’s credibility. To do that you must secure the all important initial customer (or customers).The entrepreneur is often anxious to close that first customer and may overlook the important due diligence that answers this question: “Is this the right initial customer for my business?”

There are several reasons that a customer may not be the right partner during the early stages of your business. If you get it right, that first customer can help you achieve real growth as your business builds on that success. If you choose the wrong partner you run the risk of slowing your business or pursuing a path that costs in time and focus.

When I was running my company Bridgestream, we successfully secured our first customer (a global financial services firm) very quickly. The deal provided much needed revenue and would also provide Bridgestream a world class reference that would be vital to our business. However, soon after we signed our initial contract we discovered that the breadth of the implementation our customer expected was much broader than we expected and would require us to deal with a very complex set of interdependencies within their infrastructure while scaling our software far beyond the limits we had tested at that point. Fortunately our small team rose to the challenge and we were able to meet the customer’s request. But we also learned an important lesson in the process: one that every entrepreneur should know.

These are three questions a new entrepreneur should consider when selecting that critical ‘first customer’ or series of customers for your business.

1. How well do you understand your customer’s business?

Learn as much as you can about your customer. This allows you to understand how your product or service impacts their business: what problem you solve for that customer and why it matters. By answering this question you position your business to deliver a solution that brings the greatest value to your customer. You also will be better equipped to differentiate your value from that of your competitors. And, if your business is not well aligned with that of your customer this may not be the right first customer for you. Satisfying the needs of a poorly aligned customer may be a distraction you cannot afford.

During a sales call with a major retailer it became apparent that they were looking to use our technology to solve a problem that was unique to the retail industry. Securing their business would certainly have been a significant “win”, but to pursue them would require us to step away from our core value proposition. The discussions did not move forward, but in retrospect, it would have been a mistake to pursue a deal that would have strained the resources of a small team and resulted in a lack of clarity as to who we were.

It’s also important to understand the company’s selection process as you may not be the first or only vendor they have worked with to solve their problem. Does your solution replace an existing platform they have decided to remove? Did they work with another company/competitor in the past, and if so why did they fail? In other words, you should investigate the situation that led to other unsuccessful tries. This may help you learn about the implementation environment or other factors that can help you avoid pitfalls on your way to securing that successful early customer.

2. Are you able to successfully scale within your customers environment?

Understanding scale is also critical for a new technology company during its initial data implementations. If you’re fortunate enough to secure a F500 or F1000 business as your initial customer, congratulations! But be sure to carefully build an implementation plan that you can successfully manage. Remember that the first customer(s) above all will need to provide strong references for your business. Take time to define the stages of deployment that allow you to succeed in the customer’s environment. Often times an early stage company may not have invested in the storage capabilities or other requirements necessary to scale multiple users on multiple use cases in a large enterprise. Understanding these limits will be critical during the early stages of your business to ensure that your first implementation can be successful

3. Communication, communication, communication..

Creating strong communication channels is always important but it is especially important with your first customer. Know who you will need to partner with internally within your customer’s C Suite, IT or consulting team. Who will be responsible for managing the implementation process? Make it your business to ensure that they are successful. Establish positive and open communication channels early on in your relationship. Be willing to disclose the inevitable speed bumps and implementation problems quickly as you work to resolve them. And yes, make a point to also share the successes. Your reputation and integrity will be a critical asset and it begins with your first customer.

4. Conclusion

While the rapid pace of the early stages of your business may make it difficult to build this discipline, considering these three questions may help you choose the right course.

About the Author

Juanita Lott is the founder and former CEO of Bridgestream Software, an enterprise software company that was sold to Oracle in 2007. Gartner recognized Bridgestream as one of the “cool vendors in security and privacy “ and Burton Group recognized Ms Lott as “a pioneer” in role based access management solutions.

Juanita is currently an Investment Partner in the Portfolia Investment Fund and continues to work as an advisor and mentor to women entrepreneurs. She is also a speaker on issues of funding for women and people of color.

Juanita also serves on the national board of College Spring, a non profit supporting college readiness for underserved students.

Been There Run That

Where influencers, investors, and innovators meet to build great women-led businesses. Our 777 women-led companies have raised $10.3 Billion, including 20 IPOs.

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Where influencers, investors, and innovators meet to build great women-led businesses. Our 777 women-led companies have raised $10.3 Billion, including 20 IPOs.

Been There Run That

Where influencers, investors, and innovators meet to build great women-led businesses. Our 777 women-led companies have raised $10.3 Billion, including 20 IPOs.

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