Lessons learned in SaaS startups: Chapter 2. Know your customer.
Who exactly am I building this app for? Myself? My parents? The guy who owns the antique shop down the road? The entire world? I didn’t know the answer to this at first.
Well actually I did. I was building my first app (a project management tool) primarily for me. Whether this was a good thing or a bad thing I don’t know, but it helped me get the app started and working the way I wanted — something to help me manage my projects.
And that was it. I built it, put it live with a basic registration form, and then they started coming.
But I think I was lucky, and maybe in the right place at the right time. I wouldn’t recommend this now. And with my latest startup we have spent months thinking about who is our ‘ideal customer’.
Who is your ideal customer?
Lincoln Murphy describes an ideal customer as someone who is “ready willing and able”.
Ultimately, you should think of your Ideal Customer as: the customer type that — over a clearly-defined time frame — you will dedicate Sales and Marketing Resources to acquire.
We have been trying to define our ideal customer within the ‘ideal customer profile’ that Lincoln sets up for us.
1. Ready
The customer knows there is a problem, and are ready to solve it. They have a structure within their organization that is ready to implement a new workflow (within our app). They are agile enough to adopt change within their organization and ready to do so in order to solve the problem.
2. Willing
They want to adopt the change and are willing to do so. Not only do they acknowledge the problem, they want to hand over their credit card because they see the value in the solution that we are providing to them — that is to help them meet their weekly goals through better communication, and eliminate the need for meetings.
3. Able
They have the budget approved and are able to pay us immediately up-front for our services. They are able to commit the time to investing in our app in order to get the most out of it, and we can commit to them as long term customers (lower churn).
In doing this research we discovered a niche market, which we will focus our initial marketing efforts towards. So rather than trying to be all things to all people, we will build something really great that solves a particular problem for a particular group of people.
I’ve learnt this the hard way through my project management app startup. After initially building it for myself and then seeing a lot of people signup to the app, I tried to please everyone — from design agencies and freelancers to healthcare groups and governmental organizations. I stretched myself pretty thin, but managed to do it, though I wouldn’t do it like this again.
Know your customer, first.
