8 June 2013

8 ways to get first customers to a new product

Money that you get from real customers is the best money you can have. No investment, grant or loan is worth it. Besides enabling product development, marketing and other operations, it also brings many other benefits. When customer needs drive product development, only necessary features, that add value to customers, will be implemented. Marketing will get valuable references and customer feedback, giving strong factual basis for product positoning, segmentation and planning of marketing activities. And lastly, money from customers is real and forces to focus on essential in all company development activities.

This post discusses some of the proven ways, how to find first paying customers. All customers are not necessarily optimal for building future success, but this will be not detailed here further. Product (or service, here we use product as a generic term that can refer also to services or product business having strong service dimension), customer, sales channel and other product and company specific conditions create a context, where decisions on customer development need to be made. Thus look at the list below from your own business perspective. For promoting and finding first customers for digital consumer products, there are some more specific tools, but they are not discussed here.

1. Existing customers

Existing customers know you and your products, so it is much easier to sell them new ones. In case of an existing customer, barriers to making a purchase decision, such as knowing the company and its key personnel, competitiveness of its products and depth of relationship with the company, have been mostly overcome.

In B2B space the key is to create trust in business relationship by exceeding customer´s expectations and as early as possible to identify abd develop need for a new product. In B2C the focus is in utlizing trust towards company and its product brand, and if a company has been able to create conversation with its customers, in using this channel effectively to launch a new product.

2. Customers through your network

If a company does not have customers yet (startups) or if existing customers do not need a new product, it is worth going through various company stakeholders, whether they could help you.

Though existing customers would not be benefitting from purchasing a new product, especially business customers can have good connections to potential customer candidates. This kind of indirect reference opportunities need to be utilized. Also key persons in your company, based on their earlier career, might have direct connections to potential customers - a great opportunity to utilize earned trust capital.

Other possible stakeholders that can assist in building a customer relationship are the most important suppliers and service providers. Startups, on the other hand, need to set capabilities in assisting new customer acquisition as a key criterium in selecting investors in early phases. The same applies to board members and other advisors, also beyond startups.

3. Cooperation with other companies

Very often company capabilities and resources are not enough to be trusted by a customer. In B2B sales it is good solution to join forces with a company or alliance of companies that complement own offering with their products or services. Especially in consumer sales distributors and retailers have traditionally provided the channel and resources to reach customers - the challenge is to secure good enough distribution agreements and execution with them.
Digital applications, e.g. mobile games, have found application stores as a shorcut and means to reach consumers, but attention overflow of new applications is restarting the business for publishers, who will assist e.g. in marketing.

4. Web content marketing to acquire customers

Publishing on own site and wider in the web compelling content that relates to potential customers´ needs , can be an efficient way to start dialogue with them and lower their barriers to accept a new offering. Besides that, content marketing can be done very cost-effectively. The most important thing is to first win customer interest, then their trust, and only after that start full-blown selling of the actual product.

5. Start with a spearhead

A company, trying to sell a new service (or product), can use spearhead tactics to pave way to successful sales. Instead of trying to sell actual full service offering, the gimmick is to first push a customer to purchase a lower valued subset of an offering. It is assumed that a customer has less barriers to accept this kind of offering, and the offering company is competitive with its subset service. After a customer has accepted a spearhead offering, ice is broken and it will be then easier to sell the full service.  As an example, companies that are targeting wider scale consulting assignments, offer seminars and market studies to create initial business relationships with potential customers.

6. Crowdfunding to acquire customers

Crowdfunding is a collective effort of individuals to join together and pool their money, usually via the Internet. Through launching a crowdfunding case, a company and its new product will get publicity, and if consumers consider the project and product that it creates worth supporting and desirable, they are also willing to invest in it. In this case it is possible to attach to investments an opportunity to make a preorder of a new product - a great opportunity to get first reference customers, who are also very willing to spread positive word-of-mouth.

7. Sponsored customers

If a company has a product that can be considered to bring something very good for users and community, there might be other companies that would like to sponsor acquisition costs of potential customers. The sponsors would benefit by getting positive attention by being connected to good things that your product brings and would use this publicity to reach their own targets. Because a sponsor is usually much bigger in size than the one sponsored, costs vs. benefits would be acceptable from sponsor point of view. A possible downside is a possibility of new product price image being distorted to non-acceptable low level.

8. Freemium model

In freemium model a product or service (typically a digital offering) is provided free of charge, but money is charged for advanced features or functionalities. Advertizing based models, with monetization through advertisements attached to a basic product or service, are close relatives to freemium. There are many questionmarks related to use of freemium, but in some areas, like in mobile applications and games, it is very widely used. If prerequisites to use the model do exist, it can be even a pre-condition to enter the markets; Sometimes freemium provides a tool to disrupt established and stagnant industry conventions.


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