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When running a new business, few milestones are as inspiring, and important, as finding your first customer. After all, the first customer is validation that you have something that others see value in, no small feat.

Sadly, some new businesses struggle to find their first customer, and even more sadly, some never acquire a single customer.

Recently, I met a couple of entrepreneurs who were starting a new SaaS business for a specific industry. They told me the problem they were trying to solve and discussed what they had built.

They sounded like they might have something good on their hands, and I asked them about customer acquisition. That turned into a conversation about trade shows, PPC, PR, and all sorts of other costly and/or time-consuming initiatives.

It seemed strange to me given that one of the founders had spent a number of years working in the industry targeted. "Don't you know anyone from the industry who would be interested in this?" I asked.

Somewhat surprisingly, lots of new business owners take a similar approach to customer acquisition. Instead of looking at the people they know, they concoct marketing strategies that consist almost entirely of advertising, direct marketing, etc.

There are a number of reasons this is done. One of the biggest: the desire for immediate scale. Needless to say, while it's nice to know that a friend or colleague would likely have an interest in your product or service, it's usually difficult to build a multi-million dollar business selling exclusively to people in your immediate social circle.

So the idea that you could send out 10,000 pieces of direct mail, or hob knob with a hundred decision-makers at a trade show, seems like a more fruitful marketing approach.

In many, if not most cases, however, going big to find your first customer instead of targeting the people you know is a mistake. Here's why.

Friends are Free

Marketing can be expensive, particularly before you know what kind of pitch works (see below). So one of the biggest benefits of pitching your product or service to people you know is that it doesn't cost a cent.

Likeability Influences Sales

It's easy to forget, but most of us enjoy buying products and services from individuals we like. Who do we 'like'? People we have enjoyable conversations with, people we trust, etc. The best salespeople can establish their likeability relatively quickly, but most of us aren't world-class salespeople.

That means that to take real advantage of the likeability factor, you should try selling to people who already like you.

People You Know Provide a Great Litmus Test

The people in your social circle may know, trust and like you, but that doesn't guarantee that they'll buy from you. After all, if a friend tried to sell you a $20,000 widget he had invented, you probably wouldn't write a check on the spot.

But what you are likely to get regardless: honest feedback. And at the end of the day, if you can't convince the people you know who are in your target market to buy from you, rethinking your business may be necessarily before you try to go out to the market at large.

You Can Perfect Your Pitch

Even if your company is selling the greatest thing since sliced bread, perfecting your pitch is crucial to commercial success. Unfortunately, it's easy to make assumptions about how a product or service is best sold to prospective customers.

In reality, selling takes practice. You never know which selling points, value propositions and closing techniques will seal the deal. Early on, it's generally far easier (and less risky) to perfect your pitch amongst the people you know rather than to try to perfect your pitch amongst cold prospects you may only have one shot with.

Patricio Robles

Published 20 June, 2011 by Patricio Robles

Patricio Robles is a tech reporter at Econsultancy. Follow him on Twitter.

2391 more posts from this author

Comments (2)

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Rene

Interesting post (and you can see you probably have a whole series up your sleeve Patricio!)

Two schools of thought on this. Don't involve your nearest and dearest because through being 'honest' they can sometimes actually be the least supportive. (In the same vein as your lizard brain - that negative voice that can hold you back).

Or embrace them and their feedback, but by clear about your strategy. Stick to it and encourage them to support you through promotion, networking and opening up routes to contacts and the market.

I think I know which way I'd go.

From a digital perspective - absolutely. Get your friends and family to test and trial all areas of your site. Better to sort the transactional snags out in advance with a softer launch.

about 5 years ago

Patricio Robles

Patricio Robles, Tech Reporter at Econsultancy

Rene,

Good points. One clarification: not all of the people you know are "nearest and dearest." Friends and family are great, but don't overlook colleagues, former colleagues, mentors, past customers, former classmates, people you have been or can be introduced to through trusted contacts, etc.

about 5 years ago

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