March 25, 2016 by Ashwin Ramasamy

“What? I’ll take anyone who is willing to buy our product” says every entrepreneur.

Having customers in the early stage is a luxury. Some startups die without ever crossing that first important business milestone. But, it’s important that you choose your customers. I am not saying this in a smug manner after having won a couple of hundred customers.

While ContractIQ has gone past that milestone for me, PipeCandy is still new and yet to have an official paying customer. We have a handful of pilots but we are going through a very deliberate exercise to pick the customers for these pilots.

I was having a conversation yesterday with my co-founder on early customer acquisition for our SaaS product . One of Asia’s largest enterprise travel company approached us to help them with outbound prospecting. Their need is to reach as many businesses in India as possible, that have over 250 employees and pitch their cab services. More than reaching out to businesses, they want to reach out to individuals within those businesses and pitch directly (Ex: Pitch to sales reps and founders who might travel often).
It’s tempting to say ‘Yes’, because they are a $50M company and a good brand to have on our customer list. Before we do that, we need a model to decide who our first 10 ‘demonstration’ customers are going to be. It’s not good logos or good revenue, it’s about what templates of customer segments they represent and whether they are truly engaged & are deriving value from the product.
We should give the 10 customers’ names to investors and each one should just sing praises about us for what we delivered for them. In other words, the campaigns *have to be* very successful.
FIRST CUSTOMERS FOR SAAS

How to choose the first customers?

At this point, you need to understand what PipeCandy is.

We are an outbound prospecting product that smartly automates several mundane tasks related to sending email campaigns. We automate list building, intelligently find target people and their contacts, run campaigns, infer responses and help our users prioritize their follow-ups. In short, we put our users in touch with their most ‘prospective’ prospects, so that the conversations are really the equivalents of warm handshakes than cold emails.

The following are the criteria we use to pick our first 10 customers:

Criterion 1: No systemic or extraneous problems will affect your product performance

In our case, no campaign can successfully sell a dud product or service or a commodity. To elaborate further, we would not take yet another website developer or a voice BPO company as a pilot customer. It’s not that we don’t like them to be our customers but we just cannot meaningfully decipher the impact of our product or the lack of it. We simply can’t say whether our product did not do its job or their service just won’t excite, in case we did not generate value.

Criterion 2: Familiarity with the industry / problem space that the customer is hiring the product for

In PipeCandy’s case, for the first few customers we are offering professional services. This is just so we leave nothing to chance when it comes to product usage. Since we are rolling up our sleeves for our customers and are even running their campaigns along with them, we should be able to understand the space enough to craft a compelling message. We won’t be able to write a compelling message about why a derivatives trading company A is better than the rest.

Criterion 3: The effort required for a pilot should not be disproportionately higher than the average

For PipeCandy, this boiled down to one key variable that we isolated to be time consuming – the time it takes to find the target market and the decision makers within them. For us to be efficiently utilizing our resources, it has to be operationally easy to assemble the target contacts and the targets have to be at a reasonable scale (10s of 1000s of contacts)

We shouldn’t be wasting time creating new lists for every pilot customer. We’ve limited time and people to do the work. The better the reusability of data, the better it is for us to hit the ground running.

Criterion 4: The customer will have a need not just for the product in hand but also what’s coming down the line

For us, this meant that the product / service sold should be high value B2B or B2B-ish in nature. In other words, it has to be a high-involvement purchase. Our software is about building relationship, network and leveraging data / triggers etc. over a period of time. If our customer’s need is ultimately about selling a ‘one-time, low value item or service’ the product won’t shine. The time and cost of acquiring such a customer will go down the drain as we may not engage and retain them later.

Criterion 5: Say ‘No!’ to your ‘Pay It Forward’ customers.

We don’t need a ‘favor’ customer who is just repaying our ‘pay it forward’ debt by being nice and congratulatory. We don’t need a ‘favor’ customer who thinks he deserves every waking hour of ours because he is choosing to be a customer of an early stage product. We need a customer who is committed to the initiative, available for feedback and is honest about the value. It’s also important that they give positive ‘feedback’ should we choose them to be our reference.

Criterion 6: Are they a template for a large customer base that can be monetized well?

The reason the first customers for your SaaS product (or any, for that matter) are different is not just because they are early adopters. First customers are actually templates. Our first customers are representatives of our future customer base. The learnings we derive from working for them and with them, should inform our customer acquisition strategies. So, it’s important that they represent a wide base than a small niche.
Warning – Obligatory PipeCandy Plug below !
If you are scaling your outreach & seriously contemplating customer acquisition for your SaaS product (Duh!, who doesn’t) and would like to sign up for Concierge – our hand-crafted professional outbound prospecting service, drop your details here. If you fit out ‘first customers’ criteria, we’ll get you ahead in the queue ;).

Ashwin Ramasamy

Co-founder @ PipeCandy

Slips poor jokes & gets away with a poker face. Carries a no BS attitude at getting things done. First to arrive at the office, Ashwin’s energy does not ebb through the day. Ashwin is one of the co-founders and he sets the tone for marketing, sales, design & culture.