In the early days, you’ll have both good and bad customers. You’ll deal with terrible companies, but also great ones. So, how do you make sure you’re targeting the right customers?
The sooner you’re able to recognize what makes a great customer for your business, the faster you’ll be able to focus on them and find more.
So, how can you tell if you’re targeting the right customers?
1. They look like the people you’re trying to target
All companies start with at least a broad sense of who they’d like to target. Is your product for the Fortune 10,000 or Fortune 500 companies?
Now, what company or what person would you – if they signed up today – be excited to tell everyone about?
If you’re like me, you might be looking at your customer activity stream (or logs) getting excited whenever someone signs up or uses your product. It’s a great start to figuring out if your customers look like the ones you’re really trying to attract.
Look at their social media presence, blog, LinkedIn, company website. Does it feel like a fit?
Now, if you don’t have an activity stream in place, but have a user or customer list of emails, you can use a service like Clearbit or Rapportive to enrich their profiles.
For example, Clearbit adds location, seniority, industries, salary ranges and a bunch of other good stuff.
Are you getting more business or personal users signing up? Do they look like people who should be finding value in your product? Are they in markets that can afford a product like yours? Are there any surprises?
The closer the match, the better the odds you’re targeting the right customers.
2. They open your emails, texts and answer your phone calls
If your product is not a priority or if your users have become disengaged, chances are that they’re not even opening your emails.
That’s why it’s really difficult to re-activate disengaged users or… to get feedback from customers after they’ve cancelled.
Because there’s a nice correlation between email opens and engagement, I’ve used emails in the past to gauge engagement of segments within customer bases.
If you’ve got an email that performs well, or a proven subject line, you can test segment by segment to figure out where there’s a fit (or not) to find out where your message is no longer connecting.
3. They’re willing to help
Engaged customers also care about your product’s success. They’re happy to help if it means they, in turn, get to use a better product.
In a way, they’re projecting their future use of your product and that’s a great sign.
Suppose you’re sending a survey tomorrow, do they jump at the opportunity to give feedback? Or do you have to fight to get them to talk to you?
Do they answer your customer development questions? Are you getting unsolicited feedback? Inbound emails? Mentions on Twitter? All of those are great signs of product-market fit.
4. They’re not waiting for the ‘next feature’ to start using your product
They use it today.
Entrepreneur and author Joshua Porter coined “The Next Feature Fallacy” to talk about entrepreneurs’ hope that the next feature will suddenly make people use the product.
But, if you’re getting some usage, you’re already doing something right.
The truth is, non-users or non-customers tend to focus on what you’re not. They want new things added to the product. In other words, they want another product.
The right customers want improvements to the product you already have.
That’s a big difference.
At LANDR, we had managed to segment our users by personas. To figure out the best fits with our feature set, we ran very thorough Kano surveys.
Now, if you know anything about me, you know that I love Kano surveys. It’s the best tool to uncover the true perceived value of a product.
When we ran this survey, we were able to visualize that a certain segment – our beachhead market – thought that the product already had all the right features, they just wanted them to be better, whereas other segments wanted mostly new things.
By targeting these segments together, we were building features that didn’t make a difference for our beachhead market’s enjoyment of the product.
5. They actually use your product
They’re not using it ‘later’. Or after you’ve made it easier for them to get started.
They try it, get the ‘aha’ moment, use it again and find value.
Customers that don’t use your product or don’t find value within your product eventually churn. By retaining them, you’re merely delaying the inevitable.
6. They would be disappointed if they could no longer use your product
A valuable product solves a need. And if that need is real, then people start to rely on that solution.
Entrepreneur and marketer Sean Ellis devised what’s known as the Sean Ellis Test to validate that a company has product-market fit. In his model, a product that leaves more than 40% of its users disappointed if it disappeared has product-market fit.
Although this is not a hard rule, it’s a good way to tell whether you’re building a vitamin or a painkiller.
The problem with this survey is that there’s almost always a disconnect between what people say they’ll do, and what they actually do.
It’s entirely possible for a product to excel at this test, only to crash and burn when the business tries to scale.
That said, it’s a good place to start. You can take the survey at survey.io.
Another good model is David Cummings’s (co-founder of marketing automation platform Pardot) – rules to identify product-market fit.
It looks at your business’ momentum. It’s an interesting checklist to use in conjunction with the product-market fit survey.
7. They don’t need to be tricked into buying your product
Nowadays it feels like « growth hacks » are everywhere. At scale, I think you can hack a better conversion funnel or improve through continuous optimization, but this can’t come before finding your market.
You want customers to buy for the right reasons. To find real value in your product.
Tricking people into converting – or discounting the product – is blurring that assessment.
Instead, watch where they drop:
- If visitors never reach your B2B SaaS pricing page, the value’s not strong enough.
- If they don’t click buy, your plans or price points are not compelling enough.
- If they click buy, but don’t go through, the payment methods or the language are not good enough.
You have to know where your funnel breaks and be aware of the customers who are going through with minimal friction.
8. They’re not on the verge of cancelling their accounts
Entrepreneur Dan Martell says that retention is the proxy to making revenue.
There’s a lot of reasons to cancel a product subscription, but the ‘right’ customers aren’t constantly on the verge of leaving.
If they’re finding value in your product, it takes a big reason for them to cancel their accounts.
- Did you lose your influencer?
- Are they low on cash?
- Did their tech stack change?
- Are they getting a massive discount on another product?
- Is there a vastly superior product out there?
Again, you want customers to stay for the right reasons, but if your customers are always on the verge of cancelling, you don’t fully have product-market fit.
9. They purchase for the right reasons
One thing I like to do when a new customer buys is what is called negative selling. I try to convince them that the solution is not good for them.
The reaction is a quick window into their buying process. Why are they buying from you?
Loopio is a platform to help sales teams and businesses manage their RFP responses.
When I was interviewing their CEO Zakir Hemraj, he explained that, early on, they focused on providing exceptional services around their product.
Since they were building a product company, not a service, they wanted to make sure that their customers were buying because of the product.
If customers had been passionate about the services they were providing, then that wouldn’t have been an accurate representation of product-market fit.
There’s a lot of different reasons why customers buy (to save time, to look good, to make money, to save money), but not all of these reasons are « scalable ».
You want the value of your product to be the reason of purchase.
10. If you’re targeting the right customers some of them will become advocates
Useful products create advocates, and advocates “sell” products. This means lower costs of acquisition, greater exposure and a better feedback loop.
There’s a lot of reason why your business should prioritize ‘advocates’.
The most common way to identify advocates is through Net Promoter Score (NPS) surveys.
NPS surveys ask one simple question ‘How likely would you be to recommend our product to a friend or colleague?’ with a scale from 0 to 10.
- 9 and 10 are promoters; your advocates.
- 7 and 8 are passives; users who are not fully convinced.
- And 0s to 6s are detractors, dissatisfied with the product.
You can often ask “Why?” as a followup question. This helps inform your marketing messaging, positioning and even your product backlog. It can be very powerful if the data is well segmented.
Atlassian, for example, uses customer NPS to find growth opportunities within their user base. How else can you satisfy promoters?
Again, with surveys like these, saying you’d recommend a product and doing so is not always the same thing.
So, how does it look? How close are you to targeting the right customers?
More on Targeting the Right Customers
- How to Find Your Best Customers with a Market Segmentation Analysis
- User Segmentation: How to Find Your Product’s Best Customers Using Data
- How Loopio Grew from 0 to 300 Customers by Focusing on Relationships
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