Most entrepreneurs, especially ones who aren’t technical, believe the technology and product development is the most difficult part of a startup. They’re wrong. Easily the most difficult part of a startup is customer acquisition. That’s right, the thing that is seemingly so obvious and critical to the success of the business is also the most over looked when evaluating business ideas. The number one reason businesses close down is that they run out of cash. Making customers happy and getting them to pay a fair amount for your service is the best way to build a company.
Here are a few thoughts around customer acquisition:
- Ask potential prospects how much they would pay for the service before you build it (try not to lead the witness when asking these questions, if possible)
- Remember the 3:1 sales and marketing expense to product development expense ratio
- Product on-boarding costs should be inline with monthly fees
- The first five customers are the hardest to sign
- Focus groups aren’t the way to go
Customer acquisition truly is the most difficult part of a startup. Yes, startups require great markets, strong management teams, and good timing but if you can’t acquire customers you won’t be in business.
What else? Do you agree that customer acquisition is the most difficult part of a startup?