Finding Your First Customers
Here's how to find out who they are, where they are, and how to get them.
Ever visited A shop or restaurant and noticed a framed dollar bill on the wall? It's usually from the first sale the operation made, and for most business owners, keeping that bit of currency is a sentimental gesture commemorating a tremendously exciting moment. Ask any entrepreneur about their first transaction, and they'll probably answer with delicious and tantalizing detail. But the question you may be focusing on is this: Where did they find that first customer? And then: How can I do the same?
Those first customers are critical for several reasons. They generate much-needed revenue for your young company. They provide a foundation for all your future successes. Their purchases will validate your market research. Their consumption patterns will guide your product development and marketing strategies. And their referrals will expand your customer base.
So where are these important folks? Unless you have an extremely specialized product, chances are they're all around you. But before you can figure out exactly where they are, you need to know who they are.
Profile of a Customer
Draw a detailed picture of your prospective customer: How old are they? Are they male or female? Married or single? What is their income level? Do they live in a house or an apartment? Do they rent or own? Do they have children? What organizations do they belong to? Do they have a need for your product, and is that need currently going unmet? Most importantly, what will motivate them to buy from you? If your customer is going to be another business, rather than an individual, draw your picture with that in mind. What type of business is it? How many employees does it have? What is its annual sales volume? Who in the company makes the buying decision and what do you need to do to drive that decision in your favor? This process of clearly defining your customer will allow you to recognize prospective customers when you see them.
"The easiest way to find your initial customers is to just look around," says Gary Clinton, president of United Design in Noble, Oklahoma, which designs and manufactures giftware figurines. "If you see a demand from people you know, chances are there's a much greater demand out in the general public. But start by looking in your own back yard."
Clinton's first production facility was an old chicken coop, and he and his wife found their first customers at art shows. "We really enjoyed making unusual and creative ceramic sculptures, and we found out that the people who liked to buy those things went to art shows and craft fairs," he says. "So we started setting up booths in those shows." That was in 1973, when the Clintons were happy making just enough money to support themselves and pay their art-school tuition. Two years later, with degrees in hand, they officially formed United Design; today, the company earns $50 million in annual sales.
Where the Buyers Are
Your first customers could be in some very familiar locations. Here are some places to begin your search:
- Family members and friends. These are the people who are most likely to be supportive of you and your business. Take a low-key approach to avoid making them feel pressured. Remember, people like to buy, but they don't like to be "sold." So let your family and friends know what you're doing, and give them the opportunity to initiate a purchase.
There is a certain amount of risk in selling to this group. They may expect lower pricing or special services; keep in mind that whatever deals you offer now, you'll probably have to live with for the life of your business. Also, problems in your business relationships can create awkwardness in your personal relationships, so treat friends and family with the same high quality and respect you would other customers.
Of course, your friends and family members may not be part of your target market--but if they fit your customer profile and still aren't buying, you may need to reconsider your product parameters or marketing approach.
- Casual acquaintances. Neighbors, people you know casually at church, fellow PTA members, people who work at the businesses you patronize, your letter carrier, exterminator, hairdresser, and the myriad of other individuals with whom you come into regular contact all might fit your customer profile. In your regular, day-to-day contacts, take the time to let them know that you have started a business--they may be interested in your product. Don't be pushy, but pass out cards and fliers to let them know what you have to offer.
- Current or former co-workers. If you're continuing to hold down a full-time job while getting your business off the ground, you may want to market to your current colleagues. Many companies are extremely tolerant of workers who have small side-businesses. Be careful, of course, not to violate any company policies or promote your own business while on your employer's time.
If you're going to market to fellow employees, it's a good idea to let your immediate supervisor know what's going on before he or she hears about it from someone else. Of course, if your goal is to eventually leave your job but you don't want your boss to know just yet, you may want to pass on this potential market.
Once you're out on your own, former co-workers are fair game--and a potentially rich resource. David R. Hoods, president of Rupert Public Relations in Palos Verdes Peninsula, California, started his own marketing communications business in 1991, immediately after being downsized from his position as a division president in charge of marketing services for a major mergers and acquisitions firm. A number of Hoods' fellow senior executives left the company at the same time or shortly after, and also started their own companies. They retained Hoods to help them promote their new ventures, which provided his company with needed customers while those customers received an important service.
- Current or former employers. The dual trends of corporate downsizing and outsourcing have created a tremendous opportunity for entrepreneurs to start their businesses with a key client already in place. The elimination of full-time staff doesn't necessarily mean the elimination of the company's need for the services those people provided. If your new business is based on what you've been doing as an employee, your former employer is an excellent prospect as a customer.
To capture this potential market, prepare a professional presentation demonstrating the advantages of dealing with you as a vendor. For example, because you know the system and the other employees, the transition will be relatively seamless. At the same time, demonstrate that you understand the substantial change that will occur in your relationship when a former employer becomes a customer. You won't have the same insider access, and you must be prepared to compete with other vendors and provide your products and services according to the terms of your contract.
Sometimes, your former employer won't be an immediate source of business, but could be part of your long-range plan, so keep in touch. The firm that Hoods left five years ago recently joined his stable of clients.
- Professional, trade, and hobby associations. The individual who fits your customer profile is, quite possibly, a member of a club or group with interests similar to yours. Joining such an organization will give you access to a sizable group of potential customers.
A word of caution about this strategy: Most association members are accustomed to being on the receiving end of targeted marketing campaigns, and may resent someone who joins the group simply to look for prospective business. Your sales efforts will be far better received if you also make a genuine contribution to the organization.
- Defined geographic areas. Most retail operations can estimate the geographic area they can reasonably expect to serve. Of course, the more specialized your product, the further you can expect customers to travel. The key is to think about where your customers are likely to be.
Many types of businesses have no geographic restrictions. Consultants can theoretically work with clients all over the world, and most products can be shipped virtually anywhere. Even so, if your basic business plan includes a description of the physical area you intend to serve and how you intend to reach the market in that area, you'll be better prepared to find those first important customers.
- Specific industry or consumer groups. Clinton's first customers were individuals who attended arts-and-crafts shows, but his customer base evolved to retail craft- and gift-shop owners to whom he now wholesales, and he has discontinued retail sales. But his market has always been a very specific group that he could define and target. Similarly, the groups that have potential for you should be identifiable by your customer profile.
- Your competitor's customers. If your prospective customers are currently patronizing another company, think about how you might be able to let those people know what you have available. Study your competitors' marketing, advertising and sales strategies, and consider how you can use their system to your own advantage.
After the First Sale
Once you find those first customers, learn how to repeat the process. Use the knowledge and experience you'll gain from the initial sale to build future sales.
"Whatever your business or service is, look to see where the people who are your potential customers congregate," says Clinton. "If you can find your target customer in your immediate neighborhood, you can pretty well be assured that there are more of those people in every community throughout the United States."
According to an ancient Chinese proverb, a journey of a thousand miles must begin with a single step. It naturally follows, then, that a prosperous business must start with a single customer. When you know who and where that customer is, you are ideally positioned for success.
Rupert Public Relations, 655 Deep Valley Dr., #125, Palos Verdes Peninsula, CA 90274, (310) 377-0455.