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Customers

Art and Science of Finding the Right Set of Initial Customers

So how does a business recruit early adopters who test and use your new product or service, and then advocate this offering to others around them?
Art and Science of Finding the Right Set of Initial Customers
Image credit: graphicstock
Managing Partner, Strategic Caravan
4 min read
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For many entrepreneurs, developing a new product or service involves a lot of hard work.  However, this is not nearly as nerve-wracking as recruiting the initial set of customers! This discussion is trying to help entrepreneurs understand the art and science of recruiting the right set of initial customers.  Correct recruitment of the initial set of customers underwrites the success of a new venture.

The ‘Diffusion of Innovations’ theory was developed in 1962 by Professor E. M Rogers.  This theory explains how new products and services are ‘adopted’ by society and how businesses gain customers, over a period.  Professor Rogers also introduced the term ‘Early Adopters’ to explain his theory.

Simply speaking, Professor Rogers suggested that mature business recruits 4 types of customers over its lifecycle.  Early adopters comprise the initial 16 per cent , early majority the next 34 per cent , Late Majority a further 34 per cent  and finally the Laggards as the eventual 16 per cent (Note: Actually, it is 2.5 per cent Innovators and 13.5 per cent early adopters, but we’ll refer to all of them as early adopters to keep this discussion simple).

The theory basically suggests that in order to recruit the balance 84 per cent customer base, it is critical to acquire the first 16 per cent or the early adopters).

So how does a business recruit these early adopters who test and use your new product or service, and then advocate this offering to others around them?  It’s quite simple to understand this if you put yourself into their shoes!

An early adopter can simply be described as someone who:

  • Has the problem your product/service is looking to solve.

  • Is actively looking for a solution to address this problem he realizes he has.

Let us illustrate this better with some examples:

When Airbnb first started, they needed an inventory of apartments to make their site relevant to those looking for short stays.  Airbnb found that people who had a need to rent apartments and were looking for a solution were currently on the classifieds advertising website, Craigslist.  So, Airbnb sent out specific offers to these potential early adopters who had listed on Craigslist to use Airbnb as well.

When Uber first started, it sponsored events in San Francisco.  San Francisco had relatively poor taxi cab services and an event meant that a lot of cabs would be needed at one time – a perfect setting for Uber to show a solution for those with an obvious need.  Moreover, these were all individuals who were hyperactive online and would help recruit the early majority if they were satisfied.  

So how can you find and take advantage of early adopters for your business?  Here are a few easy tips:

Tip 1: Leverage Complementary Partners

Paytm and ZipCash (or Ola Money), both can be found to be an integral part of the Uber and Ola Cabs mobile applications.  This tight integration with a complementary partner targets prospects looking for a solution to pay for taxi cabs, without the inconvenience of cash, or without the security risk of revealing credit card information. In fact, both shared cab applications have become a strong new customer recruitment source for mobile wallets!

Tip 2: Engage With Online Communities

It is common to find online communities on almost every topic possible.  Members either post a question asking for a referral (or sometimes a complaint against an existing provider).  An ask or a complaint is basically an explicitly stated need for your business to suggest a better alternative. Find one where you can add value.  (But please don’t hard-sell on the first interaction. First, take the time to build relationships with genuine empathy and then follow up later with sincere suggestions).

Tip 3: Go Where the Problem is – Physically if Needed!

Matrix Cellular markets mobile SIM cards to overseas travellers.  At one point, you could find a Matrix kiosk at many International airports and in offices issuing visas to different countries.  Sheer physical presence, at the moment of truth, helped matrix become among the most sought-after brands for overseas travellers looking for international roaming options.  

So good luck recruiting your initial 16 per cent!  It could define the success trajectory of your venture!

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