What matters most in the first years of a startup’s life? “Closing deals,” says Greg Pugh, SVP of Customer Acquisition for Rev1 Ventures, seed-stage venture development organization in Columbus, Ohio.
It’s not enough to have a good product if you don’t have customers who want it. And lack of customer interest is a common problem: More than 40 percent of startups fail due to lack of market for their product, according CB Insights.
The seasoned business leaders at Rev1, named the most active VC firm in Ohio, say the best way for entrepreneurs to close their first customer and start out on a path toward sustainable success is to believe that in a startup, everyone, including the founder, sells. Says Pugh, “By building selling into the culture of the company from the start, closing the first customer will be easier, and closing the next customer will be second nature.”
Rev1’s leaders should know. They have helped make Ohio a growing hub of startup activity. In 2015 alone, the firm claims its portfolio generated $162 million in revenue, created nearly 300 new jobs, and attracted nearly $100 million in capital to the region.
“Inking the first deal is one of the most challenging, gratifying and defining experiences for a new company,” says Rev1 president & CEO Tom Walker, who adds that he wishes he had more early insight into the best ways to approach first customers.
Here’s how he and the leaders of the Rev1 team recommend closing your first customer and beyond:
1. Do your homework. "Never take any meeting with a potential customer for granted,” Walker says. “When you’re working on your company’s first sales, you may spend a week studying the customer and the competition just to prepare for a 30-minute call. Over time, your customer and industry knowledge will build. But problem solving and preparation? Those will always be the keys to successful sales.”
2. Identify early adopters. The visionaries and technology enthusiasts are the customers who take a risk when no one else will, Pugh says. “They help you make your product what it needs to be. They give you credibility, and often times, they become your friends.” He adds: “Be bold and ask obligating questions of your prospects in order to understand their intentions and your opportunity for working with them and growing with them.”
3. Understand your customer’s business. That’s when you can really sell to them, recommends Rev1 EVP of Investments & Venture Acceleration Wayne Embree. “They will trust you because you demonstrate that you actually recognize that their business is more than the problem that you are trying to solve. When you put it in terms of how your product makes their relationship to their customers better, that will secure them to you as a customer.”
4. Look for prospects with a track record for doing business with early-stage companies. That’s the advice of Ohio TechAngel Funds Managing Director Parker MacDonell. “Ask someone who knows you personally to introduce you to someone she or he knows personally at the prospect company,” he says. “That removes some of the uncertainty the prospect might feel at doing business with a young company led by an entrepreneur whom they’ve never met.”
5. Provide abundant value. When you do, your very happy first customer will help you land your second and third customer, says Rev1 Chief Marketing Officer Kristy Campbell. “It’s critical your product or service can provide the value required to ensure they come away from the process as an active advocate for your work.”
Visit the Rev1 Ventures blog for more of its leaders’ insights.
Follow Adrienne Jane Burke at @adajane