Startup Owner's Manual: How to 'Get' Customers

BY Steve Blank and Bob Dorf

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Editor's Note: This is the first of three excerpts from The Startup Owner’s Manual, a recently published step-by-step guide for building companies.

There are a million-plus apps for sale on mobile app stores and an infinite number of commerce, social and content websites, so the mere fact that you’ve launched a new one doesn’t make it a successful business.

Building your product is the easy part. The hard part is getting customers to find your app, site or product. It’s a daunting, never-ending challenge to build customer relationships, quite literally, one customer at a time.

Let’s get started with the first two steps for “getting” customers: acquisition and activation.

In the acquisition phase, customers learn about a product before they buy. With web/mobile apps, the effort focuses on bringing as many customers as possible to the company’s “front door”-- the landing page. There, they’re introduced to the product and hopefully buy it or use it.

The second phase -- activation -- is when the customer shows interest through a free download or trial, a request for more information, or a purchase. Customer should be considered "activated" even if they don’t purchase or register, as long as the company has enough information to re-contact them (whether by e-mail, phone, text, etc.) with explicit permission to do so.

Unlike the door-to-door salesmen of yesteryear, your job on the web is to “pull” customers to you rather than to push your product at them.

Your first step in customer acquisition and activation is understanding how people buy or engage with your product. Here’s how it happens:

Step one: People discover a need or want to solve a problem. They say, “I want to throw a party,” or feel lonely and decide to find a hot party or a dating site. Then what?

Step two: They begin a search. Overwhelmingly, in this century, that search begins online. It often happens at Google.com, but it can happen on Facebook, Quora or hundreds of other special-interest websites from Yelp to Zagat to TripAdvisor.com.

Step three: They don’t look very hard. In fact people often only pay attention to the first few things they uncover (how often do you search beyond the first page of results on Google?). You must make your site, app or product as visible as humanly possible, in as many of these places as possible where your customers are likely to begin the search.

Step four: They go where they’re invited, entertained or informed. You don’t “earn” interest from your customers with hard-boiled sales pitches or bland information. You earn it by providing inviting, helpful or entertaining information in lots of formats (copy, diagrams, white papers, blogs, videos, games, demos, you name it) and by participating in the communities and social media your customers are likely to be.

When it comes to acquisition, you can use free or paid tactics. Free is obviously the best cost, and includes public relations, viral marketing, search engine optimization and social networking. After you get the free acquisition programs going, you should start to test paid tactics, such as pay-per-click advertising, online or traditional media advertising, affiliate marketing and online lead generation.

You'll want to run some quick and simple acquisition tests to gauge customer reaction. Try controllable, inexpensive, easily measured tactics:

• Buy $500 worth of AdWords and see if they’ll drive customers representing five or 10 times that amount in potential revenue to the site or app and at least get them to register. Monitor performance and drop ineffective ones.

• Use Facebook messages or Tweet to measurable audiences to invite at least 1,000 people to explore the new product. If none of the messages work, the product or offer may well be the problem.

• Buy an e-mail blast list of targeted customers for $500 or $1,000. Send at least two versions of the offer and expect to generate at least three times the potential revenue to at least sign up, if not purchase.

• Find traffic partners, which are typically contractual relationships with other companies that provide predictable streams of customers or users to your company while you provide either customers or fees to the partner.

For web/mobile businesses, activation is the choke point -- the make-or-break place where customers decide whether they want to participate, play, or purchase.

Quick activation tests include:

• Capture the customer’s e-mail address and get permission to follow up with further information. Follow up with 1,000 customers and expect at least 50 or more to agree to activate.

• Offer a free trial, download, or white paper or a significant discount to 500 or 1,000 customers. Try this with at least three different offers, hoping to find at least one that generates a 5 percent or greater response rate.

• Call 100 prospects who don’t activate immediately. See if the phone calls generate enough of a response-rate improvement to warrant the cost. Three times the response rate is probably needed.

• Try free-to-paid conversion: Offer a seven- or 14-day free trial of an app, service, or web/mobile product. Or offer the use of some but not all of the site or app’s features.

Monitor the results of all tests and, when you’re not satisfied, revise the program and test again.

Check back in coming weeks for excerpts on keeping and growing customers.

SOURCE: www.entrepreneur.com