Q: They say those first few sales are always the toughest to get. What are some key tips that help small and midsize businesses, and entrepreneurs with a product, obtain their first few sales?
Jessica Coane,
PexPortal
A: Here are a few tips for landing those first few customers:
• Hopefully you talked to a few potential customers about their needs during your development process. They trusted you — they told you what they needed. They are a good first start.
• Consider the length of the purchase cycle. Selling to a government entity or a large company may be attractive because of the potential volume, but those organizations have long purchase cycles with multiple approvals required and long budget cycles. Start-ups looking for their first revenue don't have the luxury of time.
• Your product provides different value to different customers. Your best prospects are the customers with a need that is causing them significant pain, and your product will relieve their pain. An adage in technology markets is it's better to sell aspirin than vitamins.
• Purchasing a new product, especially from a new company, is risky for the customer. To overcome their feeling of risk, you need to use strategies like a free trial, or limited feature versions (usually at a lower price) that a customer can try. A money-back guarantee works for some products, as long as the primary risk is monetary. But if more is at risk — they lose customers or get fired for choosing a bad product or supplier — a money-back guarantee isn't enough. Use a risk reduction strategy that targets the specific risk.
Second, target people and companies with a demonstrated tolerance for risk. Certain people buy new technology products simply because they are new. Similarly, companies that operate on the leading edge of technology, that often push into new markets or have a history of being an early adopter, are the best prospects for a new product. Identify the companies or people willing to accept the risk.
Remember: Not everyone is a good customer for you. Target the customer willing to consider a new product from a new company because the product provides them significant value.
Mark Spriggs is an associate professor of entrepreneurship at the University of St. Thomas Opus College of Business.
