advertisement
advertisement

How a startup’s first big customer can make or break success

Founders need a compelling product story to win a marquee customer—and then turn that initial partnership into marketing gold.

How a startup’s first big customer can make or break success
[Photo: fauxels/Unsplash]

As a startup founder, landing your first big customer can feel like a chicken-and-the-egg scenario: big brands want to see case studies to prove the value of your product before they sign a contract, but you need brand name customers to feature as case studies. Once you ink your first deal and make that organization successful, however, that prospect can serve as validation for future customers of what your product can do.

advertisement
advertisement

This dynamic means it’s critical for entrepreneurs to make their first customers successful early on. In this week’s episode of Zero to IPO, we talked to Beth Comstock, the former vice chair of GE and the author of Imagine It Forward, and Jasmine Crowe, the founder and CEO of Goodr. They shared advice for other entrepreneurs on storytelling, building strong relationships with customers, and getting the highest possible ROI from customer contracts and case studies.

If you can’t tell it, you can’t sell it

One of the most important elements of a strong customer pitch is your story. Throughout her career, Comstock has seen both big and small companies mistakenly focus on a feature or the “gee whiz” factor when they talk to a prospect. Instead of focusing on functionality alone, she suggests that founders tell a story about a problem customers are facing, and show them how their product or service can solve it. 

The story doesn’t need to be true yet; it can be aspirational and discuss a challenge your customer will face in the future. Comstock says visionary storytelling is where entrepreneurs tend to get nervous. If you’re in this situation, think of yourself “building a future,” not explaining a current reality. It shows powerful vulnerability to tell a customer you need their help to make that future happen.

Never give your product away for free

When you pitch a customer on a vision for a product or service, they might be tentative about purchasing it if they don’t have enough proof of its value. An excellent way to lower their risk is to offer a pilot program or trial period. Crowe was able to secure one of her first big customers for Goodr this way. Goodr redistributes surplus food from businesses to nonprofit organizations who then share it with people suffering from food insecurity. When Crowe pitched her service to the Atlanta Airport (ATL), she hadn’t worked with any airports before, so she couldn’t provide a directly relevant case study. Instead, she offered a three-month paid pilot program, and it became a great success. Goodr still works with ATL to this day, and the airport recently extended its contract.

The “paid” pilot is crucial. As humans, we are inclined to be supportive and positive. Let’s face it: it’s easier to say “sure I will try your product” than “no, I don’t like your idea and I don’t want to try it out,” especially when the product is free. So, if there is no downside, human nature will always encourage early prospects to always say “yes, this is a great idea.” Separating someone from their wallet is hard, but it will bring out a real conversation about value. If you offer a free trial, you’re sending a signal that your offering isn’t that valuable. 

As a founder, your time is your most precious asset, so you need to focus on committed customers, not free opportunities. You also need valuable feedback and input from early customers, and folks will spend a lot more time and effort on your product and giving you that critical feedback if they are paying you. Follow Crowe’s lead and provide some other incentive to lower the risk for the prospective customer, such as a short-term contract. 

advertisement

Bake in customer marketing from the onset

Whenever possible, bake references and marketing opportunities directly into your contracts with customers. Comstock says that founders are often hesitant to ask their customers to participate in marketing campaigns, but once you have their agreement in writing, the ask is simply a follow-up.

Start by requesting the customer’s permission to put their logo and a quote on your website. If you can, push for a full case study articulating the problems the customer was trying to solve, their opportunity, and how you helped them accomplish their initiatives. And once you make them successful, ask them to take a few reference calls with prospective customers or the media so you can amplify their story.

Crowe baked customer marketing into her deal with ATL, and the payoff was significant: Oprah’s network, O, did a feature on Goodr, and filmed it at the airport, talking to concessionaires producing the food that Goodr redistributes. Over time, ATL’s feedback and testimonials have provided multiple inroads for Goodr at other airports and large organizations.

Your first big customer will be your marquee case study, and if leveraged correctly, will help you win many new prospects. But new entrepreneurs face many obstacles on the road to signing that first big contract. If you paint a picture of what problem your business can solve, lower the initial risk for a prospect, and bake marketing opportunities into your contracts, you’ll set yourself up for successful deals in the future. 


Frederic Kerrest is the executive vice chairman, chief operating officer, and cofounder of Okta. You can listen to Zero to IPO and the full “Imagine It Forward and Goodr” episode wherever you get your podcasts.

advertisement
advertisement

Attend Innovation Festival keynotes with Robert Downey Jr. and Janelle Monáe for free. Claim your pass now.