When to say “Uncle”:

How Many Customers = “Enough??”

The sad truth is that you’ll never know the answer to this question…and, to be honest, the answer to “how many customers do we need to talk to” is about the same as the Supreme Court definition of pornography…”you’ll know it when you see it.”

Two quick anecdotes tell the tale:

Tale One: Four customers are occasionally enough!  One startup team I worked with in the warehouse automation industry made a grand total of four customer discovery calls and called me saying, “Professor, what do we do now?  You told us to talk to 50 customers and we’ve heard exactly the same thing four times in a row…everybody just wants to give us an order!”

Life doesn’t get any better than that. And while four customer does not a trend make, it’s certainly time for entrepreneurship to take over and for customer discovery to take a back seat, at least for the moment…sign those customers up, get their money, make them ecstatically happy, and learn about your value proposition, product or service features, and customer segment in the process—all while earning actual revenue!  In this case, the first four customers provided conclusive evidence of product/market fit, and the company continues growing and prospering two years later.

Tale two: Fifty customers is nowhere near enough:  “We’ve talked to just about 50 customers, and about 8% of them say they’re very excited about our value proposition.  22% say this, and 37% say that… .  But what do we do…there’s no clear common theme to the feedback.”

Sounds like trouble to me. Why?

  •      Verbal enthusiasm is not the same as measurable enthusiasm. None of the 12 enthusiastic customers offered a purchase order or credit card, and the level of enthusiasm is hardly enough to build a business around.   So 50 interviews don’t seem to be enough in this case—there’s no clear learning so far.
  •      Early customer discovery should generate more enthusiasm, more passion about your value proposition than “8% very excited,” especially since the 8% is likely on the high side and it’ll certainly decrease when you ask those customers for money. Back to the drawing board…

So what’s a startup to do?

An entrepreneur will be old and gray before he or she sees 50% or even 30-40% rampant customer enthusiasm…it rarely happens.  But without a convincing level of enthusiasm, “back to the drawing board” usually means one of the following:

  1.  Talk to more customers, looking for that common thread of responses, whether its “I’d like it better if it did X,” or “Oracle already makes something just like this.”  You may just need to talk to more people to find repeatable, actionable themes.
  2. Talk to different customers.  If you got a hint that men or women or middle managers or sole proprietors seemed more interested than others you’ve talked to, focus in on that group and see if the enthusiasm level increases notably.  If it does, you’ve saved yourself tons of dough on marketing by better focusing your “get customers” spend.
  3. Rethink the value proposition:  More/less/different features/functions/ pricing? Maybe there’s something fundamentally wrong with your product, with other aspects of your value proposition, or perhaps with other key elements of your business model.  Dig in. This is hard work.
  4. Did you just explain it badly?  Very often, entrepreneurs are so close to their product and their startup that they don’t fully explain the business  model or product when doing discovery. Test your pitch on a few smart people and see if it makes sense.

 Next: the first step in customer discovery has nothing to do with your product!!

 

Bob Dorf speaks with, coaches and trains startups in lean customer development all over the world. He blogs at dorfonstartups.com and tweets @bobdorf.

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