Knowing how to talk to customers is one of the most critical elements of success for business, and especially startups.
Unfortunately, most startups don’t do it enough, and it bankrupts them, and starves them of cash. Many other businesses just haven’t nailed talking to customers in the right way.
So, what are the most important things for startup entrepreneurs to know about how to talk to customers, when to do it, and how not to blow it?
The Ultimate Guide To Pitch Decks
Here is the content that we will cover in this post. Let’s get started.
- 1. The Number One Rule Of Talking To Customers
- 2. Talking & Listening
- 3. The Customer Is Always Right
- 4. Talking To Customers Before Launching A Startup
- 5. Talking To Customers Before Creating A Product
- 6. Talking To Customers Before Fundraising
- 7. Ongoing Customer Service
- 8. Before Launching New Products & Changing Features
- 9. Before An Exit
- 10. Summary
The Number One Rule Of Talking To Customers
The most important thing to remember about talking to customers is to value your customers.
This isn’t just about direct customer value. A major, critical factor that most horribly underestimate. If businesses really did the full math of the lifetime value of their customers, and all of the value that surrounds that in terms of referrals, good will, cost savings, and more, they wouldn’t talk to them the way that they do. Their shareholders wouldn’t let them.
Even without doing the math, you can put it simply as, without customers you do not have a business.
So, if you want to have a business, and customers, you need to talk to them.
It will help you give them more value and be happier. The happier they are, the more profitable and successful you’ll be, and vice versa.
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See How I Can Help You With Your Fundraising Efforts
Talking & Listening
Key to this is actually reframing what talking to customers really means. It’s not talking at them, like an advertisement. Perhaps we should call it conversing, or speaking with them instead.
In fact, even more important than speaking, is listening.
You’ll benefit a lot more from conversations with customers if you just listen. If you ask good questions and just listen, they’ll tell you everything you need to know, on their own.
This is active listening. So, be wary of saying you are listening, and then acting tone deaf. People notice. They know when you are really listening, versus just pausing to say what you wanted to anyway.
We have two ears and only one mouth for a reason. It only makes sense that we try to listen twice as much as we speak. Listening effectively is an essential aspect of how to talk to customers.
Keep in mind that in fundraising or pitching products to customers, storytelling is everything. In this regard for a winning pitch deck to help you here, take a look at the template created by Silicon Valley legend, Peter Thiel (see it here) that I recently covered. Thiel was the first angel investor in Facebook with a $500K check that turned into more than $1 billion in cash.
Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below.
The Customer Is Always Right
This is a very difficult concept that many entrepreneurs, business owners and their teams wrestle with. It’s often easier to proclaim that customers are unintelligent, uninformed, or just crazy. Rather than admitting that perhaps we have overlooked something, haven’t nailed the messaging and communication, or are at least not targeting the right customers.
Only around 20% of your customers will produce around 80% of the value for your business. In some cases it may be more like 90/10 today. Some may not directly be as valuable as others. Absolutely focus on that top 10-20%. If you blow it there everything is going to fall apart. Don’t burn your most loyal customers and brand ambassadors.
Of course, others have value too. Even more so if you hope to grow, expand and scale your business. Even if they aren’t direct paying customers, delivering the highest profit margins today, you don’t know that will be true tomorrow, or may not fully appreciate the influence they have on the wider market.
You can lead, change behavior and perception over time, but you can’t force them to change their minds, or belittle their beliefs. If you try it is often counterproductive. The alternative is to start with the lowest hanging fruit that already shares your world view, and then work on changing the world from there.
Even if you don’t agree with them, try to adopt a customer is always right mindset. Remember, it is not about you, it is about them. It’s about giving them what they want. Gather their input and feedback and compile it into actionable data and insights.
This is also not just about trying to converse in the way you prefer. Whether that is an online form, phone call, or in person meeting at their location. Talking to customers the right way is also about doing it through their preferred mediums, on their timeline. Critical factors which can make all the difference in building a business. So, take the time to learn how to talk to customers.
Talking To Customers Before Launching A Startup
One of the most important times to talk to customers is before you even try to set up a new startup business. This is also one of the periods in which most entrepreneurs overlook talking to potential customers. They often think they are not ready, or don’t fully value this.
Conversely, the most successful founders are those who invest the most in talking to customers well before forming a new business, drafting a product idea or trying to raise money. This is even more important if you are entering a new space which you don’t have personal expertise in.
Talking to customers in advance is vital for identifying and verifying the problem. Is there really even a serious problem there to solve? What do customers see the problem as being compared to what you may have thought it was?
If you want to create a business around this, is this a problem that they are not only urgently looking to solve, but are already paying money for? Are they paying more money to try to solve this than you can profitably solve it for?
Get as much clarity as you can in defining the problem. Understand the whole picture, from the product to the key features and purchasing and user experience.
Equipped with this information you can be confident in starting right. You are much more likely to find investors wanting to back you. You’ll skip years of detours, and many wasted dollars wandering in the desert trying to find product market fit.
This is also one of the best strategies for landing early customers and funding. You aren’t hard selling when talking to customers at this stage. You are just listening and trying to help. That will make all the difference in creating warm sales opportunities and easy conversions when you are ready to sell. Even more so when they feel some ownership and that they have been a part of collaborating on this. It was made just for them.
Some of these customers may even want to participate in funding you and the development of your products. That means capital and built in customers. Perhaps even locking in a future acquirer for a great exit.
Or you may just pick up a lot of pre-orders and revenue to create this.
Talking To Customers Before Creating A Product
Talking to customers before even trying to form a company is vital. Yet, you should also be specifically doing this when designing your initial product, your MVP, product roadmap, and the user experience. These are all core foundations that will support or fail you as you go.
Instead of spending months or years working on a product and features, hiring and spending on things that they don’t really care about, won’t help sell it, or they won’t want to pay enough for, you can talk to them and create a MVP which is curated for their priorities and profitability.
Done right, you will know that they will pay for it, how much they will pay, and how to create and optimize the whole service. Knowing how to talk to customers can get you valuable insights into product designs.
Connecting with customers is only one of the strategies to grow your company. For more ideas on how to gain traction for your business, check out this video I have created.
Talking To Customers Before Fundraising
As previously touched on, talking to customers is extremely important before trying to raise capital for your startup.
One of the biggest risks for investors is that there is really no commercially viable business there. As well as entrepreneurs wasting all of their money on things which don’t produce valuable assets.
Especially when it comes to early stage startup funding having talked to customers, to prove and clarify the problem is one of their top boxes to check, before writing a check.
Of course things change between rounds, and with new customers in new markets. Typically investors and acquirers will want to talk to your customers before closing too. Talking to them first, and having a good relationship in which they feel comfortable to share with you how they really feel can save a lot of embarrassments and awkward moments when investors get around to speaking with them during due diligence.
Ongoing Customer Service
Knowing how to talk to customers is a critical part of sustaining your business over time too.
Customer service is fast becoming one of the most valuable competitive advantages. Others can steal your business model and product ideas, and even try to compete on pricing. One easy way to stand out is with superior customer service. One of the best ways to achieve that is with how you talk to customers.
If you aren’t talking and listening to your best and most loyal customers you will soon implode your business. This is a fundamental law of the physics of business. No one is immune. No matter how big they are, how well funded they are, and how well connected and entrenched they are.
Talking and listening to your customers is far more impactful for retaining customers than the pricing or features you are promoting. In fact, many companies may want to rethink spending millions on advertising to try and attract new customers, when they are just bleeding those they already paid to acquire through poor customer service. It’s far cheaper and more profitable to keep those you’ve got, then to be constantly churning them. Investors will notice this too.
Before Launching New Products & Changing Features
Companies often seem to come up with some pretty far out there ideas from behind the scenes in closed offices, far detached from their customers. From the outside it sometimes seems like these decisions can only be made to purposefully implode the company and chase their best customers off to the competition.
That probably isn’t true in most cases. It is just that no one thought to communicate with their customers first, or listen to them.
If you have to make decisions like hiking pricing and stripping away service at the same time, it will go down a lot better if you at least speak with your customers about it and explain before making the announcement.
In fact, any time you are considering launching new products, or changing features it’s smart to consult your most valuable customers first. So, learn how to talk to customers.
Before An Exit
When it comes time to sell your company you will also want to spend time talking to your customers.
You may be limited on what you can and should convey. Though your acquirers will certainly want to speak to key customers during the due diligence phase on a M&A transaction.
Make sure your customers are happy and see the value in this transition and integration. Especially if you also need to be adjusting or renewing contracts during this period as well.
Knowing how to talk to customers, and doing it at the right times, in the right ways throughout your entrepreneurship journey can be the most important factor for any startup. It can give you a strong foundation for success, and keep on giving your startup a powerful competitive edge. Failing in this area can also cost you everything.
Know when you should be talking to them, how you should be conversing, and really appreciating the value of this can make you. Own this, and you’ll find everything much easier from gaining early sales, to product market fit, securing investors and capital, and achieving the best possible exit.
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