This post was originally published in 2015 – updated Aug 2021.
When you’re starting a new company or product, there are two wrong answers to the question “Who’s your target customer?”
One is “everyone.”
The other is “we’re not sure.”
What’s the benefit of picking an early target customer now?
You’ve identified a problem that a lot of people have, and you’re exploring solutions. Why limit yourself to one perspective? Wouldn’t it be faster to build something quickly, and then see which type of potential customer responds?
It is sometimes faster to build first! And you’re trading speed of execution for speed of learning. In some situations, that’s the right trade-off, but not as often as you’d think. We tend to build too generic, and we overbuild.
Here’s what happens when you pick a target customer:
- Focus allows you to quickly learn about their behaviors and their Jobs to be Done.
- When you interview 5 or 8 or 12 customers within the same segment, you quickly spot the patterns in what they’re saying.
- Looking at the ways in which they don’t fit can give you a clue to which different customer segment might be better.
If you hear 5 “well, I don’t think I’d use it but maybe someone would” in a row, you can feel confident that you don’t have a fit and move to the next customer segment. If you’re talking to multiple types of customers, you’ll hear conflicting stories that make it harder to confidently move forward.
Customer development is about risk reduction and helping you make smarter bets, faster. There’s no glory in picking the right customer on the first try. Read the early stories of any now-successful startup – many of them cycled through several potential customer types until they found the ones who stoked their growth.
Who should my early target customer be?
These are the three vectors that you should balance. The answer isn’t the perfect center of the Venn diagram — it’s your job to figure out the right balance of these three vectors. But this is a good way to start thinking about your specific problem and the audience you’re (probably) solving it for.
(Eventual) Market Size: Your early customer base is not your total customer base. It’s okay to start with a niche market, and also — look for niches that have a natural connection to wider audiences. For example, the OXO vegetable peeler was designed to accommodate arthritis – and also, everyone else finds them more comfortable to use.
Severity of Pain: You’ve heard the saying “build a painkiller, not a vitamin”, I’m sure. So it’s worth thinking a bit about how you’d quantify pain for the possible target customers you have. If your product saves one potential audience money, but it saves another potential audience from legal risk (being sued costs money and creates stress and bad PR), that’s a consideration.
It’s also important to realize that sometimes, the customer with the most severe pain is NOT the best first market to tackle, because:
Ability to Change: is highly variable for different types of people and environments. Some potential customers are bound by financial regulations or laws, or inflexible financial budgets. Potential customers in healthcare, finance, or education, in particular, may have a pain, realize it, and desperately want to solve it, but have severe limitations on what they are able to change.
Subset: Try to find an early customer where the buyer and the user are the same person. When you have to convince two different stakeholders, you’re doubling the amount of customer development work you need to do. It’s not impossible; it is harder.
Or, limited ability to change doesn’t have to involve laws or rules. It could simply be that some conservative customer bases prefer to take a wait-and-see approach — even when their pains are great.
How can I expand beyond my early target customer?
First, make your early target customer happy. Make their life easier. Share ideas with them, let them preview early mockups or features. This helps you make more-informed product decisions and more importantly, it builds fans. Fans want to spread the word about the things they enjoy.
Your early customer superfans will talk about your product to their friends or peers who are similar to them, and that is often how you discover the next adjacent market. You’ll see signups or sales to people who start asking for a slightly different flavor of changes or feature requests. Looking at support tickets or usage patterns can often help you make a guess at the type of customer who is starting to gravitate towards you. Then it’s time for another, shorter cycle of customer development – talk to these new customers to discover how they’re behaving, what they need to solve, and their constraints and motivations. Compare their needs with your overall product vision and business model – are they aligned? Does it make sense to build in their direction?