The best founders don't put off talking to customers. They instead prioritize talking to them over anything else. It's one of the most important jobs for a founder.
Some view talking to customers as something you do only in the early stages, but I believe they are just as important in later stages as they were in pre-product market fit.
A common misconception about PLG
Sometimes when talking to our prospects at Relate, I hear objections like this.
"We're not ready to sell (so, not ready to buy CRM) because our product isn't ready yet."
"Our go-to-market strategy is PLG(Product Led Growth)."
Whenever a B2B software startup comments like this, it sends a little chill down my spine.
In B2B, "build now, sell later" or "build, they'll come" don't exist.
"What about Figma? Notion? They were successful, after years of just building."
True. Figma achieved product market fit despite being in pure build mode for three years, and Notion is one of the fastest-growing PLG companies in history.
But these companies, Figma and Notion, are very unusual success stories in Silicon Valley. Far more companies have achieved Product Market Fit (PMF) and grown just as fast–or even faster–than Figma and Notion because they sold from day 1: Snowflake, ServiceTitan, DocuSign, Twilio, and all.
Retool —another fast-growing “PLG company” in Silicon Valley — is an excellent case study of why it’s risky to go with PLG at first.
David Hsu (CEO) talked about the common misconception about PLG:
“PLG before finding product-market fit is dangerous. Initial sign ups may not convert and you may not know why. Adjusting your product or market often requires direct customer engagement, which is sales.
PLG is more effective once you have substantial revenue and confirmed PMF. Early on, sales is crucial to understand PMF, as was the case with Retool.”
Paraphrased for conciseness. See full podcast interview.
Early conversations with customers should be sales conversations
Your early-stage user conversations should be sales conversations. There is room for user interviews but when you’re an early-stage startup, sales conversations are much better than general user interviews.
This is because, in sales conversations, money is involved. And when money is involved, people tend to be more direct. They are willing to pay $X for Y product.
When you’re early-stage, you should prioritize features with a clear path to revenue. And the best way to see that path is by involving money in the conversation.
We learned this the hard way – when we were working on a different product, the feedback we got from people was overwhelmingly positive yet we made close to zero dollars from it.
Why you should prioritize talking to customers
Why talk to customers? And why prioritize?
As a startup founder, you've undoubtedly heard the advice to talk to customers multiple times. Surprisingly, though, few founders have a regular dialogue with their customers. To truly understand their needs and pain points, you must meet with them in person (Zoom calls are fine, but they gotta be person to person) and attempt to sell your product.
Obtaining this knowledge is vital to refining your product/market fit and cannot be done through surveys or data analysis.
Things to watch out for when taking to users
There are two kinds of feedback. The first one is compliments and cheerful comments. The second one is something you can take action on. Hearing the first kind might feel good, but they don't help your business. When you hear the second kind, you can understand what the customer needs to get their job done.
We need to extract the direction of our business and product from customer conversations . That direction is fundamentally found in customer behavior patterns and the problems and solutions they understand and define in their own unique words.
When you talk to customers, you must listen carefully and make sure that you ask more than you talk. This is a common sales/user conversation mistake; to justify the meeting, you try to prove your value by describing it. But if the customer has already agreed to take a meeting — they already think the meeting has some value. It's your job to discover what led them to take this meeting.
So instead of talking, ask what their work lives are like, what they've tried to solve, the problems you're trying to solve, how much they're willing to pay for a solution, etc.
Talking to customers at different stages
Founders need to prioritize talking to customers, regardless of the stage they're in. But I suppose there are slightly different things you can get out of them at each stage.
In the ideation stage, your goal should be to learn about your business through the words and actions of your potential customers, more than selling.
Questions you can ask:
What's the hardest part about doing [x]?
- This question discovers the real problems your customers have.
When was the last time you faced this problem?
- This question helps you understand the problem through real-life examples that your customer faced.
Why did you find it challenging?
- Customers buy the why, not what or how. This question helps us find the right frame for our product/offering from the customer's perspective.
What solutions have you tried so far?
- This question helps you identify potential competitor, both competing products and patched-together workarounds.
What don't you like about your current solution?
- This question uncovers any features you might want to build as a way to differentiate.
What is the cost of the [x] problem?
- This question will give you a grip on the depth/size of the problem.
How often does this problem occur?
- Repeat occurrence is a good sign. If the problem occurs repeatedly, that means this is a problem worth solving.
How much budget is available (or do you think will be available) to solve this problem?
- This question aims to discover if there is serious interest or willingness to solve the problem from the customer. Even if the customer is willing to solve the problem, if they don't have the budget, it's unlikely to translate into sales (yet). Remember that the most stark difference between B2B and B2C is sales.
Post-launch means that you already have customers using the product. So you should tailor your questions to learn how customers perceive and understand your product.
Why do you use our product? (or, why did you choose our product?)
- Ask them the "why". Ask what problem they were trying to solve before onboarding and how your product solves it.
Why do you like our product?
- Ask why they "like" your product. If they are using your product over another competitor, it's probably because they like at least one thing about your product over the other. In most B2B SaaS markets, except for truly revolutionary ideas, you're almost always improving an existing solution. If the case, then figuring out why customers chose your product can help us envision our product roadmap.
What don't you like about our product?
- Asking customers what they don't like about using our product or what they find most challenging to do in the product to take action [x] can give you hints on why they churn.
- This will also give you guidance on new features or improvement ideas.
Achieve three great outcomes by asking these questions
1. A simple product with exciting new features
What we call a "product" is effectively a collection of features that work together. On their own, features don't mean much; it's only when they come together that they become a solution to a specific problem.
There may be features in your product that are less important or even unnecessary to solve that problem. However, they only add to the complexity of the product and hinder usability.
Asking these questions will be a starting point to simplifying the product and understanding which features will be exciting vs. another addition to the bloat.
2. Prevent churn and achieve high retention
What kills SaaS is often churn, not growth. To understand why customers churn, you'll need to closely examine what problems customers want to solve using our solution and why churned customers failed to solve them.
Once you understand the reasons for churn, you can create a concrete roadmap to fix things that cause them.
3. A strong market positioning
Even if you're pre-product market fit, if you have a customer, there's a reason that the customer is using your product. And this might not be something obvious. Even if you design the product to work in a particular way, customers might find another way to use it to solve their problems. It's your job as a founder to find this out. Once you know how customers are solving their problems with your product, you can use it to position your product in the market better.
In conclusion, talking to customers is a vital aspect of being a successful founder. Whether you're in the early stages of ideation or post-launch, engaging in sales conversations and actively listening to customers can provide invaluable insights.
By understanding their needs, pain points, and the solutions they seek, you can refine your product, prevent churn, and position your offering effectively in the market. So, prioritize customer conversations and harness the power of direct engagement to drive the growth and success of your startup.