Get Customers Before You Build the Product

May 17, 2010 – 6:00 pm | by Matt Ackerson
action shot

One of my current clients for Blue Sky Local

If you’ve tried to build one or more businesses, this technique may be useful to you. It may seem counter intuitive to some but it is absolutely the best way to de-risk any start-up business model, but especially web-based business models.

If I could go back and do each of my business ventures over, this is the one thing I would do differently: I would get customers on board (ready to pay or paying upfront) first.

This is because, in part, if you build the product first and sell it to customer second, you’re likely to make more mistakes since the customer (the end-user) is not engaged in the development, thus it is less likely that what is built will meet all of his or her needs. A customer who is on board and paying from the start has a vested interest in making sure your product meets his or her needs.

For example, say I was interested in launching a Groupon copy-cat website for Long Island, NY. With this business model I would talk with local business owners and get at least a few dozen of them on board. To do this I might have to prepare a little slide show presentation (but building the entire service first is NOT essential!).

Simultaneously I would tell friends, family, and strangers through various online and offline means about the concept and convince them to hand over their email address for great deals. After I’d reached a sufficient number of signups for both businesses and customers, THEN I would build the web product and launch because at that point I would know almost certainly that I would be making money right out of the gate.

What if you cannot get customers on board in advance? Then don’t build the business. It’s that simple.

There may be some skeptics out there who might reply to this by paraphrasing what Steve Jobs said, which is sometimes the customer doesn’t know what he or she wants until you build the damn thing and give it to them to try. This is true to an extent, so there will always be some sort of up front investment but it in most cases it will not require that you exceed the scope of creating some design mockups or a short power point (as in the example above).

Businesses fail because they fail to make sales. They fail to make sales because there’s no market for their product.

Sell first, not second.

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  1. 2 Responses to “Get Customers Before You Build the Product”

  2. By Ed on May 18, 2010 | Reply

    Matt,

    This is a great business strategy (although in some models it is not possible). A friend of mine started a consumer product business. He designed the product and figured out how much it would cost him to have the product manufactured in China. Then he went around finding costumers. He got retailers such as bed bath and beyond, walgreens, and others to buy from him before he gave the green light to the manufacturers.

    Very little risk since he had already sold what he was importing.

  3. By Matt Ackerson on May 18, 2010 | Reply

    That’s an awesome example of what I’m talking about, thanks Ed!

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