How to Find Your Ideal Customers

How do you find your ideal customers? Surprisingly, this is a challenge that many founders have because they start off with a huge vision and need to break it down. That means finding a market that’s serviceable and available in order to break down the big vision into what is actually achievable right now.

Dominate a small market first

It’s important for all founders to understand that the startups that are growing the fastest are not actually targeting the biggest market in one go. They're the ones that identify key initial niches that are more likely to sign up for the products of the startup than the mass market. It’s only over time that they start to get better at building their brand, gaining notoriety, improving customer loyalty, and building a go-to-market team that can help them tackle the bigger market.

Technology scales, go-to-market doesn't

The one thing that many startup founders realize, especially when they have a technological background, is their thinking is scalable. In most cases, a startup’s technology could be used for all kinds of segments. But what they learn over time is that technology scales but the go-to-market doesn't. Even with a large total accessible market, it's always best to first focus on one serviceable and obtainable niche. This helps to give a startup initial credibility and initial fans. Once that first niche has been established, it’s possible to grow from there.

What benefits are customers looking for

The key question that founders should ask themselves is what benefits customers want. Also, what customers have the biggest pain point that your startup can help to solve. Trevor Lain of LexAlign is a great example of a founder who went through this process. Trevor knew what his product offered but didn’t initially understand the pain point of customers or what features would push customers to sign up. Almost every product or service goes through this process, even the iPhone. When the iPhone first came out, it didn’t have mass appeal the way it does today. There were certain customer segments that gravitated toward the iPhone much faster. But over time, it found mass appeal.

Niche down to grow with more power

Aayush Jain of Green Deck experienced this process first hand. Green Deck could help a variety of retailers but chose to focus on online fashion retailers because they had to make hundreds or thousands of decisions about pricing. Naturally, one fear that many founders experience, including Aayush, was narrowing down too much. However, when you focus on a particular niche, it’s easier to become the only game in town for those customers. In a way, this is what can empower a startup to become successful.

Finding underserved segments

Even if the market appears crowded, it’s possible to find a segment that’s been overlooked or is currently underserved. For instance, Forecast out of Denmark is one of many project management software companies. But co-founder and CEO Dennis Kayser saw that there was an opening in the market for companies that focus on more complex needs, which is what became Forecast’s focus.

Go big or small - not both

Another key question for founders is whether to go big or go small. For example, should a startup in the B2B space focus on SMBs or large enterprise clients. Of course, there are a variety of factors that will go into that decision. But above all, it’s important to not attempt to serve both, which can be a recipe for disaster for a startup. In one instance, Fredrik Thomassen, the CEO of Superside, recognized that their use case was best for large customers. On the other hand, Niels Martin Brochner of Contractbook recognized that large enterprises would have a long sales cycle with his startup, so in the time it took to land one big client, Contrabook could have sold to thousands of SMBs that were being underserved. In some cases, it’s about being able to recognize where you can help people the most.

Embracing customers' view

Finally, founders need to recognize that customers may have a different view of their company than they do. Sebastiano Bertani of Tanaza realized that customers saw his startup in a different way than he initially envisioned. When he embraced the vision that customers had, Tanaza started to find early adopters. Ultimately, finding your ideal customer is about honing in on the niche that your startup can best serve in the short term. If you can’t do that, sustaining success long term will be next to impossible. If you find that niche, you will find your fans and early adopters. They will become the champions for your startup, enabling you to solidify your standing with that niche and expand from there to new markets.

Roland Siebelink talks all things tech startup and bring you interviews with tech cofounders across the world.