How Are You Acquiring Customers?

I know that “how are you acquiring customers?” is now part of a VC joke, but the question is no joke.

Across the companies I work with, there’s a very strong correlation between those that found a new twist on acquiring customers early on, with success in the business.  In contrast, those companies that ended up acquiring customers in more traditional ways (e.g. Google AdWords, display ads, etc.) have struggled much more and grown more slowly.

Taking this even further, I think differentiation for many companies resides not with the product idea itself, but with customer acquisition methods.  For the Web and mobile, ideas are plentiful, often easily copyable, and increasingly narrow (because it’s gotten so crowded).  With the ever-growing app/Web-site/messaging bombardment, it’s impossible to get new user attention.

This viewpoint is heresy for many product-oriented entrepreneurs, but I think it’s more right than wrong.  I frequently meet entrepreneurs that have 10 slides on product/service, but only 1 on customer acquisition.  That ratio of attention is completely backwards.

And taking this to the extreme, I’ll share advice I recently gave a friend.  He’s a very creative product guy, working on a bunch of new product ideas.   I suggested he invert things:  stop working on products, and start working on customer acquisition opportunities.  Then, figure out the apps that will engage those customers.

7 thoughts on “How Are You Acquiring Customers?

  1. Great blog post on a critical topic. I was talking with a sales guy I know and we both agreed that cold calling and emailing simply don’t work any more. The people making the buying decisions are inundated and cold calling makes them less likely to want to look at your product. We are in a market that seems to be taking off and get inquiries almost daily from people who find us through searching iTunes. We have about 25 apps there now so we are an established provider. But we are also about to publish a major white paper on Getting Mobilized for Meetings and Events. It takes people through the process of making smart decisions about implementing our product. It is written as an educational piece and is not at all promotional. We have partnered with the largest meeting planner group — 25,000 members — who will be doing the promotion and distribution. We hope that it is going to generate many leads.

  2. I would tell your friend to spend less time on ideas and more time building the product and bringing it to market 🙂

    I think focusing on creating and building the product is way more important than acquisitions plans or strategies. “Product first” has been the mantra with us and with many of our high growth companies in our portfolio (kik, twitter, tumblr, stack overflow, and others)

    Especially in the early days, spending time on acquisition plans when the product is morphing feels like a waste of calories to me.

  3. Thank you for your comments; you’re helping me clarify my thinking.

    I agree with you on product focus, but I think great product is “necessary but not sufficient” for success, esp. as things have gotten very crowded.

    I wrote this because my own experience is showing strong company success correlation with some early twist on customer acquisition. Many entrepreneurs wait too long to think about customer acquisition, and often acquisition goes hand in hand with product.

    Stack Overflow is a great example. Developers Google their problems all day long, and SO is all over the organic results. It’s a great acquisition story — that’s how everyone finds Stack Overflow! However, if we had taken SO’s initial product, and dropped it on a profession that did NOT have this dynamic, the story would be much different.

  4. Andy.

    It’s certainly true that SO gets a ton of Google traffic because that is a principle way users find the service.

    But they only get to that position on Google because the quality of the product is excellent. It was/is a crazy focus on product that got them the distribution they currently have.

    I think it’s true for our other consumer portfolio companies as well and others that I’ve seen up close but not in our portfolio like foursquare, instagram, etc. They were smart about distribution and using networks like Twitter but it only worked because they spent 100% of their time particuarly in hte early days on product.

  5. For years the mantra “have a great product and customers will beat a path to your door at any price”. I think there needs to be balance and great customers with bad product has no staying power. The same is true of the inverse. Cheaper, fast, better; pick two, is always in play. The same holds for your customers.

    Your point is that you cannot ignore where customers come from and how you bring them together with your product. This needs to get equal billing. I like that idea. But it needs emphasis not over stressing.

    A great product will succeed with an good customer acquisition strategy. A great customer acquisition strategy will counter balance a good product. For long term success both need to be in place.

  6. Hi Gang,

    Great discussion! I like to start out with a plan on how I will get my first 50, 100, 500 customers. Use of social media will help it go viral, as well as word of mouth.

  7. Great insight Andrew. As a product focused entrepreneur I agree 100% – once you have that perfect product you’re usually way behind in figuring out how to get the right folks to use it and it’s usually a catchup process. Flipping it upside down gives you a better perspective to not only focus on the customers but also assure that your product is focused on them in a way that fits a viable acquisition model. I’ve failed to use this approach in my past startups with the expected results but am now using this type of approach on my latest efforts. I would definitely like to share for advice and feedback.

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