<< Back to Chapter 4: From Idea to Building a Minimum Viable Product
Getting your first customers can be really challenging. I’ve spoken to a lot of entrepreneurs who thought of and built a first version of a SaaS product that seemed like a great solution for a certain niche, but they just couldn’t get that initial traction with customers.
From my research I have found a few common strategies that have worked. Most fall into the category of things that don’t scale. Some require that you do many months of preparatory work before you build the app.
In Chapter 2 I point out that knowing how will you find your first 25 customers is part of finding a good business idea. If you truly have no idea, you probably shouldn’t build the product. However you may also find it makes sense to work backwards from a group of customers to a business idea.
For example you might find that roofing companies are extremely easy to find: they advertise their contact info in business directories and you could easily meet 10 roofers per day just by hanging out in the right section of a hardware store. Now you know that if you had a SaaS product for them, it would be very easy to find the first 25 customers and beyond.
Keep working from both directions to refine or reject ideas, both working backwards from target markets of customers and working to find customers for certain ideas that otherwise seem valid.
In my experience, successful Micro-SaaS businesses consistently use one of the following strategies for acquiring their first customers.
Become a consultant
Storemapper’s first five customers came from a single email blast. Over nine months of freelancing for e-commerce clients I kept a spreadsheet of every client email, even for gigs that I didn’t end up winning. On launch day I emailed the list of about 30-40 targeted people and within two days there were five paying customers.
Consulting for e-commerce businesses was a fantastic way to learn about exactly what kind of products they needed, their willingness to pay for solutions and where the pain points where strongest. The real upside that you are getting paid the whole time. If you find yourself getting hired repeatedly for a similar job, you may be able to just “refactor” that job into a SaaS app that can scale.
Consulting-first also necessarily forces you to focus on a lucrative target market. If the businesses aren’t hiring consultants or freelancers to solve problems, odds are they will be tough customers for SaaS.
Forums and IRL conferences
Consulting in e-commerce gave me a big advantage in generating business ideas but it didn’t prove that many actual customers.
The immediate next phase for Storemapper was to find places where e-commerce merchants were looking for answers to stuff. Most of the big e-commerce platforms like Shopify, Bigcommerce, Volusion and WooCommerce have forums. So I searched the forums and tried to be helpful. Of course I jumped to the few topics specifically around store locators, but I also looked for popular threads on topics with lots of activity from merchants just setting up a new site (or migrating from another platform) — prime timing to choose a store locator app — and just added helpful comments. I would let my forum “signature” with a link to Storemapper do the marketing.
The generalized tactic is to find where your target market clusters and be there. This could be online in forums or the comments sections of an industry blog or in real life at meetups or conferences.
Aggregator sites and blogs
Hopefully your target market congregates somewhere online. If it’s software for developers, then you’re looking at Hackers News, Product Hunt and Reddit. Maybe there are niche blogs that cover the topic. Become a member, be helpful and without spamming folks, politely point them towards your app when it’s a relevant solution. If you’re knowledgeable on the broader topic, it can be helpful to invest some time answering questions not directly tied to your app to build credibility and not come off as a spammer.
Several successful Micro-SaaS businesses have been started by “blowing up” on certain popular sites. But it wasn’t just pure luck that they hit number one on hackernews or reddit. They had often spent years being helpful and cultivating the respect of the community that then responded when they finally launched a product.
Business directories (or hit the streets)
It will be easier to find customers in certain B2B markets than others. If you sell to plumbers, real estate agents, or attorneys you can just search any online business directory and put together a huge list of leads. Look through Yelp, Craigslist and Google local listings for local businesses. Give them a call and ask if that have any pain points in their business and politely introduce your software product.
A variation of this is if you can find your customer type by just walking around. Build an app for ice cream parlors, bodegas or drug stores and you can find customers by just strolling around your city and chatting with the owner. Bring a laptop, sign them up for a free trail and walk them through the setup process on the spot.
If your target customer business doesn’t have a storefront, a little bit of research will still almost always turn up a directory website.
Steal business from jobs boards and freelancer sites
If your Micro-SaaS replaces a job that your customers would typically hire a freelancer or consultant for — great fodder for business ideas — then jobs boards can be a fantastic place to find new customers. Setup a regular process to search for job postings on every site you can find and tell job posters they can “hire” your app instead.
I knew several of my freelance clients had been interested in hiring me to build a store locator so I figured that was probably happening elsewhere. I had previously used just one or two sites like oDesk and Elance (both of which are now Upwork.com), but now I created accounts on every one I could find. I would trawl the sites for jobs that included a store locator in the requirements, “apply” for the job and pitch them on using Storemapper instead.
While I was freelancing I discovered that two of the major programming freelance sites let you create an RSS feed for new jobs that matched certain search terms. So I made a feed for any new jobs that contained “store locator” and used IFTTT to trigger an email to me with the link. I’d quickly confirm it made sense, then paste in a standard pitch to the effect of “I don’t want to do this job but you should use my app for this part of the gig” totaling about 30 seconds are work with a pretty high success rate of getting new customers.
Ride the wave
Sometimes you can get bigger platforms to bring your first customers to you. In Chapter 3, I mentioned that a good way to find good Micro-SaaS ideas is to look at fast growing platforms and find an unmet need. You want the need to be large enough that a decent percentage of the platform’s users want it, but not so large that the platform itself is likely to build the solution themselves. If you hit that sweet spot, you may find that the people behind the platform will refer customers to you.
Justin Jackson calls this catching the big wave. Catching the big wave is all about timing. When I launched Storemapper in the Shopify app store, it was the only store locator solution. So we’d get all the app store searches, all the recommendations from customer support and all the discussion forum searches. Shopify was really blowing up at that time and we caught the big wave. These days the Shopify app store is quite saturated and even has quite a few copy-cat store locator apps. The big wave is likely over for Shopify. Since I’d like this chapter to stay relevant for more than a few months I won’t make a suggestion for where the big wave is right now, but it is a strategy worth remembering. If you initially built your SaaS as a standalone, rather than directly integrated to a platform, it may be worth some development time to build an integration with a growing platform if you think it will help you ride the wave.
The Parallel Track: Build the audience
The best and hardest method of acquiring your first customers is to carefully cultivate an audience over time, gain their trust, learn their pain points and build product for them. When you deconstruct a successful Micro-SaaS business you often find that they got their first customers through this kind of path. The downside to this approach is fairly obvious, it takes a lot of time and energy to produce content, interact with and cultivate an audience. You have to invest all that time before launching the product and learning if people will really pay for it. The upside is that if the product is good, getting your first customers will be smooth sailing.
Essentially this is a parallel track running through all of the previous chapters on finding a good business idea, building the first product and acquiring your first customers. You can build an audience on a reasonably broad topic, find out from that community what kind of product they need, build and launch it to that audience. In this track you can spend considerably more time on the first version of the product and you can also be a little less niche since you already have a good batch of initial customers.
Most of the tactics and criteria I have laid out can be relatively mixed and matched. But this strategy can’t really be remixed. The type of business, the target market, the way you validate it and they way you build and launch it all need to be dialed in for it to work (or to be worth the time and effort).
Also, this whole workflow does not work for a large number of businesses that might otherwise be good Micro-SaaS. Nobody would have read a blog about store locators. Building an audience around the idea of making e-commerce apps would not have brought the right audience: my actual potential customers are e-commerce shop owners, not developers.
I actually don’t recommend this approach for first-time Micro-SaaS entrepreneurs. Even though it is one of the more successful ways to launch and get your first customers, if the product fails you’ve invested far more time and energy to get to this point. It’s also much more difficult to ditch a business if you have an audience following your every move. It seems to take most entrepreneurs several attempts to find a Micro-SaaS business that really works so I would recommend targeting a niche, building a quick MVP and using one of the above strategies to find your first customers.
How NOT to get your first customers
There are a number of well-known customer acquisition channels that I think are particularly bad for early stage Micro-SaaS businesses. Here are the general things you want to avoid.
Any cost per acquisition: VC-funded SaaS companies are almost always cashflow negative. The wonderful magic of big, funded SaaS is that you can spend $100 to bring on a customer who pays $20 per month, and as long as you know that customer will stay around for a year or so, you are generating value for the company. But this cashflow formula means the more customers you add and the faster you add them, the more money you lose each month. This situation can be lethal to a bootstrapped business. Unless you have easy access to capital at generous terms and/or are very experienced with paid acquisition I would avoid any channel that has a discrete cost per acquired customer.
Compete with funded startups: I would avoid entirely almost any channel that involves bidding against or any degree of competition with funded startups. This is just not a fight you can win as a bootstrapper.
Heavy time investment: At the beginning of this chapter I argued for doing things that don’t scale. You shouldn’t be too stingy with your time in the early stages of acquiring customers. I strongly advocate channels where you can invest a little bit of time, get a new customer, and repeat. However I really recommend avoiding channels that have a big investment of time up front to get up and running. Do not underestimate the amount of upfront time it takes to negotiate an affiliate deal or set up a retargeting campaign. These kinds of things can turn into huge de-motivating black holes of time that end up distracting you from your real goals.
Un-vetted signups: In general you should be able to confirm that the type of customers coming in through a channel are in fact a good sample of people who should be interested in your product. This is why certain forums and directories are great sources. Channels that bring in a random slice of people on the internet should be avoided. You don’t want to flood your app (and support queue) with unqualified customers who are just poking around who will waste your time and then not sign up for a paid plan.
Some specific comments on a few common channels to avoid:
Adwords, Facebook ads, etc
For all the reasons above this is probably the worst possible way to get your first customers. It costs per customer. You are competing directly with every single company in the space, most of which probably have much larger budgets than you and vastly more experience bidding. There is also a pretty substantial overhead cost of time or money to get even a half-decent campaign up and running.
I am not a big fan of SEO as a customer acquisition strategy. Partly this is because I just don’t fully understand it and I don’t feel like my bullshit radar is very well calibrated when dealing with SEO tips, tricks and consultants. If you are already an experience SEO ninja, great, ignore me. If you would be reliant on how-to articles or consultants to boost your SEO ranking I really advise against it as a way to get your first customers. First it’s a black box and an extremely vulnerable position if Google changes their algorithm. Second, it’s just so passive that you have no idea what kind of traffic you are driving to your site. You may boost your ranking for certain search terms but you really don’t have any idea who the people are that are searching and clicking to your site. I much rather cold call people I know are potential customers than sit there and try to divine whether or not this traffic is at all relevant to my product from Google Analytics.
Affiliate deals and partnerships
These can really seem like a great deal at first pass but I would strongly encourage you to avoid them. First, don’t fall for the survivorship bias. You may hear from a fellow entrepreneur about the amazingly successful AppSumo deal they ran last month. But nobody (except I guess me) is going to shout from the rooftops about all the affiliate deals they spent dozens of hours emailing, calling, negotiating that turned out to be a total waste of time. On top of the massive time overhead to set most of these things in motion, they are not repeatable and can also flood you with support requests.
If you’re looking for more tactics for acquiring customers, Gabriel Weinberg, the founder of Duck Duck Go, has put together an epic manual in Traction. Keep in mind that the book is aimed a little more at the funded startup scene, but there is a mountain of actionable advice in there.
Adii Pienaar, one of the founders of WooThemes and now Receiptful, has a great ebook and podcast aptly named Your First Customers, also a great resource.
Next Chapter 6: Thriving in the Long, Slow, Grind >>