Discussing customers with potential investors gives you an edge. When you’re trying to impress investors, be proactive and bring up customers into the conversation. Don’t wait for them to open up the topic.
To investors, and everyone, having customers is the ultimate positive signal for your business model. If your customers are gaining value and willing to pay for your services, what else could early investors ask for?!
With that said, here are three major tips to consider in order to discuss customers and demand for your product.
Tip #1: Communicate with Users
Talking to users frequently should be practiced at all times. It doesn’t matter if you’re fundraising or not.
When Airbnb first launched, they tested the concept of renting their own floor. This gave them the chance to talk to their first customers and even stay with them under the same roof.
When you’re around your customers most of the time, you stick with reality and tear down old assumptions formed at a cold office. You gather new information, gain new feedback, and form stories.
Consequently, you become automatically ready to talk to investors about your customers. Instead of providing cold numbers, you can show more intimate details that prove your understanding of the customers’ needs.
Try to gain customer feedback at every step of your process. If you’re running a SaaS company, listen to their feedback from signing up to actually using your service. Form as many stories as you can.
Tip #2: Get Testimonials
Do you have happy customers? Great, reach out to them and ask for testimonials.
Having testimonials solidifies your stance with investors. Show them that you have happy customers who are willing to write a few sentences in favor of your service.
This is especially crucial in the B2B space. In B2B, every customer matters. Sometimes the market is too small that you can name every potential customer in a small list. Investors too may be familiar with the companies who gave you testimonials. Together, these two factors increase the investor’s confidence in your startup.
Tip #3: Know your Customer Metrics
Defining, measuring, and tracking your customer metrics is essential to most investors. If you do have customers, investors would want to dive into the numbers.
Define the customer metrics that suit your startup. Is your main KPI bookings, active users, GMV, or another metric? Avoid the metrics that magnify the number of your users with no added value. For instance, showing only the number of sign-ups is usually perceived as a red flag that you have very few actual users.
Also, try to define the cost per customer acquired (CAC). This provides investors with a sense of the expected profitability from your business model.
Having clear metrics for your customers and the cost of acquiring them shows investors that you did your homework and have a clear vision of how to run the startup to success. By showing them the numbers, it becomes easier to get them in your shoes and see the potential value of your venture.