April 2, 2024

208. Honing Your Target Customer

208. Honing Your Target Customer
Apple Podcasts podcast player icon Spotify podcast player icon RSS Feed podcast player icon Amazon Music podcast player icon Castbox podcast player icon Castro podcast player icon Deezer podcast player icon Goodpods podcast player icon iHeartRadio podcast player icon Overcast podcast player icon PocketCasts podcast player icon TuneIn podcast player icon
Season 4

Text your thoughts directly to Rich.

Focusing on a well-defined target customer profile is crucial for rapid growth and investor confidence.

Follow more of Allyson's writing on VC Minute Substack: https://vcminute.substack.com/

About AVL Growth Partners
AVL Growth Partners, founded in 2009, is the leading fractional Finance and Accounting firm supporting organizations in pivoting from growth to scale. AVL brings an experienced team of CFOs, Controllers, and Accountants to your organization, delivering transparent, strategic actions for short and long-term success. Transform your financial approach affordably with AVL, supporting companies coast to coast - get to know AVL Growth Partners at avlgrowth.com. (Sponsored)

About SpringTime Ventures
SpringTime Ventures seeds high-growth startups in healthcare, fintech & insurtech, and logistics & supply chain. We look for founders with domain expertise, forging a path with a truly transformative technology. We only invest in software-based businesses in the USA. We bring a people-focused approach, work quickly, and reach conviction independently. Our initial check size is $600k. You can learn more about us and our approach.     

Transcript
WEBVTT

00:00:00.000 --> 00:00:02.939
I recently participated as a mentor for a startup accelerator.

00:00:03.209 --> 00:00:10.439
All of the companies were pre or early revenue and as mentors and you met with the founders back to back to brainstorm how they might overcome company challenges.

00:00:11.160 --> 00:00:15.839
The meetings were short and the goal wasn't to completely solve the problem, but point out potential blind spots.

00:00:15.839 --> 00:00:18.780
The founders might be missing in the day to day of running the business.

00:00:20.100 --> 00:00:26.879
Not surprisingly, the top issues for companies in the program were how to build the top of the sales funnel and, or convert customers quicker.

00:00:27.390 --> 00:00:37.079
While some of this was reflective of normal, early stage sales challenges, when probed deeper, it became clear a portion of this was a symptom of a target customer base that was just too broad.

00:00:37.700 --> 00:00:45.429
Few founders could clearly articulate exactly the type of customer they felt was most acutely experiencing the pain associated with the problem being solved.

00:00:46.450 --> 00:00:56.380
We've discussed how important specificity is in relation to the problem value prop, but my recent mentoring experience got me thinking about how important narrowing down the profile of the initial target customer is.

00:00:57.009 --> 00:01:00.250
It's not enough to say that the focus is on banks or hospitals.

00:01:00.700 --> 00:01:05.230
In the early days, it needs to be laser focused on the profile of those that are in the best position to buy.

00:01:06.129 --> 00:01:08.409
This is why customer discovery is so important.

00:01:08.590 --> 00:01:13.209
It's critical to understand who gets the problem being solved and feels the urgency to purchase today.

00:01:13.599 --> 00:01:16.329
Versus those that are going to need more time and proof points.

00:01:16.810 --> 00:01:23.109
That's not to say you shouldn't be talking to folks who fall in the latter category, but that you should understand how they fit into your go to market strategy.

00:01:24.040 --> 00:01:29.980
During diligence, a key area an investor has to get conviction on as the potential of a business to quickly scale.

00:01:30.540 --> 00:01:36.099
A founder needs to paint a picture of how the company starts with a segment of customers and ladders up to a larger opportunity.

00:01:36.760 --> 00:01:45.939
Successfully doing this shows an investor that the founder knows the market and their customers, both of which are essential traits that investors look for when evaluating founding teams.

00:01:46.540 --> 00:01:52.810
A big part of startup success as quickly validating or invalidating assumptions, they get the company one step closer to product market fit.

00:01:53.530 --> 00:02:03.700
Being very precise and customer discovery and effectively communicating your customer focus, instills confidence in investors that founders can lay the groundwork for scalable growth and build a fantastic business.