The Customer
The 5th ingredient is the customer
Key Questions:
- How much do you know what will trigger your customer to buy what you have got?
- How often will they buy and with what regularity?
- How many are there?
- What is the probability that their behaviour will pan out the way in which you say?
If you can come up with evidence of how this customer behaves when offered your product then you are on the right track. But of course you might be a first mover in this market, where there is no evidence. In the absence direct evidence, it gets riskier for you and the investor. That is the risk reward “balance” might be in tact, but the absolute level of risk may just be too high for their risk profile. In other words the first mover has the opportunity to land grab and secure market share ahead of late comers, but given the experimental nature of being first to market, perhaps based only on research, the risk of it going nowhere is higher.
The long and short of it is you are making statements about your customer that range from being an assumption to being fact. The longer you have been in business, and have observed first-hand what your customer wants and does, the more factual it is, and the less the need for you to draw on research, other company’s or other countries experiences in support. If you cannot provide either trading experience or otherwise qualifying supporting evidence, then your statement constitutes just a guess – to be avoided if you want investors to buy into your venture.
In summary having stated what your customer is expected to do and how it will drive your business outcomes, will the investor believe what you have to say about your customer?
