Customer Service Information |
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Leverage Customer Capital First
If you're still dreaming about raising outside capital for your business before you have any paying customers, I've got a nice big bucket of ice water to throw on you. Wake up! The cold reality is that investors aren't interested in your business idea unless you can demonstrate that you've got customers who are actually willing to buy. Before you try raising outside capital, you should focus on building your Customer Capital. Customer capital is the value you create for your company and your idea by getting real customers to buy your product or service. Let's take a look at why customer capital is so important in the early stages of a business. Paying customers validate business models Even the most cynical investor will agree that a paying customer is the most powerful way to validate a business model. Anyone can debate whether or not your business will make money when it's still a bunch of wild ideas on a piece of paper, but few people can contest a steady stream of paying customers. Finding a handful of paying customers early on will provide a firm foundation for the future value of your company. In some cases it may be difficult to find a paying customer before a product or service is fully mature. In this case getting a formal commitment (a Letter of Intent) or a contingent purchase order based upon meeting a customer's conditions is a powerful first step. Either way, demonstrating that a customer is willing to say "yes" and write a check goes a long way toward validating your business idea. The value of a dollar earned A dollar earned from a customer is worth twenty raised from an investor. When raising capital you are really putting all that money to work so that in the end, the customer will pay for your product. A paying customer alleviates that risk and capital and gets straight to the foundation for why you are running a business to begin with - to make money. Not only does this offer a more direct impact on the value of your business, it also keeps you from diluting your equity position in your company. Netscape's $4 billion "blunder" Netscape Communications found an effective way to use customer capital in their heyday. In a time when software companies were judged on the strength of their sales, Netscape did the unthinkable - they actually gave away their software for free. While industry pundits laughed at their strategy Netscape ultimately had the last laugh. They quickly developed a market share in the Web browser market of over 90%, launched one of the most successful IPO's in history, and sold to AOL for nearly $4 billion, all based on the massive amounts of customer capital they raised. While I'm not advocating giving your product away for free, it's important to understand how Netscape leveraged their customer capital in a most ingenious way. Consider how much it would have cost them to bring a paid version of their product to market and drive customer acquisition that way. Now consider the cost to Netscape if another company had offered it for less (or for free!) or if they had not achieved market dominance at all. In the end Netscape's customer capital was so valuable that even after losing the browser wars to Microsoft's Internet Explorer they were still able to sell the company to AOL for $4 billion. Flip the script As you're building your business, consider every alternative to raising investment capital. If you're worried that a customer won't buy your product for reasons that more money or a larger customer base would cure, consider offering them a discount or other incentive to do business with you. The relative cost to acquire early customers might be nothing compared to the amount of time and equity it could cost you to raise outside capital. Remember that, unlike customers, your outside investors will demand equity for their investment, and they don't plan on giving it back! Send in the Investors If you've truly exhausted all possibilities to leverage your customer capital, then maybe it's time to call in the outside capital. Be certain, though, that if there's any angle you've overlooked to drive the company without needing capital, your investors will be quick to point it out and question your resourcefulness in the process. Forcing your attention toward acquiring customers will not only uncover ways to increase the value of your business in the short term, it can also generate the cash flow you need to alleviate your investment capital needs. Learn to leverage your customer capital and you can leave conversations with bankers and investors for your IPO! - Wil Wil Schroter is a serial entrepreneur, author, and public speaker. Wil has been recognized as U.S. Small Business Person of the Year, twice as the Ernst and Young Entrepreneur of the Year (1999 & 2004), and is a member of the Business First Top 40 under forty. Connect directly with Wil at wschroter@yahoo.com. Visit http://www.goBIGnetwork.com.
MORE RESOURCES: No, GPT-4o isn't going to kill teaching or customer service Business Insider NTTA customer service, Tarrant County district clerk spar over mistaken charge The Dallas Morning News For 13th Consecutive Year, Wolters Kluwer Customer Service Wins NorthFace ScoreBoard Awards Morningstar How did customer service get so bad? Financial Times Senate passes bill improving air safety and service for travelers, a day before FAA law expires The Associated Press Cognigy Named a Leader in 2024 “Conversational AI For Customer Service” Report The Bakersfield Californian What Consumers are Saying About AI and Customer Service Customer Think For 13th Consecutive Year, Wolters Kluwer Customer Service Wins NorthFace ScoreBoard Awards Business Wire When consumers would prefer a chatbot over a person The Ohio State University News CommBox Launches Connect Partner Programme, Offering Market-Leading Automation and AI Capabilities to ... Business Wire Frequently asked questions and customer service CSPI Newsroom Top Banks Offering 24/7 Customer Service in 2024 Business Insider Customer Service & Support Hillsborough County (.gov) Senate Passes FAA Bill on Air Safety and Customer Service – The Presidential Prayer Team The Presidential Prayer Team Playvox Brings New Integrated Workforce Management Solutions to Freshworks Customer Service Applications PR Newswire Verizon Down? Users Report Service Outage, Call Dropping | Ways To Troubleshoot And Customer Support Times Now Customer Service Rep Confronts Customer Committing Fraud With The Consequences Of Her Actions. – 'It's okay to do ... Twisted Sifter How to contact Amazon UK Customer Service About Amazon.co.uk Citizen First Customer Service City of Lynchburg Lee Michaels’ Scott Berg: How to make unhappy customers happy Greater Baton Rouge Business Report Air India rolls out iPad app for on board customer service Live From A Lounge At some point, construction gave up on customer service – but it's far from a lost cause New Civil Engineer Welcome to Riverside Public Utilities City of Riverside (.gov) Customer Assistance Programs DC Water Textron Aviation Unveils Expanded Global Parts Distribution Facility, Elevating Customer Service Yahoo Finance Genesys & ServiceNow join forces to revolutionise customer service ChannelLife Australia Senate passes bill improving air safety and service for travelers, a day before FAA law expires Chicago Tribune Contact SEA Customer Care portseattle.org Buccaneers Continue to Excel in Season Pass Member Customer Service Experience, Voted No. 1 for Sixth ... Buccaneers.com Ministry of Immigration aims to improve customer service following altercation at Western Border Breaking Belize News AI is replacing customer service jobs across the globe The Washington Post Customer Service Center - Recreation & Wellbeing University of California, Berkeley Delayed On Southwest? You Can Now Skip The Customer Service Line And Request A $75 Credit Online Forbes Social media customer service statistics to know in 2024 Sprout Social What Your Business Can Learn From Southwest Airlines Business.com Elefante Music and School for the Performing Arts Seeking Customer Service Representative - School Services TAPinto.net Best Customer Service 2024 Forbes CFPB Issues Guidance to Halt Large Banks from Charging Illegal Junk Fees for Basic Customer Service Consumer Financial Protection Bureau Utility Billing The City of Vancouver, WA Klarna says its AI assistant does the work of 700 people after it laid off 700 people - Fast Company Top Customer Service Programs for Small Businesses Business News Daily VodafoneZiggo unveils new Vodafone & Ziggo customer service app Telecompaper EN |
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