I wrote a similar post to this a few months ago and as we learn and grow at Power2Switch I’ve seen a need to add some more of what we’ve learned. Enjoy.

Chilean apples in Iceland

Companies that do not provide what customers want die. Fact. And they die very quickly too.

I’ll go further and add that companies (most especially startups) that do not have crystal clarity on who their customers are will die even quicker. Clarity to the point of imagining this client, giving the client a ‘name’ and characteristics and figuring out how the client will interact with your product/service. It helps you clarify what your product/service is, how much these customer are willing to pay and where/how you will sell to them. It even gives the customer comfort knowing that you have them in mind when you start to sell to them. Only then, especially in today’s hypercompetitive market, will the customer buy from you.

We’ve got this wrong several times on this journey called Power2Switch. I’ll use an example from a few months ago and suggest a process for thinking about your defining your customer. At Power2Switch we provide electricity cost reduction and usage management to small businesses in Illinois. Our typical customer has below about 60KW peak demand (your typical Potbellys/Jimmy John’s location).  One day we got ‘lucky’ and landed a customer the size of the Trump tower (over 700KW peak). This client was going to septuple our revenues!!! So we did what every self-respecting bootstrapped startup team would do – we dropped everything and started pitching the client.

We neglected the small clients who require about 20mins of our time and stopped tweaking our product to better serve these clients. We spent hours and hours creating pretty presentations/going for drinks/waiting in fancy lobbies/redoing the fancy presentations to sign up this huge client. It took over 2 months. And then the client said NO.

They realized they could use an in-house energy management team because the savings we projected could pay ‘experts’. We’d lost the connection with our real market segment. And we only had some fancy presentations to show for it. We now knew not to play in that segment trying to attract that size of business. And we’d expended the little capital we had. So we tucked our tails between our legs, hunkered down in the Polsky Center and went back to developing a product that solves our market segments’ energy issues. We’re better serving this segment now and still learning/improving our product. For the small business segment.

So how do you go about figuring out who your client is without wasting as much time as we did? It’s actually about keeping it simple. Simplicity with a lot of a lot of thought and interaction with the customer segment:

  1. You must be very clear what your minimum viable product/service is e.g. we think we want to sell apples
  2. You pick a market segment that you know needs apples e.g. we want to sell apples to expectant mothers
  3. You decide on a price point once you’ve asked and now know what the real pain is for these expectant mothers (they want to eat healthy for their babies) e.g. we sell expensive organic apples to expectant mothers
  4. You then find where a lot of expectant mothers who can afford expensive organic apples shop e.g. We sell expensive organic apples to expectant mothers from our street stall right outside of Nordstrom

Any experiences of this sort? Any additional thoughts on the 4 steps?

Photo Credit: Futureatlas (

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