Entrepreneurs, Avoid Offering Free Pilots at all Costs

“Oh yea, we lost the iPad on the second week and couldn’t test it out.”
“Sorry, we didn’t get a chance to install the integration because we had to put out a bunch of fires.”
“We used it a couple times…”

If you give away your technology to businesses under the guise of “beta” or “pilot”, you are guaranteed non-use. It WILL be a waste of your time. You CAN’T get that time back.

The first three months after a new technology hits the marketplace are critical. Every second your product is being used and tested by a customer is precious, with valuable learnings pouring into your database like VCs  to a hot startup’s party round. The only way to begin to collect this data is for the end user to care, and the only way to get them to care is to make them pay.

Every couple weeks I’ll get on the phone with a young startup looking for advice on how to get their brand new app into the marketplace. In the most typical case, they have spent the first three months live giving their product away to any business that has a heartbeat and agrees to test it out. These businesses feel like they’re doing you a favor and typically don’t give your “game-changing”  app the time of day. The driving force for success is getting them to open their checkbook.

 Start With Your Competitor’s Price

For guidance on pricing out of the gate, look at what your competitors are charging for their product. While there likely won’t be perfect comps because your product is differentiated in some way, you need to ascertain what your prospects are comfortable paying for a similar service.

 Go After Perfect Fits First

It’s so tempting to ‘spray and pray,’ spreading your product far and wide to anyone who says “sure, I’ll try it out!” You will spend more time troubleshooting your product with the worst fit clients and less time helping a select few succeed. Do your research and identify the companies that need your product the most, serve the right demographic customer, have the right management team in place to pull the trigger on a deal, absolutely need your product, and have the desire to be seen as innovators. If you can’t find a dozen customers who absolutely need your product, go back to the white board.

Price It Low to Start, but Make Them Feel the Pinch

Since I recently tied the knot, a bunch of my friends have asked me how much money they should spend on an engagement ring. Some websites will tell you 2-3 months gross salary, while contend net is the best way to go. My advice is to find a price point that hurts a little bit. Proposing is a huge life decision, and there is no better way to internally gauge your commitment and seriousness than making it a bit painful in the wallet. The same applies to business.

In your prospect meeting, they will inevitably ask who you’re working with already, and in the early days there will be few. For taking the leap of faith, you should give them a sizable discount and promise to grandfather them in when prices rise and new customers come on board. In exchange for the discount, ask to use their data for a case study. This give makes them feel special and appreciated, deepening your relationship with them. The case study request afterwards is an implicit signal to the client that you will bust your butt to make sure they’re satisfied.

Give Those First Clients Impeccable Customer Service

By hand-holding your first clients, you can turn them into cheerleaders. The easiest sale is the referral sale. Executives trust their friends in the industry, and you want to be the insider’s vendor choice. Be their Sherpa to gain their loyalty. The second reason to be involved in their use of your product is to gather valuable user data firsthand. Be present to listen to their delights, challenges, and struggles. This feedback will help refine your pitch and inform the development team which features to build next.

Expand Using the Respect Factor

With case studies in hand from happy, perfect fit customers, spread the gospel in your industry, widen your net, and attack the next concentric circle of good fits for your product. Use the first few clients as a benchmark that others in the industry respect. Wash, rinse, repeat.

Entrepreneurs, Avoid Offering Free Pilots at all Costs

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