Out of all of the questions I’ve asked founders and executives to get them to talk about the goals of their business, one seems to get people thinking about the kinds of concerns I wanted to discuss better than any other.
Here it is:
How many customers do you want?
At first this might seem like a silly question. Who doesn’t want a lot of customers, right? Wrong! I didn’t ask “how much revenue do you want” (though it’s also wrong to assume that every company is interested in making billions of dollars), I asked “How many customers do you want?” What’s great about this question is that to answer it, you have to have a lot of other questions answered first. Here are just a few:
Will you sell to startups or enterprises?
Will your software be available for self-service purchase?
How much money on average will your customers pay you?
How will you reach potential customers?
Who is your target buyer within your target company?
How much money will your customer pay you initially?
How much money will your customer pay you over the lifetime of their engagement with you?
And many, many more. My position here is based on the belief, espoused by folks like Hardie and Fader, that Customer Lifetime Value is the key to understanding your business, especially in a contractual sales setting. Everything flows from how much your customers will pay you.
If you’re trying to figure out go to market, or how your idea or product can become a company, ask yourself this question, and force yourself to answer the other questions it poses.