#FIWAREPamplona - Training Day - Gaining and retaining customers
Address to Entrepreneurs at the Finodex Project’s FIWARE-Roadshow 2 September 2016 in Pamplona
Gaining and retaining customers
GETTING A CUSTOMER
Customers are the entrepreneurs’ most important persons. In the long run, it is the customers who must
pay for what you do. So let us first define what a customer is:
A customer is a person who has a need or a problem I can remedy with my solution which the customer is ready to
pay a price for that will give me a profit.
Perhaps you have been in contact with customer prospect from start, and perhaps they have helped you
developing your prototype. But very often, an entrepreneur invents a solution before he or she has a
customer who will buy it. If so, there can be a long way from having no relation to a customer until you
meet a customer face to face:
In order to get customers, you must generate leads. In retail, lead boxes are a popular instrument for doing
this. You’ll find them in supermarkets at the check-out where many people see them. There is a clear
message on the box about the offer (for instance “Do you want to lose 5 kilos in two weeks?”), and there
are slips of paper you can write your contact information on and post in the box. The posted slips are leads,
the lead box now contains the names of people who are interested in your offer, and you can contact them.
Instead of lead boxes, which are not relevant for most of you because of the nature of your solutions, you
Arouse curiosity with teasers and appetizers on email and/or social media
Get the prospects’ contact info
Build a customer database
Be aware that you need to contact customers every day
Set goals for number of leads per week/month. Follow up on all leads quickly – leads are
perishables (”fresh food”).
As a management consultant, whenever I was in the office, I spent at least an hour, for instance 9-10 am
on calling prospects or on following up on customers I had already had been in contact with.
Fig. Lead box
It can be burdensome to get meetings with customer prospects, and therefore perhaps tempting to let
someone else do the hard work for you. But don’t hire meeting bookers! Do it yourself. Meeting bookers
require approx. 100 euros per meeting they book for you. Furthermore, although they may have
understood your business and your product, don’t expect to turn more than 5% of these meetings into
contracts. Meeting bookers are good at persuading, so the customer prospects will often say yes to a
meeting, because he/she feels pressured, not because of genuine interest.
When you participate in fairs, make sure that your booth shows activity so that it attracts visitors. Perhaps
your prototype can be working, perhaps you can show a video. Attract people through activity.
Your website should also be interesting to visit, and there should be news every week. Make the website
interactive, e.g. communicate with your costumers on a blog. (See problogger.net for advice about how to
build a blog).
Make a strategy for getting customers, based on the nature of your solution, the strength of your
competitors and the behavior of your customers. Consider whether you compete on price or quality or
both. Decide, whether your customers need a demonstration of your products, or whether referrals are
more relevant or just enogh.
Fig. Considerations about marketing and sales
Your first customer is your source of wisdom and a friend. He or she:
1. Shares her/his problems, fears, hopes, worries and pain with you
2. Makes you understand the value of your solution (time and money saved, new business opportunities)
3. Gives you feedback and so helps you develop your prototype
4. Becomes your first reference and ambassador
5. Reveals how he/she prefers to communicate with suppliers and customers (mail, website, social media,
6. Knows of other customer prospects and possible partners
7. Deserves reward in the form of a lot of attention, service, discounts.
Your target group is also the target group of others. In order to reduce marketing costs and to get deeper
insight in the target groups, you might consider teaming up with a partner:
Your product is not for all. Probably, you have a number of target groups, perhaps 2-3, not only one. Let me
give you an example: let us say, I want to sell a new app-based method through which all children can learn
to read, including dyslectics. Children without reading difficulties will learn to read in half the normal time.
The children, however, are not my target group, because they are not going to pay. Their parents are.
These parents can be subdivided into three groups: 1) Ambitious parents, who want their child to excel and
read earlier than most others. 2) Parents of children with reading difficulties who want immediate action in
order to get their child on track and catch up. 3) Disappointed parents who, to begin with, have trusted the
primary schools to help the child and ask me to help now. The number of members (parents) in each group
can be calculated. You then can assume that 10% in each target group will buy. And knowing that parents
spend a lot of money on their children, you can set the price reasonably high, for instance 15 euro per app.
So, returning to your own business, define your three (or more) target groups:
Customer segment 1: Definition and number of members
Customer segment 2: Definition and number of members
Customer segment 3: Definition and number of members
Then quantify each segment and set a price, which reflects the value for the customer and makes you earn
a satisfactory profit. In a five-year perspective, you must have a revenue which can pay for your own work,
your employees’ work and for the further development of your product.
For each segment, answer the questions below:
One thing is to prepare a strategy for approaching customers, another is to overcome possible personal
psychological inhibitors. You may be your own enemy in this respect, if you avoid direct customer contact
under all kinds of pretexts:
In the same vein, you should know not only yourself and your tendency to procrastinate and avoid action,
but also learn about some of the findings from the Psychology science which can be used in marketing:
Reciprocity or ”Foot-in-the-door” principle. Regan’s experiment (1971) is about creating gratitude, give for
instance a free e-book, a free consulting call. If people have committed themselves, they identify with this
commitment and feel obliged to buy. Find a way to make your customer grateful and committed. Give him or
her something, an element of your product or some relevant information for him/her. Then he or she will be
more inclined buy later.
Conformity. Solomon Asch (1951) investigated conformity. The subject is one member of a group of people
who are asked to make judgments about various stimuli (e.g. which of two lines are longer). Unknown to the
subject, all other members of the group are stooges who deliberately agree that the erroneous answer is the
correct one. Such a circumstance allows for the assessment of the degree to which individuals succumb to
group pressure to conform or maintain independence in their judgment. Asch’s experiment showed that
individuals often follow the majority in the group. In sales and marketing, this finding can be used for
attracting new customers telling them that they will join (or be accepted by) a “group” who bought the same
item. The desire to belong to a group, or the fear of not belonging, is a strong sales factor. Therefore, use
customer testimonials when you promote your product. You can ask you first customers (your
“ambassadors”) to express their satisfaction with your product and use their testimonial in your promotion of
Fear. Burson & Gershoff (2015) have studied how consumers’ social identities stem from comparison
between themselves and others. These identities help determine consumption decisions. Unfortunately,
perceptions of comparative traits and characteristics are often biased, which can lead to similarly biased
consumption decisions. Translated into normal language, this means that people sometimes buy out of fear.
They want to match the social group they want to belong to. In business-to-business (which is relevant for
many entrepreneurs), the customers may buy, because they fear that they - without your product - will be
beaten by competitors. Thus, when promoting your product, point to the competitive advantages your
product will give the customer. In my own research (Ivan Häuser, 2011), I have confirmed the discovery that
the language contains many more pejorative expressions than positive ones. This is a manifestation of a
general phenomenon: language (and, apparently, human consciousness) differentiates evil more finely than
good, and the unpleasant more finely than the pleasant. Simply put, fear plays a colossal role in the way we
perceive the world and is a fundamental motive or cause of our behavior.
Framing. Kahneman (1980) made an experiment, which showed that some ways of presenting a product are
more effective than others. The effect of a new pharmaceutical treatment was explained in alternative ways
to two groups: 1a) Treatment A, 200 people will be saved, 1b) Treatment B, ”1/3 probability of saving 600
lives”. 2a) Treatment A, “400 people will die”, 2b) Treatment B, ”1/3 probability that no one will die”. All four
versions of the offer contain the same message, but they are framed differently. The majority of customers in
the two groups chose, respectively, 1a) Treatment A and 2b) Treatment B. Clearly with regard to
pharmaceuticals, customers are attracted by hope and positively formulated results. Thus, be careful with
how you frame your presentation of your product. Think what is most attractive for your customer.
Scarcity. Adewole (1975) conducted an experiment, where people had to value (set the price of) cookies.
There were two cookies in one jar, and 10 in another, all cookies being the same. The Customers valued the
cookies in the jar with two higher. For you to remember: Customers want to be special!
Environment – Meredith & Wheeler (2008) tested, where it is better to test the product, for instance at the
producer’s or at the customer’s place. The arrived at the result that a test should be conducted where the
customer is going to use the product, that is in a real setting. However, I happen to know that yachts are
easier to sell at a fair in a showroom and not when they are rocking on the waves in a harbor. The person
who is supposed to do the cooking at sea may be repelled by the rocking.
In professional sales, i.e. B2B, you should use the SPIN selling method when you meet your customer face-
to-face. With this method, you link the customer’s problems with your solution. The task is to get on the
customer’s side of the table. Show you are interested and understand her/him, before you present and
extol your solution.
The SPIN Selling Method
Getting on the buyer’s side of the table
Situational questions (be prepared from home – but show curiosity asking these innocent questions)
How many people do you employ at this location? Who are your most demanding customers? Could you tell me how
your system works?
Problem questions (Identify your customer’s problem)
What would you like to accomplish? What are your objectives? What is difficult? What prevents you from achieving
these objectives? How satisfied are you with your present system? What problems are you experiencing in this
Having identified the customer’s problem, let the customer explain what this problem means to him/her, how
much he/she suffers, how happy he would be, if the problem no longer exists. Let the buyer be emotional here.
Question types: What effect do these problems have on your competitive situation? Could that lead to an increase
in your costs? How will this problem affect your people’s productivity and job-satisfaction?
Now, after the other questions and answers, you can relate your solution to the buyer’s problems. Questions: How
would it help, if you had this information online? How could a faster system help you? What would it mean to your
business, if you could offer our solution?
When your customer prospect signals interest, it’s time be both efficient and careful. There are certain
documents you need to prepare before closing a deal or starting a co-operation:
Non disclosure agreement
Allows the potential customers to get the necessary insight into what they are going to buy and prevents them
from copying the product.
Letter of intent
Is used for indicating interest in the product. Can also be used in negotiations with investors.
Is used for confirming an order.
Standard terms of delivery
This document can contain conditions regarding pre-payment, delivery time, insurance, responsibility, guarantee,
Below, see a standard Letter of Intent:
Letter of Intent
For: <Name of the entrepreneur>
Issue: <Purchase of xxxxxxx>
Reference: <Sales material, video, notes, etc.>
The company <Name, address, VAT registration number> has had a dialogue with company <Name, address, VAT
registration numer> about purchase of the product described under “Reference” above.
This product is under development and is expected to enter the market <date>.
Provided that the product meets the requirements with regard to specifications and delivery, we will buy ## pieces
at a price of <## currency>.
<Name of company representative>
In order to convince evaluators or an investor, you certainly need to have a real customer who has genuine
interest in your product. Perhaps you only have a prototype and not yet product to sell. That’s where the
Letter of Intent is comes in as a way to show that your customer is serious. The Letter of Intent also
prepares the customer for the moment when the deal must be closed, and he or she will have to pay.
When we come to the price, this must serve multiple purposes:
Before getting an order, you must be able to give the costumer a price. The price should reflect
• The customer’s perceived value (what is the solution worth for the customer?)
• The competition from similar products/solutions.
• Your costs for production and marketing
• Your profit
You cannot set a price, if you haven’t calculated the costs. These may be:
1. Development (Payment of staff for the development of hardware, software and mechanics)
2. Equipment (Components, prototype printed circuit boards (PCB)
3. Tools for manufacturing (Formwork/mold, software licenses for development tools and third party
4. Production of series 0 (the first production will often have to be repeated a couple of times before it is
right. This may be expensive)
5. External test (Often you need external tests for verifications of the product. This may be due to regulatory
requirements or there may be a need for a specialized laboratory.
6. Approval, cf. regulatory requirements (All products must be CE-marked in Europe. If a product does not
conform to regulatory requirements or is not possible to categorize, it cannot enter the market. The
entrepreneur must contact a test house (for instance FDS) about this.
7. User manual
10. Support of sales Year 1 (Typically, new products have failures. Furthermore, the users must get
accustomed to them. Therefore, costs must be expected for support in the sales phase and the guarantee
12. Sales costs
14. Complaints / errors (How do you handle complaints and failures? What does this handling cost? What
does it cost to replace defective equipment?
15. Re-design and new production, based on complaints (Probably you will have update your product, based
on user experience. This update is necessary for staying in the market).
16. Product liability insurance (can be costly, depending on the product’s nature)
Some work the entrepreneur will not do by himself, but outsource. If so, get quotations and find out what the
cost will be.
Then, when you finally have got customers, it’s not just about acquiring new ones, but also about keeping
those you have got. I’s like in a personal relation, e.g. a marriage. You must remain being interesting to your
My telecommunications service provider contacts me regularly with new offers, including price reductions.
In this way they anticipate their rivals. Likewise, some companies want their customers to give feedback in
surveys. This may be irritating to the customers, but it also gives them an opportunity to make themselves
heard, and it creates the impression that the company is interested in them and currently trying to improve
You have to create customer loyalty. Reward this loyalty. Insurance companies give discounts to people
who have had no car damages and accidents. A reward can also take the form of a workshop, where the
customers get interesting information (perhaps from an external specialist presenter) and some snacks and
drinks with an opportunity for networking.
• Keep contact (newsletter, blog, mails, social media)
• Show recurrent, constant interest
• Follow up on cancellations (Why?)
• Add-on services
• Maintain image
• REWARD loyalty (e.g. offer a better subscription when applicable)
Your company’s product will inevitable have a life-cycle. At some point, you’ll need to update and enhance
it. The old customers should have favorable conditions for getting your new add-ons and products.
Sometimes, there will be customers will complain. You must have a system for handling such complaints.
See these complaints as a source of wisdom, and take corrective action so that the cause of failure
Whenever you can, try to turn a disaster into a victory. For instance, travel agencies sometimes offer a new
trip to customers who had a bad experience. A complaint, which is handled with care and creativity, can
even enhance customer loyalty!
In Service Management, we call such a turn-around a “beautiful exit”.
Summing up, getting customers requires your awareness, energy and commitment. And when you have
gained them, work systematically on retaining them!
Burson, K. A., & Gershoff, A. D. (2015). Marketing actions that influence estimates of others also shape
identity. Journal of Consumer Psychology, 25(3), 495-503. doi:10.1016/j.jcps.2015.01.00
Handbook for Entrepreneurs (2014). www.finodex-project.eu
Häuser, Ivan (2011). Følelse og Sprog (Emotion and Language). Ph.d. School LIMAC. Ph.d. Serie 2.2011
Jansson, Toni (2007). Ingenjörsamfundet. Träningsprogram för entreprenörer. Steg 7. Marknadsplan – hur man skaffar
Rackham, Neil (1996), The SPIN Selling Fieldbook. McGraw-Hill
Racks, Amanda (2012), Customer Acquisition. Xlibris Corporation