By Jonathan Toler
Building a new product or investing in a new line of business requires some basic steps, including identifying the target customer, prioritizing potential customers, and building a robust pipeline for growth. To accomplish this, it is important to pinpoint new or existing customers who can help you learn quickly about what works and what needs tweaking in your new product or service. Determining the best pilot customers for your project will help you accelerate your learnings and set you up for future growth when you’re ready to launch it.
1.Define the Core Metric that’s Being Tested by the MVP
First, ask yourself, what is the core metric of your pilot program? It should be tied to the overall value that the program delivers you and your customers, and it should be something that’s easily measured by you. For example, at Kloeckner we’re implementing an RFID program at our service centers, allowing us to better understand the flow of materials, personnel, and machines.
At our first, carefully selected service center, the test program reduced load asset location time by an average of 68%, reduced shipping shifts from an average of 12 hours to 9, increased shipped loads from 25 per day to 32, and decreased the time it took our team to find assets required during production. The core metric was overall time on the dock, and the RFID program proved it, clearing the way to introduce the program at other service centers.
2.What is the Minimum Viable Size?
To successfully gather and organize information, you need to determine the minimum viable size of a pilot program. The minimum viable size varies based on the industry and product. For example, a SAAS with only 1-3 customers in their pilot program may not be able to understand if feedback represents broad or individual concerns and is worth the investment to change direction or fix features.
While one service center was enough for us to test the viability of an RFID program, we tested our digital customer service portal, Kloeckner Connect, with around 10 customers. For new software products, it’s typically recommended that companies have 10-20 customers in their pilot program. That number will give businesses data on the larger needs of the service and allow them to prioritize more important features.
3.Determine Which Customers Best Represent the Need and Solution
It’s not just the number of customers in the pilot program that matters, but the quality. How you evaluate quality depends on the need and solution that’s being tested. Our digital customer service portal, Kloeckner Connect, allows us to be available to our customers around the clock and provide them with continuous access to workflow and ordering across their supply chain.
When we were in the pilot phase of developing this system, we sought out customers that already had systems in place for ordering online, or were inclined to do so, irrespective of their size or vertical. Now only did this allow us to have broad and diverse use cases so we could get a generic view of customer need and eliminate bias, it also meant our pilot was more likely to succeed because we offered a digitalization product to customers that had already taken steps of their own towards digitalization and could incorporate it into their own transformation strategy.
4.Assess the History & Risk of Customers
It’s important to identify potential pilot customers who already have goodwill towards you and are more risk tolerant. Ask yourself, first, if you have a great relationship with them and, second, if you would classify them as early adopter types who are open to testing out new products or services regularly. With these customers, you can take some risk on providing new products or services because they have a more entrepreneurial mindset and are willing to learn and invest alongside you.
Ask yourself which of your current or potential customers are early adopters and more attuned to the upside of testing new software rather than the downside of potentially frustrating technical issues. And which of your current customers are willing to give you feedback when it comes to everything from product features to branding and messaging.
5.Are they Willing to Pay?
If your new product offering will be a revenue source, offering the pilot for free may not always be a good idea. It’s important that pilot customers feel vested in your new service or product. A nominal payment is critical to not just confirming their commitment and feedback, but testing the market. They need to see the pilot as an investment for themselves too, and provide you with useful feedback. Besides, human nature tends to de-emphasize anything that’s free.
If, on the other hand, your new product offering is part of an added value service to existing customers, like Kloeckner Connect, make engagement and retention your keystone metric rather than revenue. Regardless of your approach, use the pilot to establish that you have a viable product and business model. You need to demonstrate that you are converting pilots into either paid or more satisfied customers. Testimonials and use cases will be invaluable, and will make good references for your investors if you’re a startup.
6.Which Customers Will Help us Build our Reputation and Brand in the New Business?
There’s value to identifying customers who can help you build success stories that will go a long way towards marketing your new product or service. Typically, the larger and more well-known the customer, the more effective the success story. But, not always. A larger and more well-known customer won’t help you if they’re unwilling to give a testimonial out of legal concerns or too busy to cooperate on a case study. Establish what pilot customers will be open to from the beginning so there’s no question once the pilot is complete around how to move forward with brand building.
7.Are they Around to Meet?
When it comes to developing your product or service’s user interface (UI), the optimal approach would be to actually watch your customers use the product or service. Are your potential pilot customers nearby, or would be they be willing to share their screen as they operate the software? Meet as often as possible, especially in person. Virtual meetings are great, and we are big advocates for them, but they do have their limitations when it comes to giving you the full picture of how your product or service is being used. As your relationship evolves with the customer, you may also find that the type and quality of the information you gather evolves as well.