How to identify early adopters for a new business idea? The Uber case study.
Identifying early adopters of a new business idea is the key to achieve traction and validation.
Even if a new business idea is targeting a broad market, the best way to introduce a new service or an innovation is to start from the segment of customers that are more eager to use it. (Everett Rogers has written a interesting book about this)
The more they want to use it, the easiest will be to sell it, it’s as simple as that.
In fact, in an initial phase, the Minimum Viable Product (or MVP) of a new product is going to be mostly designed around early adopters, so that the business can get enough traction and validation with them and then scale up to attract a broader customer base.
Customer development interviews are the cheapest and fastest way to validate assumptions about the problems that a new business idea is intending to solve and about who are the customers affected the most. (Here are few tips on how to recruit customers to interview and how to conduct successful interviews).
However, once the round of interviews is completed, how to identify who are the early adopters?
The trick is to review the notes from customer development interviews and spot the common features within the customer profiles that show these four elements:
- Early adopters have the problem. Among the people interviewed, they are the ones that positively responded to a problem description, and offered detailed examples of the last time it has happened.
- Early adopters know they have the problem. This is crucial, as no startup will be able to educate their target customers about a problem they are not yet aware of. Early adopters are the customers that during the interviews have demonstrated to be so much aware of a problem that they could tell the last time it has happened and how they solved it.
- Early adopters have the budget to solve the problem. If customers are not able to pay for the service, it’s totally pointless to target them. By investigating customers’ current behavior in the face of a problem, it’s possible to understand how much energy, money and time they are investing to solve it and use it as an indication of their willingness to pay.
- Early adopters have already put together their makeshift solution. This is the most important indicator able to tell that a certain customer segment is the one that needs to be targeted first. These customers feel so much a problem that they have put together tactics, workarounds, operational processes, or use a combination of competitors’ services to solve it today. However, the bet here is that the solution proposed by the new business is going to do that in a dramatically more efficient way.
So this is the theory. How does it work in practice?
Let’s have a look at how a successful startup identified their early adopter segment to get traction for a new business.
As in September 2017, the taxi app Uber was available in 84 countries and over 734 cities worldwide, fulfilling 5 billion of trips so far and scoring $20B revenue in 2016 (source here and here).
It’s fair to say that Uber is a very successful service today, but they must have started from somewhere back in 2008. Who were the early adopters that they targeted first?
Uber co-founder Garrett Camp posted the very first pitch deck of what was their new business idea back then, called UberCab.
According to the deck, they were adressing the following customer problems:
- cab pickup is not always guaranteed
- a cab ride might not be safe
- a private hire car service (e.g. limo) is an alternative, but requires 1–3 hours notice
- moreover, limos are far more expensive than a cab
So UberCab intended to use advanced technologies to match drivers with potential customers, and to guarantee them a pickup in a short time plus a safe and pleasant trip. All good for now.
But where to start first?
Let’s go back to the four elements identifying early adopters to review how they made their choice. Based on the above they needed to find:
- someone who often needs a taxi, very often last minute, but is frustrated either because the pickup is not guarantee and they have to wait for minutes hailing cars or because the trip is not always safe. These look a lot like professionals moving from meeting to meeting in busy cities, execs without a company car/driver, people going out at night and needing a lift back home
- someone who experiences this very often. All the above seem to fit in
- someone who has money to spend on taxi trips. These might be individuals with an above-the-average salary, professionals, or people paying cab trips through company expenses. You are certainly going to use cabs a lot if someone else is paying for the ride
- Someone who has tried alternatives options to solve the problem. Again these might be professionals, execs or wealthy individuals who tried private hire and limo services
By combining the options, professionals in American cities were their perfect early adopters as they clearly match all the four elements.
In fact, as from their first deck, the value proposition of UberCab was “The convenience of a cab in NYC and the experience of a professional chauffeur: faster & cheaper than a limo, but nicer & safer than a taxicab”. Back in 2008, Uber decided to target professionals and execs in San Francisco and NYC first… and you know already what happened next.
So now it’s your turn to identify the early adopters for a new business idea:
- Make assumptions about the problems you are willing to solve and the people affected the most
- Meet with them in qualitative face to face interviews
- From the notes, see which features (age, sex, job, salary, etc) are common among the ones that match with all the four elements identifying the early adopters.
- Here you have the early adopters for a new business idea, start targeting them to get traction.
This article was originally published on studioZao.com