Part 14/20 - Twenty Questions You Will Be Asked By Venture Capitalists (If You Get That Far)

By Laurence K. Hayward

This is part fourteen of a twenty part series on this topic.

14. What drives customer satisfaction for this industry and for the product? And, how do you know?

Have you conducted research in order to assess what is truly important to your customers? Do you know what product features are critical vs. those that are ancillary? A classic mistake in product development is to perfect unwanted features, sometimes at the expense of critical ones. For example, a company focuses on adding certain bells and whistles to its product at the expense of timely delivery, which as it turns out was the customers’ top decision factor. In your business plan, an understanding of critical product features or determinant attributes (what most determines or affects a customer’s purchase) can be used to distinguish your offering from that of your competitors.

Once you've acquired customers, ensuring ongoing satisfaction and tracking changing needs become critical. How will you support the product or service once it is launched? What will be the expenses associated with support? It is common to underestimate the time and expense associated with product or service support. Will existing customers purchase your product or service again? Will they recommend it to others? Regular and consistent customer feedback is essential in order to obtain answers to these types of questions.

If a VC has interest in your business, you can expect at some point that they will engage in ‘customer due diligence.’ If you don’t yet have customers, they may interview potential customers or industry experts to ascertain their demand for your product or service at the proposed price points. If you have customers, they will want to contact them to ascertain level of satisfaction and likelihood of repurchase. You will want to identify potential candidates and inform them in advance if a VC is planning to conduct customer interviews. If you are approaching a syndicate of investors (multiple VCs), coordinate the process (usually with the lead investor), so that the same customers aren’t approached repeatedly with the same questions again and again.

Laurence K. Hayward is the Founder and CEO of TheVentureLab. To learn more about him follow the link here