Article

4 ways to grow your customer base as a startup

We interviewed startup founders to learn how they built their customer base from the ground up. Here's what they had to say.

By Tara Ramroop, Staff Writer

Published June 3, 2022
Last updated June 6, 2022

Growing your customer base is a hallmark of those early days, months, and years as a startup. But the work to grow your customer base doesn’t stop, even after multiple rounds of funding and an established foothold in the market. Startups know better than anyone that maintaining strong customer relationships drives growth through all stages of the business.

Startups are uniquely positioned to walk the walk—not just talk the talk—when it comes to taking a customer-centric approach to growth. But first:

What is a customer base?

Your customer base is the group of people who purchase your company’s products or services. A customer base is a mix of brand-new customers and repeat customers.

How to build a customer base

The answer to “how to build a customer base” is in the question: customer, customer, customer. There are many ways to take a customer-centric approach to startup growth, but these are our top four ways to grow your customer base, explained by founders who’ve been there themselves, as featured on the Sit Down Startup podcast.

We interviewed startup founders to hear about how they built their customer base from the ground up, drawing upon customer relationships and insights each step of the way. With Season 4 of the podcast featuring companies with an average valuation of nearly $3 billion, there’s a lot to learn.

How to grow your customer base

  1. Never forget your first deal.
  2. Make customer success a cornerstone of your go-to-market (GTM) strategy.
  3. Listen to your customers: customer conversations, customer interviews, and customer feedback.
  4. Expand with current customers, not only net-new ones.

1. Never forget your first deal

“I cannot explain to you how happy I was at that time,” recalls Eugenio Pace, co-founder and CEO of authentication platform Auth0, which Okta acquired in 2021. That first customer signed on for $27 a month, but it wasn’t about the money, it was what that first sale represented: validation from a customer of the value Auth0 was driving for them.

With that experience and insight in his pocket, later in 2013, he closed his first enterprise deal for hundreds of thousands of dollars. And that first customer is still a customer today, Pace says.

2. Make customer success a cornerstone of your go-to-market (GTM) strategy

Grow your customer base

You can have the best, customer-centric product in the world, but without the right GTM strategy, it’ll never make noise. That’s the inside scoop from ZoomInfo CEO and Founder Henry Schuck. ZoomInfo, a data and insights platform for sales, marketing, and recruiting professionals, has an $800 million run rate, 3,000 employees worldwide, and 25,000 customers today.

The foundation of ZoomInfo is data: names of companies and decision-makers to connect salespeople, marketers, and recruiters with the right candidates. Building a platform on top of that data application was the next step, putting the software in software-as-a-service.

Having spent several years himself making calls, conducting demos, and nurturing leads, Schuck knows that having a tight product-market fit is essential when doing direct marketing and sales. But closing a deal is never the final step—in fact, they learned it was more like the midpoint, Schuck says. In the early days, before the concept of customer success and customer relationships really took off, they were selling a lot but losing more customers than they should have.

“Customers that made it through the first year of renewal stayed forever. Customers that did not, we had a tough time with.” Henry Schuck, CEO and founder of ZoomInfo

And so their customer success function was born to prevent churn: their bucket from leaking. Customer development representatives (CDRs) talk to customers every day to nurture that relationship and make sure buyers have what they need to succeed with the product.

On the other side of the coin, it’s important to find the right customers instead of selling to anyone who will sign up. While impressive in the short term, it hurts key metrics like net retention rate. Net retention rate isn’t only connected to a great product, it’s also thanks to tight execution after the deal is closed.

For very small businesses, a good net retention rate is at least 100% net-negative churn, according to SaaStr. Moving up to enterprise and business-to-developer (B2D) companies, it’s more like 130%.

“We have an obligation to deliver on adoption,” Schuck says, noting that the CDR team is a large team today that delivers much value for the company.

Sit Down Startup

Grab your earbuds and get inspired by founders who’ve been there. Subscribe to the Sit Down Startup podcast for all things customer, retention, and expansion.

3. Listen to your customers: customer conversations, customer interviews, and customer feedback

Schuck says he still gets a lot of value from listening to customer conversations with a key question in mind: How often are competitors mentioned in customer phone calls? They do this because it helps the company understand the customer’s perspective about their own space or, in the case of mergers and acquisitions, a space in which they want to be competitive. If a competitor is only mentioned in one percent of phone calls, it doesn’t make sense to run a big competitive campaign against them because they are not a big threat.

DocSend CEO and Founder Russ Heddleston also looked to his customers when determining how to continue meeting and exceeding their needs. Dropbox acquired the company, a secure platform for viewing, sending, and sharing documents, in 2021 for $165 million. While there is a strong self-service component to onboarding and initial purchase, a GTM plan informed by customer insights can ease pain points down the road.

As he puts it: “Hope isn’t a strategy.”

There was a product but no GTM plan, Heddleston says. They weren’t even charging for the product in the early days of 2013. Today, he wholeheartedly advocates charging as early as possible for your product. In addition to putting a dollar amount on the value you’re providing, you’re also more likely to get quality customer feedback. You don’t want bad feedback signals from customers who aren’t also invested in your success—especially in late-stage funding rounds where the environment gets even more competitive.

Their approach was to focus on in-depth conversations with “high-usage” customers who could best explain the value they were getting and what they needed to get even more value out of it. He’d record them, take notes, and try to find the thread between them.

“That’s always your dream as a founder, to build something that’s valuable,” Heddleston says. Follow the customer thread to the why, and then the “what else.” What else do they want?

4. Expand with current customers, not only net-new ones

Grow your customer base

The cost of acquiring a new customer is much higher than the cost of customer retention—five to 25 times more expensive, in fact. Startups should always stay close to their current customer base to find those opportunities to expand.

For example, Airbnb noticed that nearly half of the nights booked on the platform were for a week or longer. With that essential bit of customer data, the company announced “Split Stays,” a way to book multiple, back-to-back stays in the same area. They noticed a key behavior in their customer base (booking week-plus-long stays) and used it as an opportunity to expand. With digital-first workplaces taking hold across industries and extended “workcations” more common, their existing customer behaviors paved the way for current customers to continue getting value out of their platform, with the added bonus of new ones being wooed by the new functionality.

Why is it important to grow your customer base as a startup or small business?

The key to growing your customer base is acquiring and retaining new customers. Making customer success a cornerstone of your GTM strategy, obsessively listening to what your customers have to say, sharing the customer success stories far and wide, and nurturing your existing customer base for expansion opportunities puts startups in a great position for rapid growth. Keep customers top of mind to keep relationships and balance sheets strong.

Sit Down Startup

Grab your earbuds and get inspired by founders who’ve been there. Subscribe to the Sit Down Startup podcast for all things customer, retention, and expansion.

Sit Down Startup

Grab your earbuds and get inspired by founders who’ve been there. Subscribe to the Sit Down Startup podcast for all things customer, retention, and expansion.

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