Adapt

Three C’s to Your Digital Business Model Success – Why You Need to Adapt or Perish

AdaptAt the Center for Business Modeling, we sometimes travel around the world to find business thinkers that underscore our philosophy for business models. This time, a Professor at New Zealand’s Massey School of Business, Leslie Warren, was the visionary that caught our eye. Listen:

  • “Businesses must reward experimentation…and create a safe space for failure.”
  • “We have to get over the idea that entrepreneurs are born that way.”
  • “Businesses must foster a culture where enterprising behaviors are rewarded.”

Very perceptive, professor!

Mistakes Matter

You’ve seen us weigh in on business models that are iterative and adaptive in the sense that they respond to customer needs and marketplace pressures. The companies that can build innovation into their business models are those who allow their strategists to “learn to learn from failure,” as Professor Massey urges in her video.

In a recent article in the Economic Times, writer Priyanka Sangani asserts: “The digital economy has resulted in a fundamental shift in how organisations operate, with the focus moving from products and services to experiences and outcomes. Organisations no longer control the conversation and if they don’t keep up with this peer-to-peer economy they risk being left behind.”

“C” Your Way Clear

Melding Professor Warren’s vision with the pressures of the new, digital economy that Sangani warns us of can seem a tall order. But if you focus on three main “Cs” of the new digital economy when building a business model to compete, you will be well on your way to achieving the flexibility you’ll need to win.

Competitors. Watch out because your competitors can turn into partners if you’re wise enough to build a business model that encourages “open innovation.” Professor Warren talks about such collaborations as the next wave of business partnerships—when the new imperatives of this “experience and outcome” economy require us to make friends of former enemies. If a partnerships not in the cards, then be sure to create a plan for regularly reviewing your competitors’ offerings and keeping track of their external presence in the digital space. We’re not saying you have to be a “me too” reactive marketer—just be sure you keep an eye on the other guy and learn from their mistakes—and successes. Use CBM’s SWOT analysis template to begin.

Customers. There’s no excuse—and I mean none—for not knowing your customer these days. What’s got them grinding their teeth in their sleep? What product tweaks can you make to anticipate not today’s pain points—but the pain points of tomorrow? (Everyone else can call these innovations, I’m fine with it.) If you don’t have a good CRM system or processes in place to get your sales teams’ feedback into the marketing strategists’ offices at least once a quarter—you’re missing the signals that can send your profits soaring.

In Sangani’s article, he interviews R. “Ray” Wang, author of the new book, Disrupting Digital Business and the founder chairman of the Silicon Valley based Constellation Research. Wang says that “the toughest shift is focusing on the new business model when the company is comfortable with life as it is. Most companies start with a new team and then try to integrate them back to the core after the first set of successes.” I would suggest a cross-functional team dedicated to the “Customer Experience” so that your business model can benefit from the brainpower of the entire organization. Fast tracking these projects will put you in a good place to compete now and win more customers later. Team members then can start intra-functional, customer-facing projects on this start-up “incubator” model.

Community. I know we are all a little tired of hearing about the differences between “engagement” and “awareness” in our online communities. Sorry, though, my friends: the numbers don’t lie: according to Demand Metric, content marketing generates three times as many leads as traditional outbound marketing, but will cost a company 62% less money.

Content marketing has proven to be a sure fire way to build communities—of suspects, prospects and dare we say, even “brand champions.” A solid program of content can move the needle on community engagement and awareness—if you know where your most impactful communities “hang out.” Do the research, plan on measuring the ROI and get started. As always, you need to be purposeful yet flexible enough to change course if your strategy fizzles. Use CBM’s Business Planning Framework to plan your community engagement projects—just pick a “tile” and get started.

Sangani’s Economic Times article is entitled, “Digital Darwinism is unkind to those who wait—you will be out of business if you wait too long.” I think that’s a little bit too dire of a prediction, because I think most businesses are awake to the possibilities—and perils—of our new world. I think we’re smart enough to “evolve and adapt” before bankruptcy looms. But one thing I do know—things are changing so fast in this digital, uber-connected world—if your business model isn’t able to change with them, it may be in very serious trouble.

Three Tips to Build Your Buyer Personas

Reaching out to your targeted audience has never been so easy—after all, research shows that much of the buyer’s journey these days starts online with quality content. In fact, a recent Gartner survey says that digital marketing spend will increase by eight percent in 2015. What’s more, “the survey found that of the 51 percent of companies who plan to increase their digital marketing budget in 2015, the average increase will be 17 percent.”

Finding out where your potential customers are “hanging out” in the digital space and getting heard in that space can be difficult, thanks to all of the “noise” online and the time-crunch most of us (buyers included) are struggling with. If you begin populating your web pages and social media plans without first identifying your buyer personas, you won’t get in front of the people who are ready to buy.

In a recent blog, Jomer Gregorio states: “While many marketers focus on several demographics to get better traction in their digital marketing efforts, marketers who focus on key buyer persona insights will require half the number to get the same results.”

Pretty powerful stuff, hmm? Here are three quick tips based on Gergorio’s insights that will help you accurately identify your buyer personas and getting the most out of your marketing efforts.

    1. Where Does it Hurt?

Gregorio writes that “buyer personas are developed by carefully understanding the key demographic information as well as behavioral information that would define their consumption trends.” You might have enough demographics to sink the Titanic, but how can you drill down to the level of behaviors? I would start with common customer pain points. Once you realize that your customer has a problem to solve and that they are in some level of discomfort about these ongoing issues, figure out what features and benefits your product or service has to put an end to their suffering.

    1. Massage Your Message

Use the Center for Business Modeling’s free SWOT analysis to run a quality control check on your messaging. Most companies should have a list of fewer than five messages about their products and services to ensure that their brand story is clean and cogent. Get your executives together and decide, in light of your buyer personas, what is resonating and what is not. Make sure you use the insights of your first-line customer service leaders and sales executives. The messages you started with might not be the messages you need to meet them where they live today.

    1. Testing, 1, 2, 3

These days, analytic tools for your content are easier to use than ever—more intuitive and substantially more functional than what we’ve had to use in the past. I know that it feels like finding a quality lead sometimes feels like searching for a needle in a haystack—but if you keep up with your marketing messages, constantly reworking them to improve your reach, testing them and testing them again, you can get better at reaching your buyers. I would add that it’s often useful to test “personable” messages for all of the various buyer personas. That’s because according to buyer persona expert Brian Eisenberg, no matter which persona, “people are easily affected by their emotions and decisions are usually affected by their emotional state that will sometimes make them decide on things based on emotions and gut feel – and not on facts or analysis.” For me, remembering you’re reaching a human being behind that phone or laptop screen remains paramount in crafting messages that really resonate.

Definitely check out the B2C blog when you’re identifying your buyer personas—it’s a good place to start. In the meantime, run that SWOT on your messages so that when you get a chance to “talk” to your buyer, you’re clear on not only what you are saying but also why you are saying it.

Making Your Business Model More “Customer-Obsessed” in the Digital World

When your business model includes technology (and let’s face it, everybody’s does right now, at least when it comes to reaching customers) you need the right kind of people on board to uncover your next competitive move. You need the combined strength of product development visionaries; marketing gurus; and business analysts comfortable with the reams of big data that digital business models generate. So let’s say you have the right kind of team in place. What else are you doing right?

Your partners and processes are iterative and agile—you can move on a dime to tweak your sales and marketing plan as the marketplace demands.

Your sales and marketing strategy also has your prospects visiting your website and downloading your content in droves and you’ve got the analytics to nail down quality leads to keep your sales force happy for months to come.

Finally, your product or service continues to morph to reflect the common “pain points” you see out there – and your product development people are enabled via a robust, yet flexible Products and Services Roadmap process to introduce new products – products that “own their space” from the moment of launch.

You seem to be going gangbusters – you’ve obviously got a handle on the customer-facing “tiles” in the framework, above, but you want to be able to supercharge your customer focus. You might think that you need a brand new framework to deal with these new and emerging techno-powered customers. Not so.

You can effectively use the Center for Business Modeling’s Business Model Framework in light of the customer mandates inherent in our new, super-connected universe. Here’s how to do it by focusing on three key questions that will make sure you remain, “customer-obsessed.”

The customer is always right, right?

Let’s face it– your target audience might think they know what they need, but they may not always be right. Ideally, you do, and you can shepherd them through the buying process to educate, inform and, ultimately, inspire them with the product or service offerings that solve their most pressing problems. I remember delivering an IM solution for a group of internal employees back in the day. The pre-pilot benchmark groups were highly cynical about the solution—but once they got it popping up on their desktops they said, “We didn’t know that this is what we needed all along!”

You have this next greatest solution for your customer because you listen and learn with every complaint, every return and from lessons learned from every supposedly “revolutionary” product in your segments that flames out upon start-up. In the connected universe, you have even more signals to prove yourself an innovation partner rather than just a supplier, or one-and-done partner.

Marketplace and Target Audience Identification business model tweaks in this new world require you become a business collaborator—and to become an innovator for your customers before they necessarily know they need one. Ask yourself these customer questions and use them to adjust your customer-facing activities:

  • Do I take the time to find out which industry innovations are exciting my customers? If so, what do I do about it?
  • Are my sales channel partners having the same conversations?
  • How can I digitally enable myself to hear what my customers are saying and start conversations, building the relationship and shoring up my brand equity? Can I be cost-effective when doing it and can I prove it works?

Brian Solis has an interesting take on this last one. He says that: “Stakeholders and investors find it difficult to assess the ROI of customer experiences and the impact of positive reinforcement on the bottom line.” If you can get more quality leads from listening better and listening digitally, that’s enough ROI for us. That means you are creating a customer experience that works—and these days, you must use technology to do it right.

In a recent presentation at Pegaworld, Solis outlines the stakes involved in keeping your connected customer top of mind: “To effectively compete in the digital economy, you are left with no choice; become customer-obsessed or lose! Every moment-of-truth counts when it comes to customer loyalty. For some, this paradigm shift will be easy. For many, you will have to re-think your business model.”

Use CBM’s Framework among your top executives to plot out how this connected, customer obsession will look in your business model. Then, as Solis says, “adapt or die.”

Can You Really Use Marketing to Shrink the B2B Sales Cycle?

It seems at least once a week that I talk to a B2B company about how to shrink their sales cycle. Sales executives and CEOs get especially frustrated because their quarterly sales forecasts become much harder to predict when the sales cycle timing is all over the map. For example, we have one technology client where it seems half their deals close in days or weeks, while the other half can take six months or more. So what is going on and what can us B2B marketing types do about it?

The first thing we need to do is accept certain realities, regardless of the pain involved. And the first reality is that buyers have more control over the sales cycle than sellers. They have come to understand that the offer you claimed was for today only can easily be had tomorrow or next month – especially if they wait to buy until the end of the quarter. And even more significantly, our prospects know they can use Google to find out a great deal of information about your company, your competitors, the product or service category, and what past buyers think about you and everyone else in your space.

Here is the relevant point about the new realities: the important thing is not the actual sales cycle (how long it takes the prospect from the time they start their research to the time they buy). Rather, the key metric is what we refer to as the “effective sales cycle” – how long the prospect is actually in touch with your company.

If you organize your business around the new type of selling model as shown below, the “effective sales model” will shrink and your close rate will go up. This is true because the potential purchaser completes all or most of the first three parts of the process without engaging with your sales staff. In this example, if you start interacting with prospects at the fourth stage, close rates can skyrocket – from a typical 1-3 percent of raw inquiries to as much as 10 percent of those who are educated and self-qualified.

So how do you create the environment to support everyone from early-stage information gatherers to hot prospects who are ready to engage or buy today? Here are a few tips:

New Sales Model
 

  1. Provide content relevant to the needs of the audience. This will be very different for someone who is doing some general category research (what’s out there) as opposed to someone who is in the final buying stage (pricing, terms and delivery options).
  2. Layer the content. At Fusion Marketing Partners, we recommend the layered content approach. Of course this varies by type of product and offer, but we typically recommend fairly short and generalized text on the landing page (e.g. 300-500 words). On pages that link from the landing page, text can be much longer, running into hundreds or even thousands of words for some technical products and services.
  3. Offer options. Don’t treat all visitors to your website like they’re the same. Some are at early stages: give them a place to browse content and self-educate without a sales person breathing down their necks. Others are at later stages: give these people a way to self-qualify and engage in different ways – phone, chat, email, form submission.
  4. Enable self-service. Sales resources are expensive and whatever parts of the processes you can offload to the website will cut your costs, and assuming you execute this correctly, boost your effectiveness. As reported in a recent Forbes article titled Death of a B2B Salesman, a Forrester Research study showed that “Nearly 75% of B2B buyers now say that buying from a website is more convenient than buying from a sales representative. Further, 93% say that they prefer buying online rather than from a salesperson when they’ve decided what to buy. B2B companies that wait too long to create self-serve eCommerce websites risk losing share to pure plays and omnichannel competitors.”
  5. As you can see, marketing can help shrink the effective B2B sales cycle, but it may require a new way of thinking – as well as some concrete actions to align your selling model with your prospects’ buying behavior.

Watching for World-Changing Disruptions to Your Business Model

 An expert shares what your business model needs in the global landscape

Every once in a while, I like to lift up my head and look around at the global disruptions that will impact my business. When I read Nicholas Forsan’s blog this week, I gained new insight into the global trends that will disrupt all businesses and found a new way to look at my current business model to shore it up against chaos. Here are a few of Forsan’s insights that I found worth watching:

  1. “The digital world gives us the tools to make smarter decisions, e.g. to generate commercially viable insights from customer shopping patterns, maximize the efficiency of our operations through real time monitoring, innovate our business model.” I am upgrading my analytics to take advantage of this trend and to help my clients gain a clearer picture of our activities—not only from an ROI perspective, but to protect our brand reputation in the digital space.
  2. “The internet revolution and the rise of mobile as a platform have created new marketplaces”. Mobile marketing will soon be the primary way prospects learn about products and services. Like many companies, it is important that we change how we pop up as a business on smart phones and examine ways to use mobile marketing to grow the business. I’m sure that our web presence is awesome on a traditional tablet or laptop—but not so sure it holds up on the smallest of screens. That has to change since Forbes wrote that “9 out of 10 mobile searches lead to action. More than half lead to sales.” (Source: SearchEngineLand)
  3. “Our workforce will also become younger and ever more diverse, and not only will we be expected to manage such a diversity but also satisfy these employees with motivations and expectations of work very different from our own.” My subcontractors’ have very different expectation for work. They’re mostly young and hungry (i.e., inexpensive so that I can make a decent margin on their work) new professionals who are building portfolios and will undoubtedly leave my business for greener fields once they produce enough to impress a new employer. I respect their viewpoint and spend a lot of time trying to figure out what makes them tick—after all they are the future!

With all this in mind, I am going to get back to the CBM Framework and revisit two sections: Sales and Marketing Strategy and Marketplace and Target Audience Identification. I’ll do a little more research on mobile marketing and managing my target audience and marketplace in light of emerging global trends. Then I’ll put my head down again and get to work.

Keeping Promises to Your Customer: Marketing Strategies that Work

How to tell your company’s story to inspire trust, remain agile to customer needs

In Seth Godin’s recent blog, he says: “My take for the last 15 years is that marketing is merely storytelling and promise making/keeping, and in fact, everything the organization does is at some level, marketing.”

I couldn’t agree more. But how can a new company or an existing company ensure that they’re telling the right stories and making promises they can keep? Using The Center for Business Modeling Business Planning Framework will help. And the best thing about it is that it is an iterative process: If your story doesn’t gel or your promises start to feel flimsy, using the framework will help you adjust.

Agility is Critical

A post by Margaret Rouse writing on techtarget.com provides an excellent definition of business agility. She outlines the ways that a company can keep changing by “assessing priorities and progress frequently”—not just at the end of a project. Her post mostly discusses agility in the context of project management, however, isn’t your business plan the most important and impactful project you undertake?

Using the Framework has helped me crystallize my stories and ensure my promises are kept to my clients in three major ways:

I Can Do Anything Better Than You

1) Brand integrity- I used to tell the story: “I can do anything you need in PR and marketing” and it’s just not true. I don’t have certain skills but then again, one of my strongest attributes is being clear-eyed about that. If one of my clients gives me a project that’s not in my wheel house and hiring a contractor to fill in the gaps is cost-effective for both the client and my company—it’s full steam ahead. However, I need to be very careful when doing so—most of the skills I need help with come with a pretty hefty price tag. Working with my client to find a more effective partner brings them more value in the long run—and makes me more of a business consultant in their eyes. That’s the new story for me—“I will do what I’m best at and if it’s not my strength, I will make sure I hook you up with quality people.” My product and services roadmap (based on the CBM Framework) was adjusted accordingly.

What No One Wants to Hear About Business Ownership

2) Keep your promises to yourself- As a marketing and PR professional for many years, I spent a lot of late-night hours catching up on work because I made sure to make the evening football and soccer games when my kids were in school. When I opened my own company, I tried to opt out of business trips (when possible) that included a lot of travel, paid awesomely — but would upset my work/life balance.

Sometimes, I just had to leave and do my job—and that involved breaking promises to my loved ones rather than to my employer or client. Today, I walk a fine line with keeping client promises and promises to myself about how present I will be for my grown daughter and my youngest son. I believe that any business plan that ignores an entrepreneur’s personal life will fail in the long run—so when using the Framework, I make sure to adjust my plan to the impact on my personal life. I might lose some revenue, but I gain energy and commitment for the projects I choose to take on—because I know that they are congruent to my values. No one asks for their checkbook balance on their death bed.

What’s the Story?

3) Telling a valuable story- The CBM Framework shows you how to tell your company’s story and also to remain agile enough to change your story when the customer is not responding. This is where content marketing metrics come in—how are you reaching your customers and what are you telling them to ultimately turn them into “paying customers”? Your marketing strategies are always evolving based on their needs and your business goals.

Keeping promises. Telling compelling stories. These are the two core activities of any business, anywhere. I love feeling confident that I’m doing them well. Let CBM’s Framework make you confident, as well.

How to Validate Your B2B Go-to-Market Plan

What are we selling? This is where we determine the specifics of our offering, not just in terms of product features and functionality, but also in terms of uses, pricing, messaging and offers. Following the minimum viable product (MVP) strategy, we create as little of the product as necessary to prove its economic viability. In fact, there are ways to do this without actually building the product, which I will explain in a future article.

Who are we selling it to? At this stage, we do persona mapping — determining the demographics and psychographics (personal and business) of who we think will purchase our product or service. Remember that who you think will purchase and who actually purchases may be quite different, so it is important to test this in the early stages of the launch.

Go-to-Market-plan
Why do our prospects need this? Given all the ways our prospects can spend their money (or not spend it), why is our offering something that will grab their mind share and wallet share? What are the compelling factors that will make them overcome inertia and hit the “buy now” button or engage with a sales representative?

Where can we reach them? This is where you determine where your prospects hang out, what they read and who they listen to, and also where you discover which media are the best at reaching people who may not currently know who you are or why they may need you.

How do we go to market?  I’ve written a lot about marketing and sales models, including this recent post where I discussed sales models as a core component of marketing and sales alignment. There are four major types of B2B models, including direct, telesales, channel and online, with dozens of hybrids and variations. There are ways to test these models at very low cost, with the goal of achieving a consistent and repeatable go-to-market model as you scale the business.

When should we launch?  Okay, to confess, the “when” isn’t as important as who, what, when, where, why and how, but I needed it to complete the set. Actually, “when” can be important when you consider the impact of seasonal purchasing and competitive product launches. Enough said about this.

Marketing research does have its place in your go-to-market plan validation, but usually as a form of pre-testing. Conducting research online or at the library — or asking someone whether they would buy a product at a focus group – is not the same as proving whether there is a market for your product. Better to spend some time and a few dollars on the type of testing that really counts – whether your prospects will actually purchase of what you are selling.  That’s the type of testing that gets me excited!

Reprinted with permission from Great B2B Marketing. To view the original post, click here.

Three Ways to Disrupt Your Business Model

Technology is no longer the key disruptor:
Your Business Model is—So it “better be good”

David Skok is one of my favorite business writers because he tends to change the way I think about my business. He helps bring new ideas to entrepreneurs like me, who barely have time to do our jobs — let alone keep up with the latest in business model innovation. I know when I visit a Skok blog or SlideShare, I’m not wasting my time.

Take this recent statement from David in a SlideShare titled, “Business Model Innovation: The New Trigger for Great Start Ups”: “Unlike in the past where technology innovation was the primary driver of startup innovation,  in the last ten years it has frequently been innovation in new business models that has caused the disruption to create the opening for new companies.”

The 79+ page Slide Share brought me to some great conclusions about where my company might be headed. David uses awesome examples to show how the “business model as innovator” concept works in practice. Here are some of the most valuable insights:

1. Watch your CAC (cost to acquire a customer) – According to Skok, start-ups using the new model—spending money to get customers to your website and then monetizing the site with offers, etc—doesn’t take into account how much money it will cost to acquire not only a visitor– but a real customer. By monetizing a portion of the customer base and using free software to acquire customers cheaply, startups can keep their CAC more manageable—and make more money.

I learned this lesson the hard way. I loved attending the big, fancy conferences when I first started my company. I thought I would network with the big money clients—then, once they met me, of course they would hire me—voila! That $2,500 conference fee paid for itself.

When I finally broke down the average number of clients I obtained from attending twice a year, every year for three years, I came up with five clients that yielded about the same amount of money as I spent on the conferences. I deicided to cut down attendance to once every two years and spend my new business money on people who were already in my network.

I still go because I love to learn about my discipline. I just don’t spend as much in acquiring customers there. And even though $5,000 a year doesn’t seem like a lot to you, it was a lot of money to me back then. Today, I’d rather spend it on something that yields client contracts on a regular basis.

 2. Keep Track of Buying Behavior – Skok says that outbound marketing annoys your customers and is increasingly not working. Today, buyers use Google search, reviews, free trials, blogs and other content sources to learn about the offerings they need. The key point Skok makes resonates with start-ups in particular—you need “inbound marketing thought processes.”

 I see so much content “thrown at the wall until something sticks” by start-up companies. They “know” they need to be certain places online but they don’t pay thoughtful attention to what they want out there; who needs to be saying it (I love customer testimonials as a buyer and as a business); and where they need to be (to build a social following) basically, how to “educate and entertain.”  Spend a lot of time on this part. It’s worth it.

 3. Be a “New World” Business – The older business model had us charging for everything, even demos. Demos and trials are still widely used. But to move into the “new world” of innovative business models, you have to figure out how to simply give it away. For free. And only monetize a fraction of your customer base to make money.

Granted, your customer base has to be pretty big for most of us to afford the mortgage, the car, and our kids’ tuition with this model. But if you are watching your CAC carefully; writing and posting targeted content in accordance with how your buyers really behave (and not how you wish they would); and figuring out how to give it away while monetizing enough to feed your family and please your investors—Skok says you can get there.

Use the Center for Business Modeling SWOT tool to figure out your strengths, weaknesses, opportunities and threats in these three areas. And then get to work disrupting your market.

How to Find Your Total Addressable Market

Businesses love talking about total addressable market because it’s exciting for them to see the available opportunity for their product or service. So exciting, in fact, that they often clammer to craft specific campaigns or shift messaging around new potential markets. However, if this is done hastily or without thorough research, it can turn into a waste of time and resources.

Determine Your Ideal Customer Profile

To find your total addressable market, you first need to determine your ideal customer profile, then find look-a-likes that accurately fit the mold.

Determining which data are relevant to your total addressable market is a challenge. With so much data available on both current and prospective customers, it’s hard to distinguish the signal from the noise.

The traditional way of figuring out significant information was to look at the accessible firmographic data. Firmographic data includes basic information such as industry, location, size, and revenue. While this is useful to include in your analysis, this type of data is only the tip of the iceberg. Additional business signals that are harder to obtain, such as web savvy or social presence, may actually be better predictors of success.

Let’s pretend for a moment that you are a point of sale (POS) system looking to sell your product. Perhaps you target restaurants, because they fit your ideal customer profile. You may have performed well with them in the past, so you continue searching for other look-a-likes in the same industry. But what happens when you throw a new industry in for comparison?

addressable market

On the surface, with solely the firmographic data taken into account, the mechanic appears to have a lower success rate than the restaurants. This is where most marketers end their targeting exercise and launch campaigns targeted solely at restaurants. But look at how the success rates change when you add additional business signals:

addressable market

With the additional signals taken into account, the business in a new and unexpected industry has a significantly higher likelihood of success than a formerly considered look-a-like.

This example reveals that before you deeming a category unfit, make sure you are looking at the best possible predictors of success. This advanced segmentation uncovered a more effective go to market strategy than the original idea to sell to restaurants.

In this case, social media presence was more indicative of success than industry. 

The restaurant segment performed well because restaurants are more likely to be socially savvy than other small business industries. This new perspective with additional business signals revealed almost as high of a success with mechanics that were on Facebook as with restaurants on Facebook.

Discover the Size of the Market Opportunity

Once an ideal customer profile is solidified, the next step is to figure out how large the market opportunity is that fits the description.

Understanding your total addressable market will help you answer 4 key questions:

  • How long will my sales pipeline remain satisfied?
  • What is the real size of the market?
  • How many prospects can I expect?
  • What is the potential revenue for a particular quarter or year?

You can think of your total addressable market as the sum of your ideal buyer profile look-a-likes.

Let’s look at two scenarios to help understand how valuable it is to understand total addressable market for a product or service.

In this first scenario below, you have a segment that has a very high success rate compared to your typical conversion rate. Here is a highly targeted segment with an impressive success rate of 85.7%:
addressable marketsegmentation

It is clear that this segment will perform well. However, the addressable market opportunity – as shown in the number of new and open records – is small. This segment should still be used, but it will soon need expansion to provide a full sales pipeline and fuel sufficient business growth.

Below is another scenario for comparison with one signal removed to widen the net of potential businesses.

segmentationsegmentation

In the second scenario, you have a segment that converts at a lower success rate, but with a much larger market opportunity available to target – as shown in the number of new and open records. Even though the success rate is lower in this scenario, it still has a high success rate at 67.7% – and is well worth targeting. The sheer volume of the potential in the new and open records make up for the slightly lower success rate.

The results from the second scenario are more helpful in determining the size and scope of the total addressable market because it is scalable. Continue this analysis process with additional high performing segments that have ample market opportunity to effectively visualize your total addressable market.

Conclusion

Estimating the size of your market used to be a struggle that involved informed guesswork and complex calculations. Now, there are tools available to businesses that automate the total addressable market discovery and execution process. Taking advantage of these tools gives marketing and sales teams confidence that they are focusing on the right market segments and opportunities. Marketing organizations in particular need to be more strategic in their analysis because their efforts span a large scale that requires significant resources. Gaining a realistic understanding of your ideal customer profile and your total addressable market will help your entire organization become more targeted and effective.

The images in this post are of the Radius product. If you would like to learn more about Radius, click here.

To view the original post, click here.

minimum-viable-product-thumb

Three Ways to Make Your Product an “MVP”

Mine customer insight to provide a minimum viable product (MVP) that covers the bases

Because CBM believes in the test, fail, test, succeed model, any discussion about coming up with a “Minimum Viable Product” to meet customer needs tends to perk up my ears. CBM’s Business Model Framework is built on the same premise: Learn how to start your company by selling your product (an MVP) and make profits as soon as possible.  Maybe it’s not the complete vision you had when you wanted to start a company. But if you go about it the right way, identifying your MVP gives you a one-way ticket to the heart of your customer.

minimum-viable-productThe point is to prove you have a product that will attract investors; help you build a solid sales and marketing approach; and engage the right customers at the right time—i.e., when they are ready (or almost ready) to buy your product or service.

This blog by Christopher Bank has a lot of good insight in the form of questions you should ask yourself when you are testing your product proposition. Minimum viable product strategies describe a process that gains the most information about your proposed product and your customers’ response to it, with the lowest risk. In a great article by Eric Ries he says identifying the “core utility”—or the minimum set of features that your customer is willing to pay for—is key to MVP success. Here are some other ideas from Mr. Bank and Mr. Ries—and a little bit from me—about how to define MVP for yourselves:

  1. Customer Insight

During the MVP process, startup companies interview customers and ask them to rank their product on which features solve the most problems. That’s a good start, however, it needs to be followed up with a home-base of sorts—a great landing page that captures who is visiting it, and why. Bank’s suggestion is to offer a set of products and features in the classic A/B mode—and see what customers prefer. He takes that one step further by asking start ups to offer A/B pricing options, too.

There used to be an ironclad rule—don’t put your pricing on your website but instead, make your customer pick up the phone so you have a better chance of sealing the deal. But because you are formulating your MVP, you are not truly selling anything—yet. Granted you want to start soon, but the A/B test is a better way to accomplish this.

  1. Explainer Video

I should preface these remarks with the fact: I love short, easy demo videos when product testing. Less than 4 minutes is ideal. Bank tells us about the DropBox explainer video phenomenon which won the company 70,000 subscribers overnight. Ries discusses how important it is to find out nobody wants your product as soon as possible. A video explainer can do that.

I worked on a project for a pharma field sales force that offered them a pop-up alert on their laptops whenever there was a new piece of approved information they could use when they were detailing physicians. Almost every salesperson disabled that pop-up within two weeks. Why? Because we didn’t bother to show them how to easily turn it off, disable sound, or gather each notification in email for an easy read at the end of the day. If we had used an explainer video, they would have been much less annoyed and told us to not even bother with the pop-up functionality.

  1. Brand Purpose

Usually, I skip blogs’ commentary section. I find that many people either don’t pose thoughtful (useful) questions or they try to sell the blogger something—either their ideas or actual goods and services. However, scrolling down on Ries’ blog, I found a gem by Chris Holz: “There is a distinction between product and offering. Those that focus solely on their product miss the potential found in communicating an offering that includes the product and other elements that customers place value on and increase willingness to pay.”

That’s a great point. I would change the classic, “Always Be Closing” (ABC) mantra to read, Always Be Communicating. Holz makes a great point that I think fits with both the CBM Business Planning Framework and the lean startup philosophy: You can (and should) build a brand for your MVP from the get-go—by communicating the reason your company exists as you ask your customer which problems they need solved by your product. Hopefully, the two answers are the same.

If you are changing your brand purpose as you are iterating your MVP, then maybe you need to be sure that your true purpose is solid. If not, you might have something to sell, but if you end up selling an iterative product, your customers might get confused or frustrated when you make changes. They won’t feel that way if you’ve effectively communicated the “why” before the “what” of your business. And they just might follow you to profitability.