One of the biggest challenges is gaining access to meaningful market, competitor and customer data. “Gut feeling” is unfortunately the most readily used decision making tool in the absence of hard facts, when it really should only account for 10% of the decision making process – so anything you can do to acquire and use objective market research data will help you to make better decisions.
Step 1: Customer Need: Identify Your Solution to the Customer’s Problem
Start by understanding the customer’s need or problem, and how you are going to solve it in simple terms better than your competitors. The greater the need for your product or service, the easier it will be to gain customer interest with marketing and sales conversions.
Step 2: Model Your Customer’s Buying Persona
Identify and model a primary and secondary typical customer buying “persona”, detailing demographics, interests and behaviours that align with the customer needs that you are solving and figure out why customers would really want to purchase from you, and not others.
Step 3: Map Out Your Customer’s Journey
Followed by diagrammatically plotting out the customer’s journey engaging with you, from brand awareness to first purchase through to retention and repeat business, identifying all the critical points where you will gain insights and capture data that you can then use to improve your products and enhance your customers’ experiences.
Step 4: Define Your Total Market Size and Shape with Objective Data
It’s not enough to have good customers that you have insights for – you have to find enough of them, so all Sales Funnels need to begin here. This is also the meeting point of Marketing and Sales where you will attract and convert unknown customers to your brand into loyal fans.
It might seem hard to find relevant and high quality data to understand the size and shape of your customer market and their associated trends, but there are businesses who have taken advantage of that problem by packaging and selling those insights – Ibisworld is arguably the most used in the Australian market.
Step 5: Competitor & Pricing Analysis
A strong competitor “SWOT” and product / price value analysis, focusing on your top 3-5 competitors, will help you figure out how your target customers will assess your value. This is a work in progress tool, which you update as you gain knowledge and experience of your competition.
Step 6: Determining Your Potential Market Share
This is where it becomes really important not to overstate your capability or capacity. It is extremely rare to see a growth market that is really devoid of direct competitors (or reasonable substitutes). You will need to figure out how much share you can win, how long that will take and how much it might cost (eg through short term discounts). And you will need to ensure that you can afford to operate at that scale and through that growth phase, eg through having sufficient working capital.
Step 7: Look-a-Like Audience Validation
I have in the past found 4 to 5 people within my network and asked each of them individually a series of the same questions to validate my research, or find gaps and insights that help me to finalise my market research. However it’s important to look at the overall comments of the validation group, remain focused on the overall trends and park “wilder” insights that might be useful for future product developments.