The Current Landscape for Business Growth
In the post-internet, global economy, markets are increasingly crowded, margins are tight, and competition is fierce. The ideal would be to be able to leap across the chasm and tip purple cows into blue oceans on a regular basis (if you’ve read the classic books*, you may find that amusing…).
Unfortunately, most companies find it difficult to successfully innovate and market extremely well on a consistent basis. Even for companies who can, an efficient method of deciding upon and carving out niches for business development is an essential survival tool.
This is not about competitive analysis and product development. I am assuming your company did their homework prior to developing the product/service and your current focus is growing the business by attacking new areas.
Market Research Tips
The first step in creating your business growth strategy is to examine a particular market to assess its size and scope, uncover problems needing a solution involving your product/service, gaining an understanding of the buying cycle, and developing a market-appropriate value proposition that differentiates your product/service (from here on simply referred to as “product”).
Note: Although the process of narrowing your targets is basically linear (size the total market, identify and size the niches, determine applicability, determine the number and size of potential customers, etc.), the research does not have to be. Whenever you find relevant data, capture the information and bookmark the link for later reference.
Researching Market Size
Once you have identified a number of markets which may have uses for your product, the first step is estimating how big the potential “pie” is and how many slices it can be cut in to. That is, sizing the overall market space and determining niches or sub-markets within the larger market, and the size of those niches. For example, in the United States (US), government is a large vertical market. In 2017 total government spending in the US was $4 trillion. 2018 projections are over $4.4 trillion in spending. The total government market can be roughly broken down into federal and state & local. Federal can be further broken down into military and civilian, and so on. It is important to firmly estimate the market size and that of its submarkets or niches so that you can make good decisions about how and where to deploy your resources.
Here are places to find relevant data:
1. Government websites. Governments compile vast amounts of data and put much of it online. Their definitions of industries and cohorts are not always consistent and may not necessarily align with standard practices in your industry, but they do clearly state their definitions and assumptions and the data is free. This is a great place to develop a top-level view of almost any industry, and you can drill down pretty deeply in some areas. Examples of US government data stores are: www.census.gov, www.commerce.gov, and www.bls.gov. They data is available in tables, flat files, and even some infographics (click image below to open the Census.gov site).
2. Industry associations for the market you are targeting often compile data and do research for their members. Some of this information is made available to the public on the internet, sometimes you have to join the association. Other times it is available for a reasonable fee.
3. Professional associations for a segment of the workers in the market/industry you are targeting. The Piano Tuners Guild or the National Association of Music Merchants might have useful information if your company sells products that may be used by piano makers or players, for example. Alternatively, associations of a wider group of people whose job titles would make them the decision makers in your target market may have some data on the size, number and value of the various markets populated by people who do that type of work. For example, a chief information officer would be a decision maker on software systems in almost any industry. Data or a website from an association of CIOs will indirectly provide information and ideas on other markets where your product may have value. Although there does not appear to be an overarching CIO association, both the federal and state governments in the US have CIO associations (www.cio.gov, and www.nascio.org ).
4. Tradeshow groups. The groups or organizations that organize the trade shows for an industry always have data on the attendees and markets. Sometimes, these are the Industry Associations mentioned in item 2, but not always.
5. Market Research companies. Pre-packaged detailed reports are available for purchase about many industries. However, sometimes the summary information provided to encourage the purchase will have sufficient relevant data to help you determine whether or not a market holds enough promise to investigate further and will provide clues to additional information sources. The larger firms will also perform custom research on a contract basis, which can be worth the expense if you have already decided upon a target, need depth of knowledge quickly, and can clearly focus the research. www.frost.com, www.forrester.com, and www.statista.com, are a few examples of the resources available.
6. Business, financial, and trade publications and periodicals often compile useful data to support a story or point of view, or to otherwise provide value to their customers. Whenever you are reading business or trade publications, capture potentially useful data for future reference. In some niche industries, the trade publications actually gather and report on key metrics; with the detailed data available for a modest fee. Most major publications are also available on line, such as www.forbes.com, www.businessweek.com, and www.cio.com. There are also credible online only publications such as www.businessinsider.com and the site you are on ( www.startandgrowbusiness.com ). Exploring the content online is a fast way to decide on areas you would like to explore further, and most offer RSS feeds so you will be automatically alerted of new content of interest to you.
In my opinion, the fastest way to compile lists of the various data sources to drill into is by doing keyword searches on www.Google.com for several phrases describing the type of information you are seeking. For example, you may search for something like “IT spending in education”, “technology spending in the classroom”, and “IT infrastructure in schools”. In addition, phrases like “education trade shows”, “education associations”, and “education magazines” will provide more information sources. The search engines each use different criteria to return results, so it’s worth the short time it takes to search on more than one. Be creative in your search phrases to maximize results, and don’t give up after trying one or two search terms. At times, the data you require may not be available. In that case you need to either contract for the necessary primary research, or extrapolate the information needed from information that is available as if you were pursuing a new area of business.
If you are pursuing a new area, or a product application in an industry where it is not traditionally used (essentially a Blue Ocean strategy), you may need to extrapolate relevant data from available information. As a fictional example, if you think an interesting market for your portable exercise equipment is commercial airlines, you are not likely to find data on exercise equipment sold for use on commercial airlines. However, data on the number of airlines, the size of their fleets, their locations, the companies they buy their planes from, the number of health clubs, health club membership rates, etc. is available. Perhaps you can also uncover information about how often frequent travelers use hotel health club facilities or access health clubs they belong to outside of their native city. This data can be used to create data regarding the potential for the use of exercise equipment on commercial airlines. When constructing this data, it is imperative to document all of your business case assumptions. It is also recommended that your spreadsheet analyses retain the raw data and use formulas in such a way that you can easily change those assumptions and calculate new results for these alternate potential business cases. New markets need to be examined carefully from a variety of angles to minimize risk and maximize results. Please also be mindful of the natural tendency to let expectations lead the data to conclusions. Be as objective as possible, your success depends upon it.
For your reference, it took me 50 minutes to capture the following data on the US government marketplace from the internet: The US Federal Government budget was $4.147 trillion. Social Security, Unemployment & Labor; Health Care; and Defense were the top three spending categories. The 2018 budget is of similar size and distribution. Details of what products and services the Federal Government spends money on and which agencies do the spending can be found at: www.gsa.gov and www.fpds.gov. Consolidated, detailed state and local government data is only available for purchase. However, each state provides details on their budgets and upcoming expenditures on their individual websites. The state website addresses follow the format: http://xy.gov , where xy = the two letter abbreviation for the state. From many of the state sites, drilldown to the county and municipal sites is possible. Not every county and municipality provides deep details, but if state and local government is your target there are paid services available to assist you if the staff time to develop the data is more difficult to acquire than money in your organization. Of course, in many organizations both money and manpower are difficult to acquire, but hopefully the increased sales you will make from your vertical market activities will help alleviate both problems!
Once lucrative niches or sub-markets are identified, you need to evaluate them to decide where to invest your resources. Market Scope includes a consideration of potential applications for your product in the target market, an estimation of the number and size of the target companies or agencies in the market, and some idea of their budget and buying cycles.
Market Scope
If you don’t have any idea how the companies in a target market develop, produce, market, sell, and deliver their products, additional internet research is necessary. Fortunately, you can use the same techniques described previously to conduct initial research in this area by applying different search terms. Wikipedia (www.wikipedia.org ) and How Stuff Works (www.howstuffworks.com ) are excellent resources as well. With a rudimentary understanding of the target market’s business model and some imagination, you should be able to determine if there is any potential for your product in this segment. Of course, any initial assumptions will need to be tested later through discussions with influencers and decision makers in the target industry, as there is no substitute for primary research. If there does not appear to be a good application for your product, cross the market off your list of potentials.
If there is potential for your product, research the number and type of companies active in that market, the amounts spent on products like yours or substitute products (or in areas where products like yours may have applications, as in the airplane exercise equipment example), the budget and buying cycles for those organizations, any relevant regulatory requirements, any restrictions on interactions between customers and vendors, and standard procurement practices in the niche. Trade and business magazines or websites are the best source of this type of information. “Reviewer” web sites and prominent industry blogs also provide perspective. Relevant regulatory agencies should be consulted to probe the limitations, restrictions or required certifications. Company press releases and annual reports often contain excellent information. Researching these sources will provide you with a list of potential customers in the niche, an idea of the market potential, an idea of potential challenges, and an estimation of the amount of time required to realize a return on the investment of resources. This information needs to be analyzed in the context of your company’s business focus, strategy, and available resources.
If a market appears to be viable, the next step is to begin developing the value proposition of your product for those potential customers. You must clearly understand why they would need a product like yours, what they would do with it, how it would improve their business, what the total cost of ownership (TCO) would be, the return on the investment in your product the customer could expect, and how that compares to alternatives available to the customer. You must be able to present the value of your product to the customer concisely and convincingly, from their point of view.
While you are developing this value proposition, you can begin working on Market Development. The relationship network you develop in the target market will help you refine your value proposition and perhaps help uncover new applications for your product.
Market Development
Market Development requires identifying the Influencers and Decision Makers, developing a positive corporate profile, and developing a positive personal profile in the target market. This is not selling. This is building the credibility and relationships that will facilitate future sales. Keep in mind that B2B sales cycles are rarely shorter than 3 months and can be 2 years or more for large, complex purchases. Advertising certainly helps build the corporate profile. However, advertising only supplements and facilitates your work in building a relationship network, it does not replace it. Further, the advertising should clearly demonstrate an understanding of and affinity for the target market by presenting your value proposition from the specific customer viewpoint of the market being targeted. Generic ads communicate a lack of interest and/or understanding of the market to the influencers and decision makers in that market.
Influencers:
Influencers are the people who provide thought leadership in a market or otherwise have influence with the buyers and decision makers. Generally, speaking, there are many people in an organization who influence the buying decision, but here I am specifically discussing the “mavens” (see the Tipping Point) and experts who exert influence within the market at large. It is essential to get to know some of the influencers, and perhaps, over time, to become an influencer yourself. You will learn a tremendous amount about the target market and decision makers from the influencers. They may also become advocates for your product if your product has a solid value proposition, and both you and your company consistently act with integrity.
The quickest way to identify potential influencers is to find out who has been speaking at conferences and symposia in the target market over the past year, and who is speaking during the coming year. Any person who is speaking at more than one event or has a key time slot at an event is likely an influencer. Finding the conferences is easily accomplished by searching the internet using terms containing words like conference, symposium, exhibition, colloquium, etc. Fortunately, most professional gatherings provide details on speakers and sponsors on their website. Further details can be obtained using the research strategies in Chapter 1’s Market Analysis section.
The best way to get to know an influencer is to have a mutual contact introduce you in person. Second best is an e-mail introduction by a mutual contact. However, it can be equally effective to introduce yourself immediately after one of their presentations at a conference. Chances are you will wait in line and only have a minute of their time, but that is enough to meet them and request some follow up dialog in person, by phone, or by e-mail. Most public speakers are easy to talk to and may be equally interested in enhancing their own network.
That is the easy part. Maintaining regular contact and, most importantly, contributing value to the relationship (ideas, information, other relationships) going forward requires sustained effort on your part. The rewards for your efforts include applicable knowledge, enhanced credibility, and access to other influencers and decision makers.
Decision Makers:
Decision makers are the people that decide whether or not to buy your product or service. Sometimes it is an individual, and sometimes it is a team or committee. Once again, the market analysis techniques from Chapter 1 will help you identify them. Further information is often available on the websites of the companies you are targeting, especially in small and mid-size companies. You can meet them at conferences and trade shows, especially if you do a great presentation on a topic of importance to them. You can meet them through friends, colleagues, and the influencers you now know. If you haven’t met any yet, you can contact them directly. In my opinion, it is best to precede a “cold call” with a personal letter or a creative direct mail campaign, or networking via LinkedIn. “Cold calling” is a tough, low percentage activity, but the advance work makes it a little bit easier to actually get in touch with the decision maker to begin the relationship. Another option would be to become a corporate sponsor of an organization of decision makers, if one exists. This can help build relationships quickly, if your participation is consistent and you offer value to the organization.
Using LinkedIn to Reach Influencers and Decision Makers
If your network and strategic networking doesn’t get you to the Influencers or Decision Makers in the target market, LinkedIn is a valuable resource. There are several approaches to identifying and connecting with the people you need to know.
1. Use the Search tool to identify the people at the companies you need to meet (the “people who searched for y, also searched for x” should be as carefully mined as your direct searches). Suggest doing your profile research in Private mode, so you don’t seem like a stalker when you do reach out.
2. Join the appropriate Groups and participate. You can directly communicate with other group members. Of course, seeking someone’s opinion or a further discussion of group topics can be a viable reason to connect. You can figure out which groups to join by searching keywords and by comparing the groups your target influencers and decision makers are in.
3. Utilize the Sales Navigator tool to develop a significant lead pool quickly (this is a paid service on LinkedIn). With this tool you can select the industry, company size, role, etc. of the people you want to get to know. You can also track your interactions with them.
Getting the list is the easy part. Cultivating the relationships takes time and creativity. If you imagine yourself in the place of the person you are interested in working with, you will quickly realize that sending a contact request or message pitching your product will not be very effective (influencers and decision makers may get 10-20 unsolicited pitches per week). Instead, research the person’s profile and role. Read about the company and learn about the initiatives they are undertaking or the challenges they face. Use that knowledge, and find some useful resources, articles or information to share that may be helpful to them. Position yourself as an ally and a resource. Then request the connection. Continue to add value, and begin to connect on a personal level if appropriate and practical (based on mutual interests, background, etc., or simply acknowledge a work anniversary, promotion, or birthday). After a connection is established, you can arrange to meet at an industry event, or set up a call for an informational interview. Note that an informational interview should not be a sales pitch, it is a listen and learn session. IF you learn that they have a need for your product/service, you can request permission to provide some background on how you might be of help to them at another time. If they do not have a near-term need, continue to be a resource. They will eventually need your product or service, and may recommend you to others in their network in the meantime, if you treat them well. Once the relationship is firmly established, you may even directly ask them for a referral. Remember, the B2B sales cycle can be long. Take the time to plant and water the seeds of these relationships, because they are also the seeds of your reputation in the marketplace.
Corporate and Personal Profile:
In a niche market, the people representing the company have a major influence on how the company is perceived in the market. Your personal image and that of the company are closely intertwined within the network that defines the niche. It is important for you to constantly be aware that you are representing your company in all interactions, and to stay consistently “on message” as long as the “message” remains true and relevant to the market (if the message is no longer true or relevant, it’s time to work with product and marketing management to rethink the message).
Some ways to raise both your personal and corporate profile are:
1. Take an active role in industry associations related to the market.
2. Work on standards and regulatory related issues if you are qualified. If you are not personally qualified, try to persuade your company to deploy appropriate personnel to do the standards/regulatory work and make sure that they know what the corporate message to the market is and can stay reasonably “on message”.
3. Become a knowledge resource to people in the niche on a particular area.
4. Speak at industry events, after you have developed some level of expertise.
5. Provide compelling information at “tabletop” and other exhibit opportunities where you can meet influencers and decision makers.
6. Provide event sponsorship if it includes media you would have purchased anyway, and/or an opportunity to address a group of influencers and decision makers.
7. Write articles for trade or industry publications.
8. Issue industry/market relevant press releases whenever your company introduces a new product or wins an account in the market.
9. Maintain a relevant, frequently updated web portal specifically for the target market.
10.Partner with a company that is already firmly established in the market to offer a more comprehensive solution than either of you could on your own.
It is essential that both you and the company consistently act with integrity and a focus on customer satisfaction. As the saying goes, it takes a long time to earn a good reputation, but it only takes a moment to ruin it. People will be buying from you as much as the company, so it is important to build trust through constantly ethical action.
Market Penetration
By now you are focused on a particular niche, know the market well, are getting known in the market, and have a solid value proposition. Although you will continuously build and maintain your network, deepen your understanding, and refine your messaging, it is now time to focus most of your time on actually winning business. As you know, the key activities here are lead generation, follow up on leads, making it easy for the market to buy your products, and providing opportunities for people to buy from you.
Lead Generation:
Fortunately, every activity listed in Chapter 2 on building your personal and corporate profile is a lead generating activity. Additional ways to generate leads are product promotions, targeted advertising, an e-newsletter, offering white papers and other resources in return for contact information, search engine optimization, and paid search advertising. Just don’t forget to consistently include current contact information so people can find you. Wherever possible, use unique promotion codes for each activity so that effectiveness can be tracked and measured.
Lead Follow Up:
The key is to make sure that a knowledgeable human follows up with each and every lead, qualifies the opportunity, and continues the process through the sales cycle. Nothing alienates a customer more than a lack of responsiveness when they are eager to buy, and this can have a severe negative impact on your personal and corporate profile throughout the market due to the relatively closed network inherent in a niche. If you are spending the time and money to generate leads, follow up in a timely and professional manner. If you do not have sufficient staff to follow up appropriately, stop spending resources on generating additional leads.
Make it Easy to Buy Your Product:
This sounds a bit silly. However, niche markets often have distinct distribution channels that service them. There may be a particular set of regulatory requirements that must be adhered to (which should have been revealed in your market analysis). There may be buying “schedules” or “contract vehicles” that your product must be listed on to facilitate purchase. It may be standard practice in the niche to offer leasing or other financing packages. Your product may be perfect for a particular customer’s needs, but if it is difficult for them to buy they will find another product that fits their needs.
Provide Sales Opportunities:
Once an opportunity is qualified and the decision makers are identified, arrange a meeting to present to the full set of decision makers, answer their questions and objections, and most importantly ASK FOR THE BUSINESS. You’ve spent a lot of time and money getting to this point in the process, don’t squander it by not asking for the business. There are many ways to close a deal, but they all require asking for the business. The worst thing that can happen is they say no. However, “no” simply means “not now”. “No” means you have further objections to uncover and respond to, but once they are answered you have earned the right to ask again. Perhaps at the same meeting.
Often customers almost “need your permission” to buy. If you don’t ask, they won’t buy. Furthermore, once you have asked DO NOT SAY ANOTHER WORD UNTIL AFTER THEY HAVE ANSWERED. One of my “golden rules” of sales is, “whoever talks the most goes home with the stuff”. This is never more true than after you have asked for the business. The silence may be a bit uncomfortable, and a few minutes may seem like an hour. But five minutes of silence is much more bearable than going home empty handed. Don’t talk your way out of a sale!
Fill the Sales Funnel
Keeping the Sales Funnel filled with leads requires constant effort and improvement.
Further improve your website and sales collateral by providing case studies and testimonials. Current technology makes producing professional video, audio, and print materials extremely cost-effective. So, no excuses. If your case studies and testimonials are compelling enough, decision makers and influencers will want to use them to convince their peers to adopt your product. This makes the case studies/testimonials another lead generation tool. It also indirectly makes influencers and decision makers using your case studies product advocates.
Ensure that your website becomes a resource to the market by updating it frequently with useful information, white papers, web tools, and links. Prominently provide a way to be contacted via the website and be sure to follow up quickly and effectively.
Continue working on your personal and corporate profile to build and nurture relationships with customers and their influencers.
If you can handle more leads, work the trade shows, symposia, and conferences.
In short: be there and be a resource, and you will enjoy significant business opportunities.
*References to four classic books: Crossing the Chasm by Geoffrey Moore on overcoming the challenges of marketing/selling “bleeding edge” products/services; The Tipping Point by Malcom Gladwell which defined a lot of the “viral marketing” nomenclature, Purple Cow by Seth Godin on innovation; and Blue Ocean Strategy by W. Chan Kim and Renee Mauborgne on expanding market spaces through innovation or extreme specialization.
