In order to develop a business plan, companies need to determine the size of their market. For some industries and companies this is relatively simple to do; for others, many assumptions are involved. We offer some insights on factors to consider when sizing your market.

Your total market size can be quantified as company sales if you were to capture 100% of the market. As this is not a realistic goal for any company, the next step is to define your niche in the market. Most firms are challenged by their inability to size their relevant market, particularly if the market is fragmented or rapidly evolving.

Here are a few steps that are critical to consider in your analysis: 

The Market: What factors influence the market size? Think about macro trends (such as population growth, economic strength) and industry trends (such as price increases/decreases or a shift from specialty to mass distribution). Monitoring the market is a key part of future projections.

Competitors: Who is competing for the customer you serve?  Consider both direct competitors and substitutes, and factor in product or pricing shifts that may change industry dynamics. Monitor your competitors' strategy to position yourself more effectively.

Customers: Who are your customers and what are their demographic and psychographic profiles? What products are they currently using to fulfill a similar need, where are they purchasing, how loyal are they, and how easy are they to reach?

Analagous Markets: What other industries have experienced similar transformations and what were customer adoption rates in those markets? What learnings can you leverage?

Market sizing should be an ongoing process for your company in order to stay ahead of changes in your industry and serve your customers most effectively.

Implement your customers’ ideas, not yours. Most companies make the mistake of starting with the supplier solution and ending with market needs. Starting with market needs would be more beneficial since B2B customers tend to be more rational and engaged than their B2C counterparts. By soliciting input from B2B customers, companies have an opportunity to differentiate from the competition in the eyes of suppliers and customers.

Conduct customer interviews with regularity. Interview customers during product development and gain feedback with regularity. To get feedback on new products, companies should hone in on attractive market segments and interview customers, prospects, and their customers’ customers. Have diverse functional teams interview, listen, and probe to maximize the opportunity. You'll be a star in the customer's mind by asking questions and truly listening!

Get everyone listening to the Voice of the Customer. Many companies rely on VOC experts to collect and analyze data, but the data never reaches the masses. A better approach is to enlist sales reps, service reps, and others to become VOC experts. They have the customer’s trust, know the customer’s language, and have the opportunity to gain a reputation as a supplier who really listens.

Get quantitative. Over time, your qualitative interviews will grow in number and provide critical mass from which you can perform quantitative analysis. Once you have large sample sizes, you are better able to answer questions such as: which ideas are worth acting on? which can be tossed aside? where are significant issues that must be addressed?

Expand your definition of the competition.  Most companies view competitive products as those similar in features and functionality. What they tend to overlook is that other substitutes may be a more significant threat. Your positioning must reflect the entire competitive set to ensure an approach that enables your company to maximize sales over the long run.

1. Get to know your current customers.

What makes some customers easy to work with, purchase often, and profitable to your business? What are their demographics and purchase behavior? Compare these customers with those who seem to tax your organization from a resource and financial perspective.

If this information is not readily accessible, it is always a good idea to speak with customers to cultivate relationships and gain these insights. Ask your customers what benefits they derive from your product or service and be sure to include these findings in your sales targeting and marketing messaging. This analysis should help you define your ideal customer profile (keep in mind there may be several ideal profiles if the markets you serve are diverse).

2. Be realistic about which customers you can serve effectively.

In order to be successful, you need to find your sweet spot in the market. What is the size of your market and where is the growth? In which segment(s) do you have competitive advantage, namely a product which is at least as good as or better than other solutions? Finally, make sure the customers you identify as your target can be served profitably. The combination of market opportunity, your capabilities, and profit potential are the key ingredients to whom you should be serving.

3. Go after your ideal customer.

Once you have a better sense of why customers like you and who is best served by your company, identify potential customers. During the sales process, be certain that you are dealing with the decision maker and are aware of any influencers in the process. Get to know their hot buttons so you can build this into your conversation or proposal. As you develop learnings along the way, be sure to keep refining your ideal customer profile (and even coming up with a profile of customers to stay clear of). Remember that your ideal customer continues to evolve as both you and the market do!

Your ideal customer is probably right in front of you so be sure to tap into the insights he or she can share. With this knowledge, you will be better able to cultivate more customers and grow your business.

Most companies understand they need a roadmap for success. A strategic plan provides this direction to employees. Arguably, the leading cause of business failure is not having a strategic plan in place that is being well implemented. The following steps can help you avoid some of the most common pitfalls of strategic planning.

Step 1. Select a facilitator with industry experience and without bias.

Though an internal facilitator knows your corporate culture and your products, they may bring biases into the equation. Biases may reflect corporate politics, job security or a business as usual mentality. External facilitators with experience in strategic planning may offer a more neutral approach and have no hidden agendas. 

Step 2: Set the agenda.

Key decision makers need to be included to ensure they are committed to the process and plan. To enrich the intellectual potential of the meeting, people with relevant company information (i.e., finance) or are especially creative should be included too. The meeting should follow a structure, starting broad with the industry analysis, followed by an analysis of your company's capabilities. An action plan must be included to make any good plan tangible.

Step 3: Come prepared with data.

This step is pivotal to preplanning. Having a firm understanding of industry trends, key competitors and threats and opportunities will serve as a crucial foundation for the strategic plan. Company data provides a starting point for your financial goals. Industry and company data analysis should be conducted prior to meeting and shared with key stakeholders.

Step 4: Running the meeting.

Encourage brainstorming and out-of-the-box thinking. Ideas evolve from one another so all input is valuable. Keep to a structured process but be sure you have some flexibility to adapt to your audience.

Step 5: After the meeting.

Conclusions should be summarized and distributed to the team. All decisions must be specific and actionable. The post-meeting document must state your goals and HOW you will achieve them.

Recent client engagements highlighted some key success factors for increasing penetration. To gain these insights, we interviewed heavy and light users and contrasted their feedback. A few common themes emerged: 

1. The importance of the controllable vs. uncontrollable: How much of the gap between light and heavy users is controllable? We recently worked for a client who sold complex investment products through multiple channels. In some cases, 'light' users did not have enough clients who fit the asset profile, while 'heavy' users had more affluent clients to sell to. The 'light' challenges in this case were uncontrollable. For other clients, light usage was driven by dissatisfaction with the service, a controllable situation. It is important to quantify what is controllable in order to target resources effectively. 

2. Root causes for low usage: Once you eliminate the uncontrollables, the root cause for low usage can be addressed. Typical causes often include: lack of perceived value, better competitive alternatives, or true dissatisfaction. Dissatisfaction is most critical to address and needs prompt attention. Regarding lack of perceived value, on occasion we see our clients' customers don't see the value of the offering, because it was not presented to them in a compelling way. To overcome this, benefits need to be clearly communicated and quantified where possible. Finally, on the competition, is the threat real, or is it perception? Both must be addressed but in different ways.

3. "What would make you buy more?": We found that open ended questions such as this one, and more thought provoking questions such as "would doing x make you buy more?" go a long way towards understanding usage potential. Asking the question in different ways encourages the interviewee to think outside the box.

While increasing usage is a challenging task, it is sometimes critical. During our research, we have found the above tools advance clients significantly towards that goal. 

Our recent work with a major internet travel site illustrates some useful and cost-effective approaches to generate B2B revenue — without recruiting a large sales force or allocating a hefty advertising budget:

1. Have a clear value proposition: in B2B you are required to prove impact to the top line and/or bottom line. With consumers you can get away with an impulse or emotional sale since the price is often low. In B2B you need to articulate: does your product or service save money and time? does it help generate new revenue? How is your offering better or different from that of the competition?

2. Determine and focus on the target market: it is easy to fall into the trap of trying to sell to everyone, especially on the Internet. To minimize sales costs, you need to identify the companies or segments that are most likely to benefit from your services and actively market to them. If you engage in any direct selling, your target segment should be your key focus area.

3. Build off your B2C strength: Leverage your strength in B2C to attract B2B customers. Capitalize on your brand equity with consumers and give your customers access to these consumers where feasible. Offer them a hook to give you a try. The more stickiness you get, the more likely businesses will buy into your approach.

4. Build a channel: find out who your customers go to for advice and become their ally. Whether it is consultants or advisers, customers often perceive third parties as knowledgeable. By befriending them you may get an indirect channel to your customers.

Our recent client work demonstrates that following these practices can lead to a smooth and profitable transition to B2B customers.

While most of our clients use Win Loss to gain customer insights for an established business, why not do the same early in the product lifecycle? We recently completed a Win Loss study for a technology company that launched a service nine months ago but really didn’t have complete insights on customer needs. By speaking with existing customers and those lost during the sales process, we were able to see if our client was on track. What did customers think of the offering? How well did the sales process work? Was pricing in line with expectations?

Our research revealed that customers were – at best - mildly satisfied. Our client has an established brand online, thus customers were willing to try the new service. Unfortunately, feedback we received was that pricing was high, customer service was subpar and performance tracking is important. Our research forced management to address these issues early in the product lifecycle, avoiding costly mistakes and lost clients.

In the retail industry, niche companies are more the norm, and companies with no clear value proposition have perished. In electronics, Best Buy has remained a clear winner due to its focus on customer service while Circuit City faded away. Consolidations among department stores have taken place. Macy’s (formerly Federated) bought Bloomingdales, and Sears purchased Kmart. And the market has bifurcated as well. Stores such as Saks Fifth Avenue and Neiman Marcus serve high end customers, Nordstroms has a firm hold on the service-oriented customer, and Walmart and Target battle it out among cost conscious customers.

We recently worked with a technology services provider where little differentiation exists among competitors. The market is mature, and our client is facing an uphill battle gaining new customers. Some of the strategies we proposed include: becoming a low cost provider, offering a best-in-class service model, and focusing on specific geographies or industries. This industry is due for a shakeout, and the question is who will survive.

In a recent client engagement, for example, management was convinced that they were losing deals due to technology limitations. After speaking with more than thirty customers, the reality was quite different. The real concern was our client’s ability to deliver its services on time and according to plan. Price was a bit of an issue, but technology didn’t even make the radar screen.

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So how does this happen? Customers often take the easy way out and tell companies that price was the issue. It’s uncomfortable to say that a company’s people or processes aren’t meeting expectations; It’s much easier to take people out of the equation. So how can companies get the candid feedback that is so critical to building a business strategy based on customer needs? Have an objective party speak to your customers. You’ll be amazed at what you learn.

How do your customers make decisions about buying your products/services? What are their most important purchase criteria? How do they rate your company’s products and those of competitors? You need to get to the bottom of these issues before you can truly address how your message or strategy needs to change.

• The interviews and analysis should be handled by an objective party (internal or external to your company but preferably not customer facing)
• Data should be collected via a 1:1 dialogue, not a survey. 
• The analysis should be quantitative, actionable and measurable.
• Win-Loss Programs should be conducted with regularity.

Win Loss is a time-tested way to help you understand customer needs effectively. It gives you the ability to leap frog the competition by keeping a pulse on industry trends, the competition, and needed enhancements to the sales process, products, and services.