Understanding your market is tough. We decided to hold this Fast Pitch workshop first in the series because we think it’s the most important (and probably most difficult) aspect of starting a social organization, or creating a new program or campaign within an existing social organization. Most of the participants that attended this workshop with facilitator Rashmir Balasubramaniam of Nsansa said that their biggest take-away was the need to continue honing their focus and minimal viable product (MVP).
The bottom line from the workshop: There is so much information in the public domain now, that you can always find information and guidance. There’s no reason not to do, try, get a second opinion or two, and continue to improve/refine based on that learning. For more specific questions, having a one-on-one session with a mentor is invaluable, which the Hub Seattle can help to facilitate.
To further help you identify your market, Rashmir has compiled 7 resources for understanding your market below. Do you have more? List them in the comments section below!
- T.A. McCann’s blog post about finding and building your minimum viable product.
- Steve Blank’s Customer Manifesto as well as many other great resources. Here’s another link to the text of one his books on the importance of customer development, and understanding the nature of your market. Note: there were a couple of questions about whether you need to create the market, and one about figuring out the nature of the market. If it is not obvious, experiment: get potential customer feedback to get a sense of which boat you are in. In the social space, don’t be surprised if in new markets, you need to tap donor/government funds for broad based market development/awareness (see social marketing for more on this type of work).
- The Business Model Canvas: This is a great resource. Working through the canvas, and all the questions they ask, is a great way to identify key stakeholders and the related value propositions for them. This can be particularly valuable when the model involves multiple stakeholders. There are some valuable elements here that will help you get more specific on customer segments, and also on how to operationalize your overarching approach. This approach, together with multiple experiments of trying to make sales/get LOIs from potential customers will help those of you trying to determine who is most likely to pay and for what.
- A good overview on stakeholder analysis. I’d recommend including in your analysis the stakeholder needs, interests and potential value to them (be as specific and tangible as you can, so you can be creative in how to put the elements of your business model together if you have a complex business model. And think through who is feeling the greatest pain and/or may feel the greatest monetary benefit).
- Willingness to pay and pricing. A few of you asked about these topics. Willingness to pay is notoriously difficult to estimate – there’s copious literature on the topic, but it tends to be very academic in nature. In line with the approach we discussed today, I’d recommend the experimenting approach with pricing and wiliness to pay. Once you’ve identified your customer segments, go out and validate your hypotheses with them about the value proposition to them, whether/how the product/service is really meeting their needs, and as quickly as you can try and secure some letters of intent locking in a price or a range to be further negotiated later (it is more possible than you think if you are likely to address urgent/critical needs for them), and better still – build a MVP and see how much you can get people to pay for it! In the interim, here’s a link to a more traditional MBA approach to pricing, which has some very important elements that you need to consider when setting pricing.
- Estimating market size. A very brief intro to methods for estimating your potential market size. This is difficult and challenging to do, especially for new markets where you are developing the market from scratch. However, this article outlines the more traditional approach (use a variety of indicators and triangulate) and a “peeling back the onion” approach. Whatever you do, be ultra conservative when you estimate the potential market size, and even more conservative when estimating how much of the potential market you may be able to capture – noting that marketing building and penetration typically take much longer than most people expect. Note that for new markets, you may get some useful data by looking at complementary products, market size and market growth rates. Ho wever, for new markets, note that your estimates are likely to be more or less meaningless and will most likely be viewed with scorn by investors. So be honest about whether it is feasible to even estimate the market for such a new product/service.
- Here’s an example of someone working through estimating market size using a top down and a bottom up approach. It’s not from the social sector, but it’s simple and tangible and well worth a read to get a sense of how to use the methods in practice, and where/how to search for useful data.