In my previous post I discussed sizing your marketplace. During that exercise we thought about the profile of your target customers and tried to understand the channels by which you could sell to them or interest them in your product(s). If you look at what we did during this sizing exercise you can see we created a high level estimate based on some top-down (market forecasts) and bottom-up (channels) factors.
An execution plan takes this exercise one step further by thinking more deeply about who your customers really are and how you can reach, sell, and/or aggregate them effectively. Really understanding your potential customers is important because, at the end of the day, they are the lifeblood of your business, be it B2B or B2C.
So what do I mean by ‘who’ are your customers. Well customers are people, so I am not just talking about market sectors, companies, or communities. I am really talking about important customer attributes that should predispose this group of people to being immediately interested in your product/solution/offering. So, for example, your ‘target’ customers could be Directors of IT at Fortune 500 companies, or 24-34 year old men with an income in excess of $50k per year.
You’ve probably heard the mantra ‘know thy customer’, well by knowing your customer in detail you can create an execution plan that spans marketing (awareness, lead gen, pricing), sales (benefits, value proposition, and differentiation), and product development (functionality and features). So consider two examples:
Example 1 (B2C)
Let’s say I want to develop a casual game and would like to maximize its potential. By studying the marketplace I can quickly see that casual games have generated the best outcomes on social networks like Facebook and MySpace. Paying customers for social games on these networks tend to be in the 18-44 age range and women tend to spend more than men. So with this information, I can now come up with the following high-level execution plan (the real plan would have more detail, like time-lines and more specifics):
- Marketing: use viral channels on the social networks to generate traffic
- Sales: free game with virtual goods for generating scale and revenue
- Product: should appeal mostly to women, but also men, in the 18-44 demographic
Example 2 (B2B)
Let’s say I want to develop a security solution for the enterprise. By studying the marketplace I can quickly see that high security solutions for cloud computing with a low total cost of ownership is a ‘hot’ market space. I can also see that both IT managers and enterprise application managers at Fortune 500 companies should be interested in this solution. To be interesting, pricing should follow the cloud model (monthly subscription) and will need to be high enough to generate $500k-$1 million per customer per product lifetime. So with this information, I can now come up with the following high-level execution plan (the real plan would have more detail, like time-lines and more specifics):
- Marketing: employ webinars, speaking engagements, industry events to generate ‘buzz’ and target customers at key early adopter brands
- Sales: target high profile Fortune 500 customers to get ‘brand’ recognition, discount at first but then build up sales in the ‘enterprise’ price range
- Product: core should be defensible and contain innovative security IP, fill out as a platform with key features for customers and APIs for ecosystem
With this execution plan and the market sizing you now have a pretty good idea about how realistic your business concept is and what your growth prospects are. The next really important point is going to be building out your team to make good on this vision.
Until next time, have a great day!