RAT's stages of market discovery
❓Problem- 👤👥Market fit
Zoom out - look at the broader market
In the initial discovery of a potential market, how do you gauge its potential? With geography or demographics etc, to get a general sense of size? Will you stay hyper local or ‘thinking big’ and go global right away?
We have often seen teams get lost in the statistics and analysis of extensive, expensive market research to estimate accurate market potential at a very early stage. Instead, zoom out on your market,
involve the team
use a white board (or Miro).
identify your different segments together
take an educated guess by involving experts and
validate with quick desktop research.
If you’re working on a financial product, whom could you be addressing? The young earning adult, the young family, the affluent high earning middle aged, or the investment seeking retired? Look at the list from a market entry perspective and from a scaling perspective. Use simple T-shirt sizing, be clear if the size relates to numbers or money or something else. What competitive or comparable product is your market presently using? Zoom out into the ecosystem, what partnerships play a role? Work out the pros and cons, known and unknowns of each segment.
#ZoomIn - 📷
Focus on a specific customer
You can't be everything to everyone.
Don't chase every opportunity by trying to appeal to as many as possible. But focus on one customer base to start with.
It might feel counter-intuitive, but zooming into your market to a specific customer, can make your business more successful. So,
🔅 Avoid the allure of a broad customer base.
🔅 Even if your product has the potential to address everyone, you can’t be all things to all people.
🔅 Start with the early adopters!
Early adopters are the lighthouse group of customers currently experiencing the pain, and actively looking for a solution. Why are they the right ones to truly resonate with, to build trust, and why is this a good place to make a market entry?
This doesn’t, by any means, result in a limitation of your market potential. On the contrary, finding a compelling value proposition for an influential set of people within a market space can prove to be very powerful to attract other potential adopters.
When scaling to other customer segments, crossing the chasm to the early majority, the strength of targeting and satisfying the needs and expectations of a specific customer cannot be overstated.
#OneCustomer - 👩🏾💼
Understand the problem of that one Customer
Who is your customer and what problem are you trying to solve for her/him?
Make it specific.
🧶 Where does she live?
🧵 What job does she need done?
🧶 What is making it hard to complete?
Sometimes we may be looking at the problem incorrectly. Think about how Clay Christensen approached the problem of improving milkshake sales. The range and choice of milkshake flavours was assumed to be the problem. Make it more chunky, smooth, fruity, chocolaty? On asking the customers by conducting research at chains of restaurants, the real problem milkshakes were hired to solve was uncovered. Turns out, commuters faced with a long, boring commute needed something to keep that extra hand busy and to make the commute more interesting.
Looking at the specific customer and the broader problem (sets of problems) can enable us to dramatically enhance our value and importance to the customer.
Early market validation
Going from one specific customer👩🏻⚕️ to a specific segment👨🏾⚕️🧑🏼⚕️👩🏻⚕️🧑🏼⚕️👨🏾⚕️
At this stage, the problem of that one specific customer has been understood, addressed and now it is about extending the phenomena to a small group of early customers and exciting them! How many of those positive opinions convert to actions? These early market tests are real, tangible feedback data in the form emails you collect, actual sign on’s, member/user count, willingness to pay, letters of intent, etc. Engage closely with these early adopters who are eagerly looking for a solution to the problem you are addressing. Learn from them,
🎁 What do they like about your product so far?
🎁 What are they struggling with? What are they missing?
🎁 Whom are they talking to about it? What are they saying? Are they recommending it?
🎁 Act on the feedback, shape and improve your product.
According Everett Rogers in the Diffusion of Innovations (DoI) theory, early adopters make up 13.5 percent of the market population. Keep a close track of how many of them you reach!
Match the problem❓to the broader market 🌐!
Moving from the early adopters of delighted satisfied customers, should allow for a natural transition to the early majority market. This is where scaling begins. As Geoffery Moore has aptly pointed out, this market transition can feel very much like ‘crossing the chasm' and depends on how the product evolves from a niche customer base to the mainstream. Airbnb started off as an opportunistic housing accommodation at trade fairs and local business events. The excited small following prove not to scale to a larger audience. After all, how many people visit trade fairs? The company re-thought their business model, changed their sights, to focus on local rentals at large. The key tenets here are,
✅ Start by creating a small following of excited early adopters.
✅ Go from a small following to specific a segment from your early market list.
✅ Stick with them till you address the broader problem
✅ Go from that segment to the next closest segment
Repeat. Don’t stop even when you have hit mainstream ;-)!