Telling your market story isn't about doing formal market research, or gathering the supporting information you'll need to include in a plan for investors, or professors, or in some cases for the bank, your boss, partners, or any other third-party plan judge or reader. No. This is about knowing your market for yourself, so that you understand the decisions you make, understand the strategy, understand the heart of your plan.
You might get it from some kinds of market research, but in most cases we're talking about understanding the market. Understand what people want, or need, and why they buy from you. Understand what they think about when they think about your business.
For example, let's say you're in the restaurant business. Position yourself. Is your restaurant about fine food and fine dining? White tablecloths and wait people dressed up in black and white, a vase of flowers on each table? Or is it about driving through with half a kids soccer team in the van, getting a bunch of hamburgers and drinks and french fries fast?
What needs are you solving? Why do people buy from you?
Now imagine you're a business plan consultant. Can you do detailed market research for high-budget situations, like major companies looking for information about entering new markets? Or are you aiming at the people next door trying to start a business? Do you want buyers who expect to pay tens of thousands of dollars, and can you give them what they expect to get? Or are you aiming at those people who are borderline between having somebody do it and doing it themselves, who would pay $500 to get a plan done, but not $1,000? These are huge differences.
Now pretend you're a blog. How and why will people find your blog, and what will make them return?
Imagine a conversation between your favorite customer and a friend or acquaintance, about your business. What do they say? "It's pricey, but the food is fabulous so it's worth it," or "It's a price performer. Not bad if you're in the neighborhood"?
One of the sadder elements of this exercise is the many businesses who really don't know how their market sees them. The bed-and-breakfast places who are getting customers because the hotels are full, whose customers wish the organizer woman would leave them alone. The bed-and-breakfast who is aiming for quaint and historic and full of character and is getting business because of location and low price. How sad when people change their formula without even realizing what, in their customers' minds, their formula was.
One of the best exercises is thinking through who isn't in your market. Who aren't you trying to reach? How does ruling that person out help you understand who you are looking for?
For example, Starbucks has to know that it isn't trying to get the drive-through customer in a hurry. The Sushi restaurant has to know that a minivan carrying one parent and six 12-year-old kids in soccer uniforms isn't its market. The personal shopper has to know she isn't looking for cost-conscious bargain basement buyers.
John Jantsch, in Duct Tape Marketing, recommends that you start by profiling your ideal customer. Focus for a while on one person, whether he or she is your customer directly or the decision-maker for a business customer. Give that person age, gender, income level, likes, dislikes, favorite movies, songs, magazines, restaurants. Know that person.
If you've been in business, you can think of that customer fairly easily. Maybe it's a composite of several real customers.
What you want at this point is to be able to tell a story about this customer and his or her needs and wants and how your business addresses them.
Clean your mind for a few minutes. Forget how great what you're selling is. Forget the features you've focused on, and your marketing literature. Think about what your customer wants. Why does he or she buy from you.
Think about Starbucks for a minute; a brand most people know. Starbucks doesn't think it's selling coffee drinks. Starbucks sells affordable luxury. Starbucks sells atmosphere, a place to meet.
Then consider the two different options for selling food. One of them is selling convenience, reliability, consistency; it's a great solution for a parent driving a van full of kids in soccer uniforms, kids that the parent needs to feed between games. The other is selling luxury, atmosphere, fine food and peace and quiet, a fancy meal for a date -- in short, something completely different from the first "product."
Now go back to your target customer, and think about that story. Who is this, what situation is she in, why does she pay you money. What are you really selling? What business are you really in?
Back in the 1970s when I was a foreign correspondent living in Mexico City, I dealt frequently with an American diplomat who provided information about Mexico's increasing oil exports, which were a big story back then. We had lunch about once a month. He became a friend.
Then one day he told me he was being transferred to another post because he had been in Mexico too long. "What? but you've only been here for three years," I said. I was disappointed for two reasons -- losing a friend, and losing a source of information. "You've barely learned the good restaurants!"
He explained to me that the U.S. Foreign Service moved people about every three years on purpose. "Otherwise we think we know everything and we stop questioning assumptions," he said. "That's dangerous."
I remember that day still because I've seen the same phenomenon so many times in the years since, in business. Business owners and operators are so obviously likely to fall into the same trap. Our business landscape is constantly changing, no matter what business we're in, but we keep forgetting the fresh look. "We tried that and it didn't work" is a terrible answer to a suggestion when a few years have gone by since it was first mentioned. What didn't work in 2000 might be just what your business needs right now. But you think you don't have to try again what didn't work a few years ago.
This is why I advocate the "fresh look" at the market at least once a year. Existing businesses that want to grow too often skip the part of business planning that requires looking closely at their market, why people buy, who competes against them, what else they might do, what their customers think about them. Think of the artist squinting to get a better view of the landscape. Step back from the business and take a new look. Use standard market research techniques and content and just apply it to your business, not a new opportunity.
Talking to customers -- well, listening to customers, actually -- is particularly important. Don't ever assume you know what your customers think about your company. Things change. If you don't poll your customers regularly, do it at least once a year as part of the fresh look. As an owner, you should listen to at least a few of your customers at least once a year. It's a good exercise.
For creativity's sake, think about revising your market segmentation, creating a new segmentation. If, for example, you've divided by size of business, divide by region or type of business or type of decision process. If you've always used demographics, use psychographics.
Remember to stress benefits. Review what benefits your customers receive when they buy with you, and follow those benefits into a new view of your market.
Question all your assumptions. What has always been true may not be true anymore. That's what I call the fresh look.
The artist takes a fresh look at the scene every time paints it. How many times has this man seen the banks of the Seine? It doesn't matter, because he sees it differently each time. You need to take a fresh look at your market and your strategic situation at least once a year.
You fall in love with your plan, and love is blind. You don't see the fatal flaw.
I know a man who jumped headfirst into a new venture based on building a chain of used CD stores. The punch line? It was 2000. Napster was already there. Do you see the fatal flaw? He didn't. And this was a man who'd had a string of successes.
Love is blind.
So here's a trick that might, sometimes, if you're lucky, help you see the fatal flaw.
- It takes imagination. So close your eyes, relax your shoulders, and take a deep breath and let it out slowly.
- Jump in your imagination to the future. Go to three years from now.
- Now pretend that, there in the future, you know that the business you are starting now, your baby, your dream, is over. It failed. I know, that's hard, but it's a game; it's only in your imagination, so make that leap.
- You're sitting at a table, maybe in a coffee shop, maybe at lunch, and somebody asks you: "What happened? Why did it fail?"
- Now, using your imagination, your intelligence, and what you know about your business, answer that question. This is fiction now, so you have to tell a story. Make it believable. What happened?
This activity will help you think about flaws. Was it competition? Did the management lose interest? Was there not enough money? Did some new technology come along?
I don't know for sure, but I believe that if my friend with the used CD stores had done this exercise, he would have come up with the possibility of a change in the way we deal with music, meaning Napster, downloading, iTunes and so on.
And, for the record, I haven't done the research, either, but what do you think? Would you like to own a used CD store? What do you think has happened to the sale of used CDs?
Adapted from Up and Running blog.