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A Simple Tool To Assess Market For Your Startup

A Simple Tool To Assess Market For Your Startup

As a growth private equity investor with strategic consulting services, OpenView Venture Partners (the Boston-based VC I founded in 2006) puts a significant amount of resources against researching, addressing, and testing the question of how companies can generate stronger growth without having to invest significantly more resources. It’s not an easy thing to do, but I believe my team is narrowing in on a simple but powerful assessment tool for it.

And I’m going to share that tool with you here.

Before we get to the actual assessment, however, I’d like you to answer a few simple questions:

  • How clearly can you truly “see” your target market?
  • How clearly can you design and develop your market “touch points” to create the best offering in your target market?
  • How clearly do your target market participants (customers, prospects, and influencers) “see” the uniqueness of your product and/or service?

Those might seem like somewhat ephemeral questions, but it’s critical for founders to be able to answer them. And the only way to generate those answers is by increasing your overall market clarity, which is a simple metric that defines how well you — and your customers — understand your value to (and purpose in) a given market segment.

A Simple Tool for Assessing Market Clarity

Below, you’ll find assessments for seven key areas of your business and you’ll be asked to assign a reasonable percentage of confidence (or market clarity score) for your understanding of each one. At the end, you’ll add those percentages up, divide by the total number of them (7), and produce a “Total Market Clarity Score” that can be used to help you invest your time, resources, and capabilities into market activities that drive more effective and efficient growth.

1. Target Market Clarity: How clear is your target market segment?

Assign your level of confidence with this statement: “We have identified and prioritized one or more highly attractive target market segments where we truly have the unique insights and capabilities to capitalize on them, and where we believe we can create and hold top market share.”

Target Market Clarity Score: Score 0% to 100% where zero is “absolutely not” and 100% is “resounding yes”

Our Target Market Clarity Score:_____%

2. Target User Clarity: Is your target user well-defined?

Assign your level of confidence with this statement: “We have identified the people/roles in each of our target segments that come into contact with our product (e.g., install, configure, administrate, user by role) and have unique insights (throughout the product lifecycle) into:

  • What they need to accomplish
  • How they want to accomplish it
  • And what their criteria is for a great product

Also, we understand:

  • The competitor offerings for each of our target segments and have a unique understanding of their capabilities and flaws.
  • How each of the user roles perceive us and our major competitors with respect to the important user criteria.
  • Exactly what we need to do to align with the target users’ unmet, and perhaps unknown, needs (and wants), and get a “wow” from them.

Target User Clarity Score: Score 0% to 100% where zero is “absolutely not” and 100% is “resounding yes”

Our Target User Clarity Score:_____%

3. Whole Product Clarity: Is your whole product the clear winner in users’ minds?

Assign your level of confidence with this statement: “Our whole product (product, professional services, customer service, etc.) is highly differentiated and exactly matches:

  • What the target users want to accomplish throughout the product lifecycle (for each target segment)
  • And how they want to accomplish it

Whole Product Clarity Score: Score 0% to 100% where zero is “absolutely not” and 100% is a “resounding yes”

Our Whole Product Clarity Score:_____%

Target Buyer Clarity: Are our target buyers (and their buying process) clear to us?

Assign your level of confidence with this statement: “We have identified the people/roles in each of our target segments and we have unique insights into their buying process, decision-making process, budgets, buying criteria, messages, and the content (including free content and products) that will resonate with them. Also, we can clearly identify the trusted people/places that that they go for information and guidance (a.k.a., marketing/influence channels) and the way that they like to purchase products like ours (a.k.a., buying channels from their perspective, sales channels from our perspective).

Additionally, we clearly understand how each of the buyer roles perceive us and our major competitors with respect to the important buying criteria in each target segment.”

Target Buyer Clarity Score: Score 0% to 100% where zero is “absolutely not” and 100% is a “resounding yes”

Our Target Buyer Clarity Score:_____%

5. Marketing Operations Clarity: Is our product/service understood in buyers’ minds?

Assign your level of confidence with this statement: “We have a brand promise, messages, content, and a pricing model that is valuable, relevant, highly differentiated, and aligned with the best available positioning with the target buyers (for each target segment). We distribute our messages/content through the best marketing/influence channels to create awareness and influence our target customers for each target segment.

We have optimized our marketing funnel to maximize conversions of the best fit prospects for each target segment and minimize the resource drain for prospects that we do not have a good fit with. And, finally, we measure and monitor results, and adjust our messages/content, marketing channels, and marketing funnel process to continuously improve our performance.”

Marketing Clarity Score: Score 0% to 100% where zero is “absolutely not” and 100% is a “resounding yes”

Our Marketing Clarity Score:_____%

6. Sales Clarity: Are we the clear winner in buyers’ minds?

Assign your level of confidence with this statement: “Our sales channels and sales touch points within each channel are tuned to the buying process, decision-making process, and buying criteria of the target buyers in each target segment, and we reinforce the brand promise, product positioning, and competitive differentiation throughout the sales cycle.

In addition, we have:

  • Segmented our sales efforts to the relationship lifecycle with the buyers and to the unique market segments to ensure that we align with the buyers’ needs (e.g., new customer acquisition team, renewal team, account management team).
  • Optimized our sales funnel to maximize conversions of the best fit prospects and minimize the resource drain for prospects that we do not have a good fit with.
  • Tuned our sales approach through appropriate indirect sales channels (e.g., VARs, Affiliates, OEM) to help them optimize their approaches to the target buyers.
  • Measured and monitored results, and adjusted our sales processes to continuously improve our performance.

Sales Clarity Score: Score 0% to 100% where zero is “absolutely not” and 100% is a“resounding yes”

Our Sales Clarity Score:_____%

7. Brand Clarity Score: Is our brand promise clear to the target customers?

Assign your level of confidence with this statement: “Each of our market touch points (marketing, sales, product, professional services, customer service, business development, etc.) are all highly aligned with — and reinforce — a simple brand promise that we make to all of our target market participants (note: in my mind, branding is about consistently delivering the brand signals through all the touch points, not about spending a lot of money on advertising). The brand promise is valuable, relevant, and differentiated in the minds of our target customers (users and buyers) and aligned with their needs and wants.

Also, our most important touch points (branding signals) in the minds of the buyers and users are particularly well developed and we are very consistent in their delivery.”

Brand Clarity Score: Score 0% to 100% where zero is “absolutely not”, 50% is “we have the right brand vision and roadmap and the answer will be “resounding yes” soon, and 100% is “resounding yes”

Our Brand Clarity Score:_____%

Calculating Your Total Market Clarity Score

Now, take each of your percentages from the seven categories above, add them together, and divide by seven to get your average score. Once you’ve done that, enter it below.

Our Total Market Clarity Score: _______%

How to Interpret Your Score

You can think of each of the components of your market clarity score as a filter that either impedes or improves your ability to see customers clearly and deliver differentiated brand messaging in your target segment. Any individual filter can dramatically reduce or improve your overall growth prospects (although in some cases you might still get lucky and stumble into a good situation, even without high market clarity).

That said, here’s a simple way to interpret and assess your Total Market Clarity Score:

Score 0% to 25%: Don’t despair, as all companies start at 0% and you could be a diamond in the rough, particularly if you already have a good economic model. Focus most of your resources on filters closest to zero and your diamond could really start emerging.

Score 25%-50%: This is a pretty standard score for early-stage companies. To improve it, work on the high impact filters and you should see significant improvement, particularly if your economic model is already working. If your economic model is really working well, you could put more resources against methodologies to scale, organizational and operational development, and growth, but you will still benefit by improving your market clarity.

Score 50%-75%: 
This qualifies as very solid performance, but working on the higher impact filters should still improve your growth and improve your economic model. If your economic model is working well, then you might also focus more of your effort and resources on improving methodologies for scalability and on your organizational and operational development.

Score 75%-90%: 
This is excellent performance. If your economic model is working then you may want to move much of your effort toward improving methodologies for scalability and organizational and operational development, and putting much more resources toward growth.

Score 90%-100%: Frankly, this score was probably created because you were overly optimistic with your scores. Ask others in your company to score the company as well and you will probably find that you get a more realistic score.

Ultimately, we’ve found that one of the largest impediments to success for young companies is low market clarity. Further, one of the biggest mistakes that companies make is focusing too much on expansion while their market clarity is low. When this happens, the result is (more often than not) lower than anticipated growth, wasted resources, and downsizing.

We’ve also found that some companies get lucky with their approach despite low market clarity, but the growth generally slows at some point and they need to increase their market clarity in order to get the growth back. Unfortunately, at this point, it’s often very difficult to re-gain momentum and some companies never do get back on the fast track.

There are a number of other unique scenarios and situations, of course, and the reality facing your company might be different. But the key learning here is that the key goal for all emerging growth companies should be to create and maintain high market clarity and to work hard to maintain it throughout its life. As you penetrate  target segments and begin to expand into others, it’s definitely worth rinsing and repeating this process to ensure you have clarity in that new market. When this process is paired with a great product and economic model, rapid growth almost always follows.

Note: The views and opinions expressed are solely those of the author and does not necessarily reflect the views held by Inc42, its creators or employees. Inc42 is not responsible for the accuracy of any of the information supplied by guest bloggers.

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Scott is the Senior Managing Director at OpenView Venture Partners.

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