Tag Archives: Data

How Do You Quantify Niche Market Potential? Five Suggestions

Situation: A CEO’s company focuses on a specialized niche market. One of his challenges is that there is little public or chamber of commerce information available on the size and characteristics of their market. How do you quantify niche market potential?

Advice from the CEOs:

  • Define the product / service very specifically. To narrow and refine estimates of market size look for the low hanging fruit.
    • What are the high growth segments of the target market?
    • What are the high growth industries of the target market?
  • To determine whether the market opportunity is $100M or $500M:
    • Define the company’s market more clearly – particularly the initial beachhead market where there is the potential to gain the most traction.
    • Recognize that there may be two markets: a high end market – relatively low gross sales dollars but high margins, and a low end mass market – relatively high gross sales but low margins.
  • Contact the originators of available market data to get their assumptions, comparative data and any other findings that may not be published but are beneficial.
  • Work closely with customers to build category / industry revenue estimates.
    • Segment the most active customers and increase the company’s share of their purchases.
    • Develop web site transaction capabilities to offer the company’s line as an adjunct to customers’ web sales.
    • Establish a Customer Council or Round Table to better understand the market dynamics and to differentiate the company within the market.
  • Sell the product and services’ features and benefits to the C-level, not just to engineers.
    • Sell to the CEO / CFO focusing on increasing shareholder wealth.
    • Determine a return rate for conversion to the company’s technology.
    • Reach out to professional segments that will naturally see value in the company’s process.
    • Seek an exclusive relationship with an industry leader to quickly launch new products.

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How Do You Build a New Channel? Four Cases

Situation: A company wants to increase business by building a new channel. The new business is different from the company’s base business, but won’t change the company’s focus on its base business. What lessons have been learned by other CEOs who have accomplished this? How do you build a new channel?

Advice from the CEOs:

  • One company created a new channel without changing the base business.
    • They responded slowly to the opportunity before deciding to change.
    • They needed to change infrastructure by adding more people.
    • They also needed to redefine the offering to meet the needs of new clients.
    • This involved adding additional data which had been accessible previously but hadn’t been presented.
    • At first the hand off wasn’t smooth. Hiccups that could have been foreseen with more planning were extra data fields and rough hand-offs. Future new releases will focus on improved process review and more challenging of assumptions, and more patience in the scoping stage.
  • The second company created a new branch with different products and operations, but maintained one financial and inventory management system.
    • The initial produce was sold and installed, utilizing union labor. The new product is sold wholesale business to businesses and is non-union.
    • After struggling with attempts to house both operations under one roof the new operation was moved to a separate location.
    • This enabled company to set up separate operations and to fully understand the financials of both operations. It also makes it easier to assess the viability of each business and to implement changes in one without disrupting the other.
  • The third company created a new offering to sell to the same customer base, with no change in the back-end systems.
    • The new business created an insurance model for the company’s services as an alternative to the original break-fix model.
    • The two systems use a common sales team, network engineers, and back-end system. Customers choose either insurance or break-fix.
    • The challenge was that the two models need completely different monitoring and incentive systems for the engineers. This took time for development and training.
  • The fourth company created two production operations: turnkey and component.
    • This called for different sales and contracting processes and separate production areas on the plant floor, with clear delineation but using the same back end, financial, and engineering support systems.
    • The component process is short-run, high value, high margin; the turnkey is high volume runs, lower value, low margin.
    • The challenge has been in setting up a new set of contract agreements and monitoring systems to monitor the financial success of the turnkey operation.
  • What is the common thread?
    • Put sufficient time into planning and evaluating options and challenges so that there is a solid understanding of the new channel before starting.

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How Do You Move from Informal to Formal Processes? Five Keys

Situation: A company is growing its sales capabilities and adding staff. The CEO wants to improve the company’s ability to generate new business. To date they have relied on informal channels to generate referrals. How do move from informal to formal processes?

Advice from the CEOs:

  • Establish as standard practice that all personnel ask for referrals in normal communications with:
    • Clients
    • Sales associates of partner firms
    • Individuals who are trusted advisors of potential clients – lawyers, CPAs, financial advisors.
  • Different groups – CPAs, lawyers, financial advisors, etc. – have different interests and potential fears about making referrals. In conversations with individuals from each group, ask why they make referrals, how they are serving their own clients, and what potentially concerns them the most about making a referral.
    • Once this data has been collected, develop proof statements for each audience that address their needs and concerns. These may be different between different audiences.
  • Do the same with new clients, as they become clients. Ask why they chose your firm, and what most appealed to them about the firm. Make this part of the initial client services interview. Collect this data and create proof statements about company performance that will appeal to other potential clients.
    • Note that the responses from brand new clients may be significantly different from those of clients who have been with the company for a year or more. The latter group knows the company, and this will color their vision. Responses of new clients will be more germane to the needs of prospects.
  • Create a system to track frequency of contact with key referral sources. This system will identify, among other things:
    • Contact name, contact information
    • Contact history (contacts to the individual by the firm)
    • Referrals received from the contact
  • After contacting an individual who has been referred, always communicate promptly back to the referrer that the company has made the contact and the results. Always say thanks. Provide the referrer comfort that they will not be shut out.

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When Should You Bring in External Resources? Four Suggestions

Situation: A company provides market research, technical assistance, and related services for clients. It receives most of its work from proposals. Both writing successful proposals and carrying out the work of accepted proposals are critical capabilities. Should they bring in external resources to increase the number of proposals submitted? Where should these resources be focused?

Advice from the CEOs:

  • Identify the most critical tasks that contributed to proposals that have been awarded.
    • Determine, between writing and editing, which tasks are most critical. Focus internal resources on these tasks and seek outside resources to assist with the less critical tasks.
    • Provide incentives to those who write grants that are awarded.
  • What portions of the proposals could be written using external resources?
    • Background information, including corporate history, tends to be repetitive between proposals. However, this material is also difficult for an outsider to master.
    • One option is to secure outside resources that will commit to the company for a long time. These resources would have the time to learn and master the historical data.
    • Another option is to use the company’s database to store and code historical data. These data could then be managed by a less expensive internal resource and collected with appropriate filters for each new proposal that arises.
  • Codify the repetitive source material in a database. Secure software that makes it easy to filter and recall selected data for the writers of new proposals.
  • An alternative to using outside resources is to develop an internal coordinator who is master of this database and who is responsible for gathering appropriately filtered data to support the efforts of the company’s proposal writers.
    • By taking care of this portion of the proposal writing task, it will be easier to find enthusiastic project leaders to take on the more creative aspects of new proposals.

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How Do You Choose Between Opportunities? Six Points

Situation: The CEO of a software company has been presented with two opportunities by a large customer – international expansion to support their sales and creation of a data warehouse facility. The company has the option of pursuing either or both. The customer is not offering up-front cash to support either opportunity. Should they pursue either or both? How do you choose between opportunities?

Advice from the CEOs:

  • Keep pursuing both opportunities and establish a series of decision points which will yield either a Go or No-Go decision on each. The big question is to determine how either will support company growth.
  • The customer is interested in both opportunities so ask them for assistance such as: removing barriers, client referrals, or some form of cash or investment.
  • For either opportunity to succeed requires a high level of internal buy-in and support from the customer.
  • If the company can afford to be aggressive now, this is a great time to move.
    • Look carefully at the ROI on each opportunity under different scenarios.
    • Do background work with potential clients to validate each market opportunity.
  • Specifically to International Expansion
    • Buy-in from the customer’s head of international sales is essential – without this it will be difficult to establish a solid relationship with the international sales team. Lack of this support will be a No-Go sign.
    • Can the customer provide office space, access to their infrastructure, administrative support, assistance in gaining necessary licenses to do business, etc. during start-up?
    • Could this venture be undertaken through a joint venture with an established international company? This would save start-up costs and allow validation of the opportunity before risking the company’s investment.
    • Execution will require a large-scale effort – both time and money. Include both in the Go/No-Go calculation.
  • Specifically to the Data Warehouse Facility
    • A competitor’s right of first refusal on this business is a barrier. However, the opportunity may be viewed as too small for the competitor. Is it possible to buy rights from this competitor?
    • Ask the customer to transition their customers to your company and its product.

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Can Social Marketing Leverage Your Competitive Position? Six Points

Situation: A company seeks to leverage the difference between information from traditional media and the richer information available through social media. Their objective, using publicly available information, is to identify individuals’ specific plans or preferences to better target their clients’ marketing dollars. Can social marketing leverage your competitive position?

Advice from the CEOs:

  • The principal value proposition is the ability to mine publicly available information from consumers through social media and make it useful to advertisers who want to reach those customers.
  • If the company’s technology allows access to shared data which can be used by many companies this is less expensive than clients’ trying to go it alone.
  • The most important differentiation will be the timeliness of data. Many firms collect data after the fact – for example after a key purchase is made. What advertisers desire is the ability to anticipate purchases. An example is a consumer’s plan to buy a house. This information is valuable to many companies. If data is mineable, it is valuable.
  • The essential question is how the client will make more money from data being near-real time. If the client can use the company’s data to enhance their marketing database, this adds value.
  • Consider partnering with the agencies that B2B and B2C companies hire to advertise their products. Even the largest consumer B2B and B2C companies work with outside ad agencies because these companies have better access to targeted customer lists than the companies.
  • Consider a subscription model, offering access to unique, current data to many customers. The differentiating value is the currency and timeliness of the data. A subscription model generates an ongoing revenue stream.

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How Do You Launch an Internet Portal? Four Considerations

Situation: A finance company wants to revise its web portal. The objective is to provide up-to-date specialized financial information to clients for a subscription fee. Currently information is provided directly to clients. The portal will allow clients to manipulate the data provided to gain greater insight into their own strategies and operations. How do you launch an Internet portal?

Advice from the CEOs:

  • This presents an opportunity to bring several niche services together under one umbrella.
  • The plan is to make money by selling subscriptions. A challenge will be determining how much clients are willing to pay for this service.
    • Perform an analysis to determine how much clients can either make or save by utilizing the new service.
    • Try a menu approach with varying fees depending upon the number and frequency of services accessed.
  • To more quickly gain recognition and credibility, consider partnering with an existing well-established entity such as Bloomberg. Design your portal to integrate your data into their existing traffic flow.
    • This reduces the development effort because the partner already has the shell and a well-established market presence.
  • As an alternative to partnering, it may be best for the company to develop the portal on its own.
    • In this case, if there is a tightly defined target audience and the company already possesses all the equipment and programming required to launch its own portal, it may be best to carefully select initial clients and for the company to do everything itself.
    • If the company has the necessary access to key target clients, this will save the need to split revenue with a partner.

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How Do You Optimize Your Business Model? Six Points

Situation:  A company is in the process of shifting their business model to better address customer needs. They have three different models under consideration. Management is split between these models, but must arrive at a consensus. How do you optimize your business model?

Advice from the CEOs:

  • Right now, you are considering three different potential models:
    • Tools – your old model
    • Data – produced by your old model
    • Service – your new model
    • These are different models with different prospects.
  • The money makers in marketing focus on data, not tools. Data is information, and this is what is valuable to clients. If you want to focus on the data component of your offering.
  • Currently, you are scraping data from social media and matching this to your client’s database on a real-time basis. There’s a model and value here because you are enhancing your client’s current database by making it more useful and actionable to them.
  • You have tools to enable and add value to existing client databases by allowing them to better segment their database. Again, there is value here.
  • Your core IP is the ability to correlate diverse data sources. Have you protected this IP? If not, this needs to be a top priority.
  • How much information that you scrape from social media sources can you share without violating privacy? This is something to think about because people are becoming increasingly sensitive about companies collecting their private information.

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Are You Planning Salary Increases This Year? Five Thoughts

Situation: A company’s staff is highly paid. Historically, annual raises have been 4-5%; however some individuals are above industry salary ranges. The CEO doesn’t want to lose key individuals who would be expensive to replace. The company is planning salary increases for the end of this year. If the level is lower than historic averages they are concerned about the impact. Are planning for salary increases this year? How will you communicate your decision to employees?

Advice from the CEOs:

  • What’s the problem? Even in an improving economy your employees are lucky to be making what they do! On top of this, you need to consider profitability compared to last year as well as historic levels. Selectively share financial data with your employees as well as financial realities – your and their top priority are to keep the company healthy.
  • Gather data on salary ranges for roles in your industry. Good sources are Salary.com for national data (it may be dated) or Assets Unlimited’s Silicon Valley Survey for up-to-date salary information by industry and position. This will help you to prepare for conversations with employees who are currently paid above the range for their positions.
  • If you have employees above the range and do not want to give them raises, give them bonuses or spot bonuses for work well done.
  • Formalize your bonus system – base bonuses on performance metrics. Consider tying bonuses to net margin performance for the company or for departments that can impact new margin.
  • Whatever you decide, make announcements about salary levels a positive event.

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How Do You Expand Your Business Model? Seven Recommendations

Situation: To date, a company has performed a single set of services focused on collection and delivery of a stream of raw data to its clients. The CEO wants to add a consulting service based on the expertise that the company has developed over the years. The CEO seeks input on both how to position this new service, and how to organize it, either within or separately from the current business. How do you expand your business model?

Advice from the CEOs:

  • Consulting services can be offered at a premium to current services because the company will be offering analysis and recommendations for a solution, instead of just raw data. Intelligence is more valuable than raw data.
  • Offer the consulting service on a project rather than an hourly basis. For example, price a project at $10k for the consulting package instead of $200/hour for data collection and reporting.
  • To add weight to the consulting offering, provide final reports and recommendations as a professional, written document supplemented by a presentation.
  • Test the concept and early options for the consulting service with existing clients.
  • Create a new division for the consulting service so the customer sees it as an additional option and value that the company provides. This will change both the branding and image of the business.
  • To increase the opportunity for success, develop a full business plan for the consulting model.
  • Focus on the new consulting business with the same discipline as the current data business.

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