This is the third part of a five-part series on understanding your customer.
In this post we are going to answer two questions:
- What are you offering your customer?
- How many customers are there?
What are you Offering Your Customer?
The best thing to offer your customer is what they want. The thing that most entrepreneurs offer their customers is what THEY think the customer needs. That works. Sometimes. More often the result is a failure to give the customer what they really want, love, desire or crave.
The marketer, Seth Godin, talks about Purple Cows. It’s a simple idea. Imagine being on a train or a bus and driving through the countryside. Then among all the black and white cows, you see a purple cow. WOW!
I the great sea of competition you and your customers are all black and white cows. That’s because you offer the customer what you think they want. You offer what management wants. You offer what you have always offered. There are a thousand reasons to offer a black and white cow. It takes courage to go out and paint it purple.
It is hard because you don’t really know if the cow should be purple, red or pink. You have to talk to customers.
Some lie. Some mislead themselves. Some don’t know what they want. You have to sift through all these bad responses, look behind the words to find the truth and see what customers want. Then match it.
How Many Customers are There?
One VC I met said that he would never invest in a market which was worth less than a billion dollars. Smaller than that he thought and it was too difficult to make a decent return when he sold the company even allowing for growth in the market.
That’s only applicable to high growth startups. For entrepreneurs who want to fund a lifestyle, it can be far smaller. The truth is though that it has to be large enough.
One of my more spectacular failures was when I tried to sell triathlon race guides. I looked at the market to see how many I could sell. I looked at the number of triathletes and figured that at least a billion dollars were spent on triathlons each year.
I went ahead and discovered that only 5 people were interested in buying my guides. $100. I’d totally miscalculated the number of potential customers that I could have. My customers weren’t triathletes. My customers were triathletes who hadn’t done a race that was important to them and who didn’t have any friends who had done it before.
I hadn’t answered the question.
There are lots of ways of getting to an answer. Bottom-up market sizing, Top-down, TAM SAM SOM. All of those work.
Cut the crap out though. Look at the small market you can and then start counting real customers on your fingers.
If you can’t go to a place where you should be able to find customers and count them – then going further afield won’t help. It will just delude you.