Ideas & Insights – Episode 2: Defining Your Game Changer & Market Size
In this episode, John talks about how you should look at defining your game changing business idea and then how to match the “real market size” to make sure it meets your goals.
Any new game changing idea has a distinct characteristic of a fast growth rate. This doesn’t mean that your new product or service will hit £100M sales in the first year. The total value of your game changing business idea is completely relative to your business or service. You don’t have to have a “billion dollar” idea. These are really quite rare anyway.
What you do want to have is an idea that really is loved by your initial core customers or the early adopters. Once the wider market or mass market starts finding your game changing product or service, then it should significantly increase the sales growth rate, which is what can be described as the inflection point on the growth curve.
You should also track your time in months not years. The short cycle times mean you can see sooner if you are hitting your inflection point. If you’ve been at it for 1, 2 or 3 years and have still not seen the jump in your growth rate, then something is not clicking with your game changer. That may be the idea itself or your ability to get customers to know that you’re new product or service exists.
Once you set your goals, you need to verify if there is actually enough customers to sell your product to so you can meet those goals. So you need to get your “real market size” estimated.
Many companies look at a mass market research report or industry analysis and see that an industry has a market size of £1 Billion and serves 500 million people. And then they set a goal for 10% of that market which means they will achieve £100M in sales. The problem with this is that all of these people don’t care about your new product or service.
You have to narrow these customers down to the ones that in your real market size – meaning the ones who are in your country, region or city – who actually care about what you have to offer – who are available -and who have the cash to buy it. Then multiply this number buy the cost of your product or bundle of services to get the true market size you can set as a goal.
You may discover 3 or 4 “real markets” in different sectors will have a big enough total market size to meet your goals. But the key point is to make sure you have a market size that clearly exceeds your goals and expectations instead of thinking you can sell to everyone in the mass market. You won’t win 100% of all customers in your market, so the total number of customers should be big enough to give you success by only selling to a fraction of them.