The point of market analysis is to find a catalyst
All the traditional models don’t tell you what’s really important
Market research and analysis has a stodgy reputation. If you hire any firm, you’ll get a neatly packaged report with a number of charts and data points. You will have tasked them to figure out an important question – which market should we pursue? – and they will go run the numbers.
Usually this analysis ends up in a couple, predictable directions:
Go after the market with the biggest potential
Go after the market where you have the biggest competitive strengths
Go after the market where you already have a beachhead or presence
And maybe a couple other variations.
After they deliver the report, they sign off the Zoom call and leave your team to figure out how to actually create a campaign to reach the market.
And, oops! They forgot to include one key recommendation: why customers will buy today.
You end up with an analysis that looks something like this:
You’ve identified all the yellow, blue, and red companies. And then you’ve segmented out some key types of companies (cylinders, pyramids, spheres) inside each market.
Chances are, you might end up with some criteria that sound like:
250-1000 employees
Hospitals
Based in the US
Who currently use Salesforce Sales Cloud
And the market research firm has said that this segment, the red pyramid one, is the best segment for reasons. Good reasons, I’m sure! Maybe they interviewed your customers, did a quantitative survey, reviewed some industry reports, and so forth.
They may even have gone through a SWOT analysis of the company. Maybe a PEST analysis of the market. Maybe they’re really a classic management consulting firm and they pulled out Porter’s Five Forces.
They gave you a really, really clear picture about what these red pyramid accounts look like.
And then… your GTM team has to figure out how to actually convert that segment to paying customers.
Where it all falls apart is just because you chose them, doesn’t mean they will choose you.
The market research report usually forgets to answer the key question of a go-to-market strategy which is: what is pushing this segment to change?
This is what I call a Catalyst.
It’s strange to me this is usually ignored or overlooked at the market research stage, because it’s the only reason a company will buy in the B2B space.
Let’s throw out the shapes and colors for a moment and consider a different starting point in these three segments:
Buyers who are brand new to the market
Buyers who currently use a direct competitor
Buyers who currently have an imperfect substitute
An imperfect substitute is not a direct competitor, but a solution you would compete against that already solves their problem. Electric vehicles don’t directly compete with buses, but they do both get you to your end destination (albeit, a bit differently). You might sell software that helps visualize data, so Tableau would be a direct competitor and Excel is more like an imperfect substitute.
So the first question is very similar to the stodgy market research report: who is in each of these segments?
Which companies already have a solution that you would have to compete head-to-head with? Which companies use an imperfect substitute you would replace? And which companies are brand new to the market and have never purchased something before? Use all of those same datapoints to identify the characteristics of these companies.
But, there is a push that is causing this change. Buyers who already have a direct competitor’s solution that would buy you have a push to reconsider their purchase. Buyers who use an imperfect substitute have a push to think about new solutions. Buyers who are entering the market are entering for a reason! A push!
The goal of really effective market analysis is to uncover this push. It’s uncovering what’s new, not just what is. A lot of market research just answers “here’s what’s going on the in the market” and not “here’s what is forcing companies to reconsider their existing solutions… and here’s how we know that.”
Uncovering the Catalyst is not a squishy, vague process. It is a data-driven process focused on three core elements:
A model of the market
A data model of the customer
An intuition for messaging
The model of the market is above – those three segments of direct competitors, imperfect substitutes, and new buyers. The data model of the customer is informed by the vast amount of internal data you already have at your fingertips: customer interviews, win/loss analyses, internal interviews with people who are close to the customer, CRM data analysis, and so on. We want a deep understanding of the way buyers actually buy what we have to offer.
The “intuition,” which feels like the most vague part, is actually just “earned wisdom.” It is built by running a campaign and improving it based on whether it succeeds. Ask any marketing director who has spent 2 years+ at a growing company and who has been in charge of campaigns… they will have a good “intuition” about what kinds of messaging seems to work.
Consider these two approaches:
Hi, company that we selected based on our many data points. We think you’re a great fit for what we sell because you probably have the same problems as the other customers who bought from us previously.
Hi, noticed that new regulatory scrutiny for your industry is forcing you to make reporting more regularly. A lot of our customers used Excel before using us, and now they do the same reports in under 3 hours.
Which do you think would be a more effective campaign?
The catalyst (regulatory change) is pushing these firms to change (more reporting). Getting a really clear picture of the catalyst would involve analyzing:
Customer interviews
Win/loss analysis
Industry reports
Internal interviews with people close to the customer
Mapping how buyers are actually buying your product
Modeling the three market segments
Analyzing data from the CRM
Analyzing data from the market
And then, you’ve got a great sense of why buyers buy! It’s a different approach to market analysis, but one that’s much more fruitful than just finding out whether the red pyramid segment is a valuable target.
Here’s a quick, related video I posted on LinkedIn for your viewing pleasure: