Developing Your Own IP In The Cloud: Part 2
Now that you’ve settled on the idea of specializing in a vertical market and developing a cloud-based application, do you have all your ducks in a row:
- Market defined? Check
- Version 1.0 developed? Check
- Reference sites? Check
Before you accelerate too far down the vertical market road, let’s take a look at how to build strong foundations to support your go-to-market journey.
Define your market demographics
Your starting point here is to describe your vertical market in one or two sentences that most prospects would recognize as relevant to them. Add to this a description of the size of companies you are targeting in terms of annual revenues and employees. Now add your geographic reach. Depending on your vertical market, you may want to add head office, branch, years in business or other defining elements. The more specific your parameters, the more accurate your projections, messaging and marketing efforts will be.
Determine your market size
Based on your market demographics you now need to find out how many companies fit your profile. This will require the use of a market database service (think Hoovers), access to an association’s membership database or other form of research. Here we’re looking for the quantity of potential new customers that fit your demographic profile. You will also need to determine how often these companies replace the systems you are selling in order to quantify how many potential new customers the entire market will produce in a year.
Determine competitive landscape
At a minimum, you’ll need to know who the main players are in the current market space you are targeting by a simple search and your own experience working this market. Once identified, there will be a need to determine how those competitors are positioning themselves and their products. Look for their brand definitions, key market messaging and positioning statements to help guide your own efforts to either go head-to-head or be “opposite” in your position.
Some analysis will be needed as well to determine which keywords are being used by buyers to search for your products, the volumes of such words and the price competitors are willing to pay to secure a click-through to their sites.
Develop strategy and tactics to move into the market
At the heart of any good product positioning and messaging exercise is the answer to the question, “What problems are your customers trying to solve with your product?” Based on your answer and the analysis done to this point, you can start to craft your own branding, marketing messages and positioning statement to take your product to market. This involves some creativity and often some objectivity from a third party. Some Partners find that they get a little too close to their products to keep a good perspective on what buyers are really looking for.
Project your financial potential over 4 years
With market size, average deal size, competitive pressures, and positioning determined, it’s time to work the numbers to see how much capital you’ll need to sustain the start-up process. We typically use a hybrid business modelling tool for Partners to evaluate cash flow requirements from the business assuming that the old business will continue working alongside the new business for some time. The net result of this analysis will determine how much capital you will need to sustain the business through a launch of a new product into profitability.
Make GO or NO GO decision
Of course when the analysis is done, the decision needs to be made whether the reward is worth the risk. Here Partners are faced with one last component to add to your equation: courage.
If you are considering moving into a new vertical market as a Partner or are looking to expand your existing offerings and need guidance, PartnerWorks would like to help you in your journey.
Please contact us at: firstname.lastname@example.org; 604 685 3908 x 106.