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Adapting to new markets

Adapting to new marketsThere’s only so much that you can know about your target customer before you start a business. Until you’re actually trading, you can’t be certain that your product is what the broader marketplace actually wants. This is why some businesses change tack quite shortly after launch, and why many others lag and disappear completely.

Your product may well be utter genius, but if it’s not quite what people are after, your business will suffer. If you want to stay ahead of the trend of failed startups, you need to pay close attention to how your product is received once it’s launched – and be ready to change it to satisfy the demand that actually does exist.

Ship first, tweak later

Many businesses grow from the spark of the owner’s personal interest. They have an idea or perceive a need for an-as-yet-uninvented product in their own lives, and decide to act on it. Though the idea might be good, this approach runs the risk of failing for lack of one vital thing: research.

“The issue that I find a lot of people have is they come up with this great idea. It’s their passion, the thing they’re really interested in releasing to the world, but not everyone else shares the same passion,” says Brent Hodgson, founder of Niche Of The Week. “Once they get it out into the market place, they often find that they struggle to get customers who are actually interested in purchasing the product.”

He suggests that it’s a much safer bet to start with the actual evidence of the market rather than the idea for a product. Research and identify a problem that a substantial number of people have, and then create a product to solve that problem, rather than the other way around.

“It’s easy to focus on the product over the marketplace,” says Hodgson. “You don’t necessarily think about a marketplace to target as part of a business plan, you think about a product and how it suits that market. It’s something that I think most people are taught, probably instinctively. You see the ads for the products that are out there, and you go ‘hey, I’ve got a great idea for a product’, and you create that product, rather than realising those ads are actually targeting specific markets that are out there already.”

Hodgson offers this advice out of personal experience. Prior to starting Niche Of The Week, he co-founded a software business that supplied a tool for business owners to improve their websites. The product it offered worked very well, but it didn’t draw the sales the business had anticipated after launch.

“When we were chatting with people, they would be enthused and excited about the idea of the product, or the results that the product would achieve for them,” he says. “But very, very few of them actually ended up using the product.

It wasn’t until Hodgson made a significant number of sales off the back of a presentation at a conference that he realised what the business was doing wrong.

“I spoke about the software, and the problem it solved, and I made a heap of sales,” he says. “But months later, I looked into the number of people that had actually used the software, and there was practically no-one among the sales we made. It made me realise these guys were excited by the concept, the idea, the outcome they could achieve, but they didn’t have the time, knowledge, or skill to go out and use the software, and to get the outcome.”

The software was simple enough for Hodgson and his team to use, but they had made the mistake of assuming some very basic knowledge on behalf of the user. Realising this, Hodgson and his co-founders quickly changed direction, developing the software so that it was even simpler to use, and offering the package as a service rather than just a standalone tool.

“We basically looked at what people really wanted to get out of the product, and gave it to them,” he explains. “Instead of delivering a product that people could use to get an outcome, we delivered a service that would give people the outcome. We’ve got a couple of tech guys who could actually technically implement this particular stuff on someone’s website, basically solved all the problems that someone would need to solve along the way.”

Following this modification to what the business offered, sales picked up, and more customers actually started seeing the benefits of the product in their businesses.

“Basically, the philosophy that I now use for this is a minimal viable product philosophy, which is a lean business strategy,” says Hodgson. “You ship something that is a minimal viable product, you watch the results, and then you tweak based on what you learn.”

Don’t jump to conclusions

Jet Gray started DoggieSpot with her husband to provide dog owners with a directory of dog-friendly places in Sydney. The premise of the business model rested on two basic demographics. The first was well-established: anyone who owns a dog in Sydney, and is fed up with being turned away from cafés or banned from public spaces due to canine discrimination.

“We knew there was a market there, of dog owners. They’re basically inner-city people. That’s no great surprise,” says Gray. “The closer you get to the city, the more expensive the land value is, so the smaller the back yards are. People need to exercise their dogs more out in the community.”

The other target was the types of business that might be interested in using the site to advertise to dog owners seeking pup-friendly places – cafés, restaurants, pools, and the like.

“I knew they wouldn’t have a big spend with us, and that we would have to get a lot of cafés, but, in fact I found out that the spend was probably lower than what I thought,” says Gray. “Then, in moving the research on, doing primary research in animal-centric businesses, I found that the converse was true. These businesses were willing to spend more for a decent guide that was going to do things well.”

What the Doggiespot owners found, upon starting up, was that the greatest advertising interest actually came not from dog-friendly businesses, but from dog businesses: from groomers, kennels and vets desperate to get their brands in front of Sydney’s burgeoning population of dog lovers.

Accordingly, the business realigned its website and social media strategy to better suit this new raft of advertising opportunity. In doing so, they found that they could increase the projected advertising fees, effectively doubling what they were originally asking for ad space on the site. As something of a bonus, the business’s initial ad sales target subjects turned out to be very useful in furthering its exposure.

“What it also brought up was that cafés are a marketing ally for us,” says Gray. “They’re still very important for our business. After the research, we developed a massive $1,000 hamper giveaway competition that we’re going to be promoting through parks and also cafés.”

Listen to your customers

Sometimes, finding new markets is as simple as stopping to hear what your customers have to say. Julie Parianos runs Kate Lauren Designs, a linen and décor business. The business started with a focus on products for babies and young children, but due to customer demand, has expanded into items for teenagers. The reason for augmenting the business’s original product offering came down to trends Parianos observed in customer feedback.

“We’ve had a presence at trade shows and baby and toddler shows, so direct contact with customers,” she says. “They’d say things like ‘gee it’s really hard to get stuff for my teenagers’. They might have younger kids, and they’re purchasing products from us for their younger children, and just remarking to us that they’re finding it really hard to get nice quality bedding for their teenagers.

Given that the business is targeting families, Parianos has found that her current strategy doesn’t need to change much to accommodate the new products. All that needs modifying is the business’s website and the introduction of the products themselves. Her current customers are taking to the new line well, and are even beginning to enquire about adult bedding, to boot.

“It’s just good business thinking to engage your customers,” she says. “It doesn’t mean making it very obvious that you’re asking questions, but just make an effort to look for feedback.

Glenys Ambe, owner of fashion boutique Lady May, experienced a similar epiphany when she tried to revitalise her ailing retail business in the wake of the Brisbane floods.

“We started really looking into the people that were walking through the door,” says Ambe. “We looked at what we were providing, and found these ladies that are coming in like our stock, but we can’t always fit them. We did our own little checklist on the counter. When anyone walked in whether they bought something or not, we asked them to fill it out: age group, size group, gender. Did they come by themselves, or did they come with others? How long they spent in the shop, did they try something on, did they buy something, and if so, what?”

The information yielded by the survey prompted Ambe to rebrand as a boutique that makes a point of catering for larger sizes and women aged over 50, while continuing to accommodate its original demographic. If the post-flood slump hadn’t prompted her to reassess, it’s likely Ambe would have continued oblivious to the broader market for her business.

Advice

Beyond listening to customer requests, Niche of the Week’s Hodgson suggests actually making the effort to ask customers what they’re likely to purchase from you. This can be informally, via Facebook or email, or in the form of a survey or questionnaire.

“Find out what they want to purchase, and what they’re willing to pay for it, or what the problems are that they have in that market place are, and what they’re willing to do to solve those problems,” he says. “It’s certainly good to listen to your customers. The ways you can do that is through support, by watching your conversion rates on promos that you put out, the percentage of people that actually respond to an offer, and also by just picking up the phone and chatting with clients and customers.”

Kate Lauren’s Parianos makes a similar point, but qualifies it by noting that there’s no way for your business to grow effectively if you don’t pay attention to what your customers ask you for.

“Any good business should be listening to what the needs of the customers are, and looking for a gap or an opportunity to help supply those needs,” she says. “You can create all the most beautiful things in the world, but if nobody really needs them, you’re going to have to put a lot more work into selling them. If you look for that gap, it’s going to make your work a lot easier.”

If there’s only so much that you can reasonably ask your customers, or if you don’t yet have any to ask, then search further afield for information about your proposed market. There are many outlets of such information available online – Doggiespot’s Jet Gray suggests conducting thorough competitor research, and investigating what the Australian Bureau of Statistics has to offer.

“Do your research up front, and do it a couple of times,” she suggests. “I did it eighteen months ago, and then I did it a year ago, and things had changed considerably in terms of the competition out there. Be prepared to fail and change. Don’t get stuck on what you thought it was going to be and try and push through. Listen to your research, and change accordingly.”

Image credit: Thinkstock

  1. Jeremy Walt says:

    Feedback is the primary indicator that puts a business in the picture with real live stats. Whether its critical , its all good information gathered.

  2. fiverrr23Jz says:

    Thanks a lot for the post.Much thanks again. Really Great.
    fiverrr23Jz

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