Have you ever followed the intermediate results on election day? The first indications tend to vary completely from the final results as every additional vote affects the outcome. The same goes for your market insights. Using readily available data, such as market size and growth, will allow you to compare markets. But what happens if you add customer preferences? The influence of your competitors? And regulations from that market? The more relevant data you add, the more the results on your market fit will shift. And the more accurate the big picture becomes.
Hard data is not always that hard
Part of the factors that influence your results are hard data, verifiable facts from reliable sources and robust methodologies. You can often extract this data from your own systems, such as your CRM. Hard data implies it is directly measurable, factual and indisputable. No matter how you put it though, data about market size is never really hard. Just look at official data sources: they all show a different number due to variations in segmentation: the chamber of commerce divides businesses into different groups than for instance trade organizations do.
Even hard data needs to be translated
Then there’s your own scope: if you define it as transportation via trains your market will be very large, but if you specify more, say international transportation of people, it will be a lot smaller. And the difference between TAM (Total Available Market or total market demand), SAM (Serviceable Available Market or the segment of TAM within your geographical reach) and SOM (Serviceable Obtainable Market or the portion of SAM that you can capture). But also, your estimation of the average amount buyers in that specific market will spend on a product or service such as yours. In short, you’ll always have to ‘translate’ data from official sources to your own business standards.
Combination of hard and soft data
The majority of factors that influence your business results consist of soft data though, based on qualitative information such as a rating or survey. This makes it susceptible to interpretation and personal preference. Because, as much as we want to be objective evaluators, we all look at things from our own experience and perspective. And are –often unknowingly- biased as we tend to rate people we like or, for instance, countries we like to visit with greater positivity. Combining opinions from various contributors will solve this and make soft data more reliable.
Gaps in input lead to incorrect assumptions and lagging performance
Defining your market size is important, but you’ll never have it completely right. Nor do you need to. As long as you use a consistent way of calculating the size for all your markets, you’ll be able to compare them amongst each other. Comparing apples with apples, so to say. So, once you know a market is big enough to justify any investments in time and money, the most important question is your market fit. And that fit is defined by adding all relevant data, both internal and external. And both hard and soft data. The more factors you include, the more reliable the outcome. That’s crucial, because you want your activities –which markets you will service, with which products, number of sales reps and marketing budget etc- there where you’ll get the most out of it.
Not sure which factors to include in your market analysis? SpotOpp organizes, digitizes and visualizes all relevant data showing you your market-fit and sweet spots. Clear interpretation and results for strategic success. Please don’t hesitate to contact us if you want to know more.