Businesses Use Inbound Comms to Generate Market Data
If you’re a fan of shows like Shark Tank, you’re probably familiar with the many product pitches that fail. Many fail because of one key answer that the entrepreneur gives to the panel. What is this deadly answer?
Question: “How do you know that this product will be profitable?”
Answer: “Well, it’s a $18 billion market. So even a 1% slice of this massive market is worth $180 million!”
This common mistake represents a mistake that many entrepreneurs are making with data. They feel that the market, as a whole, is all they need to look at, without digging beneath the surface.
Business intelligence (BI) is the art of digging deeper. By interacting with the market, you collect data points. These could be simple queries from potential customers, or they could be much more advanced interactions via a tool like Typeform. By engaging your market, and looking at how customers interact with your menu of products and services, you can collect specific data that is relevant to what you’re offering.
The size of the market is only important in the beginning – you want to know you’re going after a big pot of gold at the other end of the rainbow. But failing to look further immediately highlights that you’re a lazy data collector. You aren’t willing to dig deep for context.
And once you start interacting with the market, you need to take it a step further. You’ve gotten your first few sales. Orders are continuing to role in. Now you need to know how loyal your customers are. In other words, how likely are your customers to return to you? Are some segments of your market more likely to return and purchase from you again, or tell their friends and family about your brand?
In business school, the term Net Promoter Score (NPS) is used to quantify consumer loyalty. The higher your NPS, the better. A higher NPS means that you are gaining a higher ROI from each customer acquisition. In other words, you’d almost certainly rather spend $10 in marketing to convert a customer that is likely to generate $100 in revenue. You probably wouldn’t want to continue spending $10 per conversion if the customers you’re engaging are only spending $5 with your brand.
Without understanding your NPS, it’s impossible to know which customers will be worthy of your limited marketing spend. The ideal customer will spend 5-10 times what you spent in order to earn their business. And they’ll tell a few friends or family members about your brand.
