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Modeling Path to Market

Modeling Path to Market. Quantify Your Business. Two Sources of Revenue. Revenue from New Customers Includes all revenue from any customer that has not purchased from you before Once a customer has purchased from you, they become part of your customer base

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Modeling Path to Market

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  1. Modeling Path to Market Quantify Your Business

  2. Two Sources of Revenue • Revenue from New Customers • Includes all revenue from any customer that has not purchased from you before • Once a customer has purchased from you, they become part of your customer base • Includes customers that buy based upon word of mouth • Revenue from Repeat Customers • Generated from your customer base

  3. Revenues from New Customers • Start with a limitation of your target market size • How will you REACH your target market with your message? • Through Media • TV, Radio, Newspapers, Billboards, Internet, Signage, Flyers, Direct Mail • Direct sales • Internal Sales Force, Manufacturing Reps, Outsourced Sales Force, Outbound Call Centers • Word of Mouth

  4. New Sales via Media • How many exposures per presentation such as TV spot or newspaper add? • What percent will be in your target market? • What percent of those exposed will not be in your customer base already? • What percent of new viewers will be unique to this channel? • What percent of the unique viewers will be attracted by your offer? • What percent of those attracted will contact you either by coming to your business or contacting you? • What percent of those that you have direct contact with will be favorably impressed with your business? • What percent of those that are impressed will buy?

  5. New Sales via Word-of-Mouth • Two types of referrals • Missionaries are recent buyers that are excited by their new “discovery” of your business and tell others • What percent of your new customers will become missionaries? • How quickly will they start to tell others about your product and for how long will they be telling your story? • How many people each missionary tell on average? • What percent of those told will contact your business? • What percent of those that contact the business will be attracted by your products and services? • What percent of those that are attracted will buy? • Referrals from missionaries are generally not convinced to buy before they interact with your business.

  6. New Sales via Word-of-Mouth - Experts People that have a need and seek out someone with perceived “expert” knowledge to find a product or service to satisfy the need are the highest probability purchasers other than repeat buyers • Your customer base are your “experts” that will refer for you • What percent of your customer base will be approached by someone that is interested in your value proposition? • What percent of those that get expert advise will contact your business? • What percent of those that contact you will purchase?

  7. Repeat Buyers • Those in Your customer base who come back to you: • What percent of your customer base will repeat a purchase based upon your value proposition? • What are the characteristics of these repeat buyers? • What is the purchase interval (e.g., monthly, weekly, every summer)?

  8. What is the Size of Your Customer Base? To begin researching the size of your potential customer base, start with the article located here. The video below highlights the relationship between frequency of visits, pricing per transaction, and size of transactio0n with a customer base of a given size.

  9. Untapped Target Market Size • Your target market will increase and decrease • Demographic shifts will add to or take away from your target market • Geographic expansion/contraction will affect your target market size • Customers that have purchased from you will become part of your customer base and should not be double counted in your untapped target market size • Customers that have contact with your business and are unfavorably impressed will reduce your target market size

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