Is it better to be a big fish in a small pond, or a tiny fish in a large ocean? When it comes to serving your audience, knowing who you serve and how you serve them is extremely important. It shapes every element of your business from marketing to supply chain. It's easy to misinterpret market size, but taking the time to accurately interpret the data can help you focus your efforts, grow in the right markets, and even discover new audiences you didn't know you had.
It's one thing to think you have a certain market, and it's another to prove it through analytics. With the right tools, you can start to see what markets you're actually penetrating. What you find might be surprising. Just because a certain market is x-billion in size, it doesn't mean you'll be able to reach it.
Salesforce says one of the biggest trends upending sales markets today is growth in micro markets. According to their research, "Averages lie. In the quest for sales growth, averages can mask where growth truly lies, and the hidden pockets of growth in your industry may be in your own backyard."
Another trend upending sales markets is the ability to capture value from big data and advanced analytics. If you just look at averages you miss the nuances and the details, but by digging into the data you can find micro markets where you may be overachieving when it comes to sales. You might be able to utilize that on a bigger scale, if you just take the time to understand those micro markets.
Subaru's success came from identifying a niche audience, and creating a marketing strategy around that audience, instead of trying to reach the mass market.
After failing to reach the mass market 18-35 year olds living in the suburbs in the 1990s, Subaru took a minute to pull back and identify niche markets they could appeal to. They identified five: teachers and educators, health-care professionals, IT professionals, outdoorsy types, and lesbians. People often joke about how lesbians drive Subarus, but this was actually an intentional marketing strategy developed by Subaru in the 1990s, before marketing to LGBTQ+ communities was mainstream.
Their success came through cultivating a relationship with their audience, learning what resonated with them, and creating campaigns that did just that. For example, ads featuring women couples didn't perform well, but ads with taglines that had double meanings like, "Get Out. And Stay Out," or "It's not a choice. It's the way we're built," resonated with their audiences.
Subaru's success came from identifying a niche audience, learning about their audience (what worked and what didn't), and creating a marketing strategy around this audience, instead of trying to reach the mass market. And years later, the attention they paid to an overlooked micro market has built them a loyal customer base.
In the early years of Assemble, we made an app called Dunno. When we launched it, there wasn't much traction. But overnight we noticed the number of users increased substantially. We took a look at what had happened. A blogger in the Netherlands used the app and wrote an article about it, and all of a sudden we had a HUGE micro market in the Netherlands, reaching over 100,000 users.
We learned that when you're calculating market share you always need to set the boundaries of what the market is. When you look at your market share, use the BCG Matrix to analyze your market share and growth. Put your product in the different categories (cash cow, etc.), but if you use the diagram, you need to put your product in the right segment or in the right category, and that's where the micro markets and using data to analyze and find micro markets gets very useful. While we weren't able to repeat our Netherlands success, we understood that we had a micro market, and knew how we'd gotten it.
The goal should be to be able to repeat or copy the advantages you have in micro markets into other markets. For example, if you find out that you have a large following in the Netherlands, like we did, you may decide to invest marketing dollars in Dutch specific reach, whether through paid search, social, content, or whatever channels you identify to reach your target audience.
It takes a little bit of analysis to identify micro markets. You have to look at the data and there's no automatic way to classify that spike, and there may be some data enrichment involved. You may need to query the data using tools, do a little bit of guesswork, query on a zip code, etc. Maybe it was spread all over the US, maybe you can try to see gender. Do you have information where you can see if it's age related? Narrow down any info to help you identify the common denominator.
If you have a lot of data or do this very frequently, it may help to create or invest in a data analysis tool that identifies 10 common expectations, like age, geolocation, occupation, or other forms of data enrichment. In many cases the best thing to do is do it manually by querying the data, having an engineer do it, or creating an excel spreadsheet and querying it. As you do this, you may start to see trends you hadn't been looking for. For example, you may see a spike in traffic in China on November 11, and realize you should run a promotion for Single's Day. In the first minute and eight seconds of this year's Singles Day, Alibaba said it had pulled in $1 billion in sales. In comparison, Cyber Monday sales in 2019 were a little over $9 billion.
You can only analyze data automatically if you know what to expect. If you don't know what to expect you have to do it manually. By querying the data, you can narrow down a correlation with other information about what caused that spike, as we did by adding holidays to traffic.
How can you look at your online sales and tell if you're succeeding within a certain population? One way to figure that out is through customer feedback or returns. You may not be able to find that data right away, and that's why enriching your own data is important. It's essential that different parts of your organization give feedback so that even if you're looking at complaints, you're able to use that information to help you learn about your market.
Don't waste the valuable information your customer service and support departments get on a daily basis. Take that information and use technology to dump and sort this data, attaching it to both products and customers. This functionally isn't built-in, but can be achieved through a plugin in your CRM.
If you're using any normal backend or CRM, you can always add tags/metadata to your product and customers, so the process would be that any data coming in from customer support calls can be analyzed by an AI tool. Just stick tags to the customer and keep a log. Tag the data with metadata, and after that you can classify your sales based on that metadata.
Don't try to change your micro market into what your marketing ambition is, instead adapt to that micromarket. Remember, the market won't adapt to you, so you need to adapt to the market, and that might mean changing your expectations of who your customers are.
You may discover a micro market, and need to pivot various areas of your business to reach them. Analyze the trends, then make a development plan to go in a direction that meets the needs or expectations of your new audience.
If you haven't already, ensure you're gathering first-party data. From there, it's time to start enriching your data, and as you do that you'll start to see micro markets. You can always enlist the help of a team, and if you're looking for help we'd love to talk.
This blog post was written in collaboration with Rachelle Cummings.