An operationally sound definition of marketing must include market sizing, annual planning and a marketing assessment. By answering these three questions, B2B marketers will know the size if the market opportunity, the approach needed to penetrate the market (breadth and depth) and where to make investments in marketing.
The purpose of market sizing is to clearly and quantitatively define the addressable, served and target market. In doing so, an organization aligns all sales and marketing go-to-market resources for maximum impact.
Sizing the market opportunity is a precursor to establishing a sound market penetration strategy. In general, there are three sizings of the market that should be made:
- Addressable Market – the addressable market or available market is a term typically used to establish the global universe available for a product, service or solution regardless of geography, distribution, quality, cost, etc.
- Served Market – a subset of the addressable market tightly matched to their organization’s value proposition (a match between the business problem and the solution offered) in a geography that can be supported with the current organizational structure. Every targeted company will have a high propensity to purchase the solution.
- Target Market – a slice of the served market. Organizations typically prioritize companies in the served market to develop a laser focused go-to-market strategy to first establish a beachhead and then expand that footprint to own a vertical industry. Next, the go-to-market strategy becomes twofold: expand within the current vertical industry and then establish a beachhead in a related industry.
All too often organizations are so focused on getting things done immediately that some critical decisions only receive a cursory review. Specifically, markets may be overestimated by adopting a market research report containing quantitative analysis on a market that “is close enough” to their market. The issues in this approach are that:
- The market estimate is an overstatement of the dollars that will be spent through purchase decisions
- The adoption rate is typically not factored in as organizations will capture X% or XX% of the overstated market not in a single year but over a period of a few years
- The market estimate includes a wide array of use cases. Unfortunately many or most of those will not align with the use case that the organization’s solution was designed to solve. This will result in long sales cycles and low close ratios.
To further refine your market sizing and revenue projections, filter the market sizing efforts through the technology adoption curve to gain a clearer understanding of the rate of growth of the market and your organization’s share of it.
The majority of companies typically do not address the annual plan creation process until somewhere in the fourth quarter. In the largest companies the process may start sooner but the diagrams outlining the annual planning process are sometimes more complicated than an architect’s plan for a skyscraper. On the other end of the spectrum, smaller companies are running so fast that no one has time to stop to “plan”. And, instead of being an opportunity to think out of the box and change the game, the default is to add 10-20% to last years plan so that attention can be returned to closing Q4.
There has to be some balance between analysis / paralysis and “fire, ready, aim.” Performing a situation analysis is essential but does not have to be a systematic collection and evaluation of past and present economical, political, social, and technological data, aimed at the identification of internal and external forces that may influence the organization’s performance and choice of strategies. It can be a simple one page SWOT analysis.
The key is to simplify and focus on the relevant, core issues and to go deep enough to understand the impact on planning and execution. After all, the annual plan is critical as it sets the tone and direction for the new fiscal year which of course impacts the go-to-market strategy.
Keep it Simple
The annual plan should only address the top ten topics. The goal is to facilitate the annual planning process and drive the annual budget, not to stifle it. Specifically, these are some of the key areas that should be included in the Annual Plan – and they should be summarized on one page:
- The Market
- The Solutions Value
- Strengths, Weaknesses, Opportunities, Threats
- Key Assumptions
- Systems, Process & People
- SMART Objective.
- Key Strategies
- Drivers of Incremental Growth
- Critical Success Factors
- KPIs & Metrics
Marketing must continually improve itself to consistently provide value to the organization, and this requires reinventing itself year after year. A best practice for reinvention is to leverage an assessment framework to quantitatively document the current state or baseline. This will intelligently establish a process to allocate scarce go-to-market resources that will facilitate getting to the next level.
Creating a baseline is often referred to as benchmarking. Benchmarking is the process of comparing the business processes and performance metrics to the best companies in the industry. Benchmarking is used by best-in-class organizations to evaluate various aspects of their business in relation to best practices in the industry. The starting point is to document the baseline and to define the end goal. Then specific tactical marketing plans are created that include both adjustments and improvements to reach the goal. The most effective organizations do not treat this as a one-off event, but as a continuous process in which organizations continuously seek to improve their practices year after year, quarter after quarter and month after month.
A marketing assessment is an intelligent way to allocate go-to-market resources in a quantitative, objective way in order to optimize investments. Once the current state is documented and the desired state agreed upon, a detailed marketing plan can be built outlining specific marketing actions, costs, resources, timelines and priority of tasks that will expedite the path to achieving the organization’s goals.
Embrace an operationally sound definition of marketing as the three B2B market fundamentals (market sizing, annual planning and marketing assessment) outlined above are essential to any successful marketing operations plan.