How to evaluate markets?

Discussions
#1

I had another discussion asking general questions about building a software product. I have experience in web programming (6 years) and marketing (around a year). I’m currently using Google Keyword Tool to determine general demand and competition for a given market.

I’ve heard both sides - go for a niche and aim for a large piece of a small pie, and, on the other side, aim to gain a foothold in a decent-sized market.

My ideal is to build a SaaS, though I am open to building other kinds of products. I’ve been looking into dog walking services and how I might be able to help with that, and appointment booking systems.

The biggest problem for me is not in identifying problems - I’m confident that it is a good idea to build products that are already selling - but in finding markets that aren’t too saturated or with too heavy competition.

Does anybody here have any methods, metrics, tools, etc. they use to determine whether it is worth diving into a given market? I would love more than anything to have the confidence to think “yes, I can make this work” - and then 100% invest in building something of value. Edit: I do understand there will always be a risk involved, however.

Appreciate any advice.

I think I might have answered my own question. Found a few excellent posts here:



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#2

I wrote a bit about choosing a market here:

But there is no magic wand I know of. You won’t really know until you start asking people for money. So just get something out there as quick as you can to test the water.

If you are self-funded, then I would say go for a big chunk of a small market. See also:

BTW I know of several people who created appointment booking systems. Of the ones who have talked about it publically:

@patio11 seemed to struggle with his and sold it.
@jasonswett seemed to find it hard to make any headway.

The other one I know got nowhere much after quite a lot of effort. So it seems to be a tough market.

#3

Pick a market you can easily identify and make it very specific. That allows you to do three things that will help in the short and long term

  1. Solve a specific problem for a specific group
  2. Give you a very targeted group to bounce you solution/MVP off to determine fit for that market
  3. Give you a specific target to market towards. With a very specific/niche group it’s easier to craft a message, market and direct sell
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#4

Thanks for the input! I’ll read through those articles shortly.

I’ve come to realise this stuff isn’t easy, so I’m not expecting opportunities to fall into my lap. I’ll try to identify some smaller markets. I just don’t want to feed my natural inclination to analyse everything until I’m in a state of paralysis and never actually get anything done. Of course, I’d prefer that over wasting time attempting to take on something I simply don’t have the resources to achieve right now. It seems like a difficult balance.

From the articles I shared, there was a suggestion of taking a large market and breaking it down into smaller markets by building niche products. One of the examples was MindBody, which is an appointment management (and general purpose management) service specifically for Yoga studios. The whole product and marketing is geared towards that customer, instead of attempting to tackle appointment management as a whole.

It’s demoralising to see someone as smart and experienced as Mckenzie struggling with Appointment Reminder. I checked a couple of blog posts and he says he was surprised the amount of effort it took to get off the ground, but also that he was distracted/burned out through other commitments and was taking on consulting work and other side-projects, etc. That is definitely something I’m going to be very careful to avoid as most of the successes I’ve seen are from people who became laser focused on their product.

At the same time, Appointment Reminder attempts to be a general purpose solution for all your booking needs across any market that might need it. I’m not surprised he is finding it difficult to cut out a slice.

Jason’s software, Snip Salon Software, is appointment booking software for salons. I remember hearing Amy Hoy (from UnicornFree) say how difficult it is to sell to brick-and-mortar businesses that don’t really see the true benefit of software. She said how that creates an instant roadblock to sales and traction.

I don’t have a product out there so I can only go off feedback I’ve heard from other successful bootstrappers, but I’d be interested to hear if anybody has an opinion on why it might have been difficult for those products to get off the ground.

#5

Focusing on a well defined niche is good advice. It makes the marketing much easier. You can always broaden out or change direction later.

IIRC:

@patio11 's major problem was that he didn’t love the market. I can see it might be a bit hard to get excited about appointment reminders.

and

@jasonswett 's problem was that hair salon people:
-were fiercely non-technical
-thought a paper solution was ‘good enough’

You might have the same issues as Jason with Yoga studios.

#6

I just read through Mckenzie’s experience with AR… and I have foreseen exactly the same thing happening to me. It’s one of the reasons I dropped a WP plugin I was working on. I didn’t get bored of the product itself, I just wasn’t passionate at all about the market I was serving.

The same thing happened with Tringas (author of those articles I shared) and he ended up joining Maptia despite finding success as a bootstrapper. It seems, for long-term motivation, working on something you are passionate about is highly important. I would lose interest in appointment reminders within 6 months. I would not, as an example (I’m not chewing on this), lose interest in online education within 6 months, and have, in fact, been endlessly obsessed with self-education over the last 15 years.

I’m not going after Yoga studios btw. MindBody is already an established product, though that is the extent of my knowledge about them.

I think I have identified a market that could do with some love, so I’m going to see about building a very simple service to address a specific problem and just see what happens when I start asking for money. As you say, that’s when I’m going to discover the true potential and difficulty in making it work.

#7

Clifford’s approach to evaluation should be quite safe.

He suggests to create a landing without even a UI prototype – only with marketing message and email form. Then search for hundreds of persons who could be interested enough to discuss it with you.

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#8

Thanks! Great read! Might pick up the book – but first I think I’ll follow the advice and try to talk to potential customers of the problems I’m attempting to solve.

#9

+1 for @cliffordoravec approach indeed (and the book he has coming up)! The interludes he publishes are also worth a read as they give some great insights about some things that happens around building a product.

I would add also that it is important to do some proper competitor research during your market analysis. Basically you want to:

  • Search for you competition: google all the possible terms that could describe your idea. Go down to page 5 (or 10 if you’re not sure about your searching terms) and list all the providers you find.
  • Know how many competitors you have: having 0 would make me question the viability of my idea (but maybe you have had the idea of the century?). Having too many would make me question the added value I could bring.
  • Know your competition:
    • Who are they?
    • How long have they been around ?
    • How is their presence on the net (are they appearing everywhere? Only on page 10 of the search ? Only in a niche of a broader marker ?)
    • What important (for the user) features can you match quickly (I insist on quickly i.e. close to your MVP state)?
    • What important features won’t you match quickly ?
    • What features do you consider useless?
    • How many clients ? Who are they? How easily could you poach them?
    • How many credentials?
    • What is their pricing strategy?
    • What is their marketing strategy?
    • How is their presence on Social media?
  • I recommend giving an overall rating to each competitor (useful if you have to comeback later on it)
  • In the end you should end up with a gigantic spreadsheet (I’m using colors to make it easier to assess) showing you the strengths and weaknesses of each competitor, and hopefully guiding you towards where you could go with your product (hint: it is where your competition is not AND you believe there is still a market)

Once there, assess whether you think you can still add some value to your market. Yes ? Then try & go get some potential clients that validate your idea :slight_smile:

Good luck !

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#10

We sell an appointment booking system for salons and similar businesses and do pretty well out of it. It is a hard slog to get going though, it took the best part of 4 years to make real money.

There are absolutely heaps of booking systems on the market, but from what I can see 95% of them fail to get product/market fit and they fall into the same trap. They see salons or similar businesses using a paper book and they think they are too scared of computers and need something simple. The people using paper or who want a simple system are not good customers. They won’t pay much money, maybe $19-25 per month and will take up too much customer support. Going down the route of a simple system is certain failure.

You need to target larger businesses and those users have larger requirements. They want advanced appointments, integrated point of sale, marketing, product management, CRM, electronic forms, business reporting etc. And the software still must be easy to use. All of a sudden your minimum viable product is probably 12 months full time work to develop.

Another trap is thinking businesses with no software are a good initial niche to target. I disagree. There are heaps of businesses using traditional Windows desktop software looking to move to the cloud, target them. We offer free data conversions from major competitors.

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#11

Thanks for the insight!

4 years seems like a long time to get going, but I’m willing to throw the rest of my life into carving out my own path. The alternative is building someone else’s dreams through a 9-5, or, on a lighter note, partnering with someone.

I’ve been slogging it out in programming for the last 8 years and am still thirsty to learn more, so I’ve no doubt I’ll get to where I want to be. I just want to avoid as many mistakes as I can because I’m approaching 30 and don’t really have endless amounts of time to flounder around like I did in my 20s.

From what you say, it just reinforces my plan to build something small and concentrated. But, as you say, there are plenty of struggling developers in that space trying to get product/market fit.

I’ve been thinking of going through all the categories on getapp.com and seeing if anything clicks with my own interests/experiences. Do you think that might be a good way to brainstorm potential opportunities?

I did also see a post on here a while back from someone asking if moving into affiliate marketing space - building a system specifically for SaaS operators. I have some experience with affiliate marketing (though he had 6 years), and it seems like there are some interesting problems to solve there.

Again… lost in the abundance of opportunity. :confused:

#12

I am in total agreement with you on this. One of the reasons I built my company is that the idea of sitting at someone else’s desk at 50 cutting code for them pretty much the same way I had done for the previous 30 years seems awfully boring.

I think people probably try and get too specific when trying to find an area to target. I have worked with small businesses most of my life as a developer and my software targets a niche within that. But I have never really had much personal experience with hair salon businesses, you just learn to love it over time :slight_smile:

If I were going to build appointment software again I would target veterinary clinics. It is basically the same software by they charge 5 times the price.

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#13

Appreciate the bone!

I can understand how you might come to love the business and the ones you serve over time, especially if it is your first business. As discussed above, Patrick Mckenzie lost interest in his Appointment Reminder, but in his blog he explained how it felt like going through high school again because he’d already done this before through Bingo Card Creator.

Anything I sink my teeth into will become my key to freedom, so I’m not likely to lose interest considering what’s at stake. I’ll figure out how to make it work and nothing, short of losing my hands, will stop me.

On this note - do you think it would be a good idea to volunteer to build software for a specific business (while retaining rights), and use that experience to build the foundations? I haven’t worked with vets before but there are plenty around me whose booking system involves a contact form on their website. It would be ideal if I could work closely with them, on premises, to build a bespoke solution and learn a tonne about how such businesses operate and how I can best serve them.

EDIT: I did just ring a local clinic. They said they have a parent company with a tech department that is now dealing with the website and software. Seems if I want to work closely with one clinic it would have to be a smaller venture?

EDIT2: rang another clinic with an atrocious website. They seem like a smaller enterprise so I’m hoping to form a relationship with them and see where it goes.

Of course, this is just one approach. I’d be very interested to hear your feedback on it.

#14

No. Absolutely not. People don’t value stuff they get for free. And you won’t really find out what they value if you aren’t charging them.

if someone offered to service your car for free, would you let them? I wouldn’t.

Anecdote: A charity read an article I wrote on adwords and asked me to do some consulting. I said I would do an hour for free as it seemed a very worthwhile cause. We scheduled a call. When I called them they said they had rescheduled the call - but they hadn’t bothered to tell me. That has never happened when I was being paid.

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#15

Interesting. It wouldn’t really be for free considering I would be getting an insight into their daily operations and I’d be maintaining rights to the software.

What would be the alternative? It seems it would be even more difficult to get my foot in the door if I attempt to sell a bespoke solution (of which would be harder to maintain rights to)?

Or perhaps a better idea would be to interview these owners/managers in order to get insight into the problems I’m attempting to solve?

#16

Perhaps it is too strong a position. Yes, that particular (reference) customer won’t value it much - it came for free. But without taking a back sit in their business it is impossible to understand the details of the operations, which is required to provide a value for other customers.

One option is to take a position as a receptionist in a vet shop. Experience the pain first hand.

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#17

The method acting approach to software development? ;0)

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#18

We do some stuff for “free” (no money involved). Specifically for Universities and non-profits. Payback - free testing and reference links.

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#19

To requirements gathering :slight_smile:

I bet working for a month as a receptionist will teach one more about the pains than interviewing 10 owners.

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#20

Haha! I’m going to retrain as a receptionist, spend a few years climbing the ladder, spend a couple of years as a vet, work up to manager, save up, buy the branch… THEN I’m going to build software for it!

Yeh, perhaps working for a charity would be a good idea.