The Startup CMO’s First 100 Days: Advice on Conducting Research & Analysis (Part 4)

A crucial step in the 100-day plan for a new CMO is to perform the research and analysis necessary to understand your market and company’s situation. This work will give you the insight and data that you can leverage to formulate a winning strategy (which we will cover in next week’s installment).

There are five distinct types of research I conduct during this phase. They are:

• Best Practices
• Customer Research
• Competitive Analysis
• Ecosystem
• Total Addressable Market
• Segmentation

You have the option of conducting these studies yourself or hiring a firm to help you; I’ve done it both ways. Depending on your budget and the complexity of your market, the more help you can get, the better. For this article, I am going to assume you don’t have the budget for external help and will be doing it all yourself.

This is part four of a five-part series. The previous installments are Where to Start (Part 1), Developing Relationships (Part 2) and Building & Managing a Team (Part 3).

How to Manage Your Findings

With the DIY approach, I gather as much information as possible and research primary and secondary sources of data. I talk to other people inside the organization and take detailed notes. This is where your central dashboard deck comes into play. It’s important to record what your findings because you will not retain it. I literally cut and paste from the articles I read so I can review later. This process also encourages ideation, and as you go through it, you will have dozens of great ideas. Write them all down.

Reviewing Marketing Best Practices

I start with brushing up on the latest and greatest in marketing innovation. While I am sure you are relatively up-to-date in marketing best practices (you must be to get this far in your career!), it doesn’t hurt to take a step back and explore the fundamentals at this time, especially if you have been at your last position for a while. Now, in your new role, your mind is fertile and receptive to new ideas. Tap into the global marketing mind and see what’s hot. Read marketing books, try to go to conferences and meetups, and check out the best blogs. CMO.com, Moz, Hubspot, KissMetrics, Social Code, Shareablee and GrowthHackers are some of the best.

Surveying Customers

Next, get to know your customers. I like to start with a survey that collects open-ended responses to questions about customers’ core pains. My inspiration is Ryan Levesque’s “Ask” method, which is the philosophy behind a great book. I highly recommend it.

For example, with TopResume, I asked our customers about the pains of the job search and career development. The open-ended format let people use their own words.

Collating the responses is more difficult than a quantitative survey, but significantly more powerful. It took me about six hours to go through the responses (this is great airplane work); I downloaded the results from Survey Monkey into a spreadsheet and then created categories of answers. Most responses were about the resume “black hole” (when you submit your resume and never hear back from anyone), so that became one category of response. There were others, like feeling out of practice from resume-writing and being unable to consolidate years of experience into two pages or less. While every response was different, there were definitive classifications that I was able to identify through this method.

This approach helps translate the responses into buyer personas and value propositions, so you can speak to the customer in relatable terms. The alternative is to hire a market-research firm to handle the customer surveys, which is a reasonable shortcut if your budget allows.

Conducting a Competitive Analysis

Next, I conduct a competitive analysis by creating a new deck. To determine which companies to track, I ask my colleagues and use SimilarWeb to look at traffic data. Then, I go through all the websites and dig into their core value props to decipher what they are saying they do. I investigate their traffic and figure out its origin. Do they have great organic traffic? Are they buying certain keywords? Do they have substantial referral traffic that might tip off some sort of partnership? This is all in SimilarWeb, but you can use other methods like SpyFu, as well.

Once each competitor has been researched, I create a summary and review it with the relevant parties in my organization, usually the CEO and other executives who can help me understand the nuances. This deck is a fantastic conversation-starter.

Analyzing the Ecosystem

Understanding your direct competition is not enough. You also need to look at adjacent competitors and the ecosystem around your business. Michael Porter’s Five Forces Model is well-known by now, and it’s a great framework for attempting to understand the space that will impact your success and failure.

For example, while I focused my research on resume companies, I looked at other industries that also cater to job seekers, which included interview preparation, career coaching, social networking, outplacement services, job boards, staffing firms, recruiting, and even HCM software. I paid particular attention to several career-advice websites that were buzzworthy from a brand perspective because I needed to understand our positioning in this ecosystem, as well as the important potential partners and indirect competitors.

The best way to look at your ecosystem is to invite key shareholders offsite and map out the business in a relaxed, creative environment. We rented a conference room from Breather and spent the day there. There were a few other topics we covered, but ecosystem-mapping was our main focus.

To visualize the ecosystem, I built a graph with the Y-axis being our ability to execute and the X-axis being ease of entry. Then, I plotted the adjacent industries on that map, with each plot-point sized by market size. This gave us an easy way to visualize our own market and other attractive markets for potential expansion, as well as with which ones are better for partnerships.

There are additional ways to approach this, too; you can map the customer journey. We visited a partner that undertook a similar exercise and mapped the customer journey on a London Underground map with each stop representing a step in the job-search process, highlighting the stops they do — and do not — service. That was really useful because it was clear to see we handled the first three stops and they handled the next five. A partnership made sense.

Once we mapped the ecosystem, the next step is to calculate a TAM (Total Addressable Market) for your core market, as well as the adjacent markets, paying special attention to the markets in which we have potential interest in the future.

Quantifying the Total Addressable Market (TAM)

Calculating a TAM can be a maddening exercise because most industries in which startups operate do not have readily available market data. So, you have to generate it yourself. However, you aren’t a market-research firm and you do not have the resources nor the expertise. Therefore, you have to decide its value and the answer will depend on the importance of this data to your goal.

At Talent Inc., I quickly performed some “back-of-the-napkin” calculations on our TAM by assessing the job market, the number of people that change jobs every year, and the professions that would benefit from personal-branding services (without divulging too much, my intuition in taking the job was confirmed by these calculations;there is a huge market for personal-branding services — such as our resume and LinkedIn profile writing services for professionals, TopResume).

I was then able to look at adjacent markets. This exercise took a few hours and drove a conversation among the management team, which resulted in our go-to-market strategy. That might sound like a short amount of time, but it was enough to get us going. And, for this business, it was all we needed. The go-to-market strategy was pretty clear.

I’ll contrast that to the process I took at another company, which was much more intricate. Calculating TAM (and determining go-to-market strategy) took weeks. The path forward was less clear since we were creating a new market.

So, I hired a consultant and several researchers to help me calculate the TAM of the verticals we wanted to serve with our freelancer management platform. We assessed about 50 verticals at a high level and drilled into about ten.

Segmentation

We used more than just TAM, in this case. We dug into segments. I referenced a popular article by Bill Gurley at Benchmark, a Silicon Valley venture capital firm, as a guide to creating a matrix that ranked the verticals according to relevant factors. In the article, he outlines the 10 key factors for evaluating a marketplace opportunity. I assessed those factors, plus a few more that were pertinent to our situation.

Below was the final result:

Each column represented a potential vertical. Each row was a factor from Bill Gurley’s article (plus, our custom considerations); I color-coded high-desirability scores bright orange, neutral as pale orange, and low-desirability as gray, which was an effective way to visualize vertical opportunities. I took the raw score for each attribute in each vertical and multiplied it by the weight of that attribute. For instance, of ease of product adaptation for that vertical had a high weight. No matter how attractive a vertical may seem, if our product would take years to get there, it was a poor vertical.

This analysis enabled us to pare down 50 to five, and then rank them in order of go-to-market; the top vertical was the immediate one, with plans for expansion as we gained market dominance.

How much work you put into TAM and segmentation really depends on your situation. Regardless, it is a crucial exercise because it forces you to look at the market closely and determine if the one you have chosen can support your revenue goals.

Once these exercises are complete, it’s time to start making decisions. In our next article, Crafting & Launching a Strategic Marketing Plan, I will explore the core elements of a good startup marketing plan that you can put together in your first 100 days. We will also cover how to sell and launch that plan. Be sure to follow me here on Medium for a notification when it goes live next week.

Diego Lomanto is the Chief Marketing Officer at Talent Inc., the leading career advice and resume-writing service for job seekers. He is also the co-founder of TournamentPokerEdge.com, the world’s most popular tournament poker training site.