Are you confused by or unaware of the size of your available market? Are you seeing slow, stagnant, or declining growth? Do you find it difficult to quantify and understand end customers in any great amount of detail? These questions stem from the biggest challenges that leaders in the business-to-business world constantly face. Tackling each topic enables firms to accurately identify and assess opportunities for growth.

There are three major topics to tackle to overcome slow growth and make sound business decisions—from investments to product development:

1.) Know the size of your market. Understanding your market, its composition, scale, and size, is a fundamental starting point for strategy development (refer to Blue Canyon’s white paper, “Measuring the Market: The Foundation of a Strong Growth Strategy”).  It goes without saying that to understand a market, you must be able to estimate its size. However, unlike consumer markets where there is a plethora of point-of-sale data, market sizing is far more difficult in the business-to-business arena. With multiple participants along complex customer chains and non-existent or unreliable market research data, companies routinely struggle to confidently understand and measure their market.

Blue Canyon uses a systematic approach to understanding markets that are far removed from the end customer. Specifically, we:

• Calculate how a company’s products and services contribute to a final product. For parts and component manufacturers, chemical suppliers, and other firms that offer “ingredients,” the key is to understand how these various products and services contribute to a final product. For example, in the global automotive industry more than 60 million cars were produced in 2012. This total can be a starting point for determining an automotive supplier’s market. A leather interior supplier to automotive manufacturers must estimate which manufacturer will use this supplier’s leather in which models, at what price, in how many square feet per car and in what geographic regions. By focusing on the ingredient, firms can determine their market opportunity by calculating their niche within an end product.
• Assess the market to develop an understanding of the dynamics between new sales versus replacement sales. Many suppliers that sell to an installed base of products must carefully calculate their market opportunity for both new sales as well as replacement sales. For example, commercial water heaters that are installed into hospital facilities typically have a 25-year life before being replaced (likely from the same brand).
• Learn about the effects that products have on the customers’ operating and maintenance costs. Understanding how the product impacts the customer’s total cost of ownership enables a supplier to focus on both sides of a customer’s ledger for capital and operating costs.

2) Understand your customer chain. Once you gain a deeper understanding of the size of your market, it’s important to think about all the different players that are involved in this complex and intricate game.

As framed in Blue Canyon’s white paper, “Customer Chains: The Key to Unlocking New Opportunities,” to understand your market, you have to unravel complicated customer chains.

By diagramming this process, companies can begin to understand who, what, and how to sell products and services. Understanding the customer chain can spotlight ways a supplier can bring more value to the market by following the money as it flows through each player. By plotting the customer chain economics, you may find that certain geographic areas that contain unique players offer pools of profit. Likewise, certain unprofitable portions of the customer chain exist and should be identified and avoided. Blue Canyon mapped out this process for a leading packaging company within the highly complex pharmaceutical market. Although volume growth was greater in China, the US promised greater success for this client due to a more established insurer/payor system.

3) Gain deeper insights from the market. Being far removed from the end customer and operating in a complex market means companies typically only scratch the surface of this kind of customer analysis. It may seem daunting and impossible to look at things in great detail. However, a Blue Canyon Brief entitled, “Going Beyond Customer Satisfaction: A Roadmap for Strategy Development,” points out that while customer satisfaction surveys or voice of the customer programs are cost-effective and easy to create, they tend not to dive deep enough into the issues at hand and complexities of the market, making them less actionable over the long-term. An in-depth, discussion-oriented assessment—similar to Blue Canyon’s Messages from the Marketplace approach—will dive deeper into the insights and unmet needs of both direct customers and prospective customers and reveal new, emerging opportunities for your business.

Why are these three areas so important? Plain and simple, the most successful way to grow a business is to diligently tackle each of these areas. Though they may appear to be basic concepts, many companies today still struggle with the basics or overlook their importance.