Operations

Niche Market
Niche Market Jonathan Poland

A niche market is a small and specialized target market that is characterized by unique needs, preferences, and perceptions. These markets are often served by small firms that focus on providing products and services that cater to the specific needs of the market. By serving niche markets, these firms are able to avoid direct competition with larger and more established firms.

Large firms may also choose to diversify their product lines into smaller and more specialized niches in order to tap into new sources of revenue. This can be an effective strategy for firms looking to expand their operations and grow their customer base. Niche markets play a crucial role in the economy, providing opportunities for small businesses to thrive and for larger firms to diversify and expand their operations.

A niche product is a specialized product that is designed to appeal to a small and specific target market. This type of product is typically developed to meet the unique needs, preferences, and perceptions of a particular group of consumers. By targeting a niche market, a company is able to differentiate its products and avoid direct competition with larger and more established firms. This can be an effective strategy for small businesses looking to gain a foothold in the market and build a loyal customer base.

Niche products can also be a useful way for larger companies to diversify their product lines and tap into new sources of revenue. By offering specialized products, these firms can appeal to a broader range of consumers and expand their customer base. Overall, niche products play an important role in the economy by providing specialized products and services that meet the unique needs of specific consumer groups. The following are common types of market niche.

Customer Needs
The things that a customer needs to accomplish with a product or service. For example, a customer who needs ice skates specifically designed for freestyle moves.

  • Comfort
  • Configurability
  • Convenience
  • Fair Terms
  • Features
  • Functions
  • Information
  • Look & Feel
  • Performance
  • Repairability
  • Requirements
  • Use Cases

Customer Experience
The end-to-end experience of interacting with your brand, products and services. For example, a customer purchasing a crystal glassware product who finds it difficult to determine if it contains lead. This represents an opportunity for a niche competitor that bases their entire brand around being lead-free.

  • Brand Image
  • Customer Service
  • Inquiries
  • Peak Experiences
  • Problems
  • Product Information
  • Returns
  • Shopping Experience
  • Unboxing
  • Usability

Price
Targeting customers by their price sensitivity in a product category. For example, a parent who needs an entry level pair of ski goggles for a child. The parent isn’t overly price sensitive but wants a quality item at a value price without any concern for brand image.

  • Affordable Luxury
  • Discount
  • Luxury
  • Mid-Priced
  • Premium
  • Value For Quality

Quality
Offering the market a unique level of quality. For example, packaging a product in a wooden box that is usually packaged in plastic.

  • Build Quality
  • Defects
  • Durability
  • Fit for Purpose
  • Hand-made
  • Ingredient Quality
  • Materials
  • Packaging Quality
  • Reliability
  • Reusability

Demographics
Products that serve a particular demographic such as a smart phone app for seniors.

  • Age
  • Culture
  • Disabilities
  • Education Level
  • Ethnicity
  • Family
  • Gender
  • Generation
  • Income
  • Life Stage
  • Profession
  • Urban / Rural

Psychographics
A target market based on the way customers think. For example, a bicycle helmet for customers who prioritize health & safety that greatly exceeds safety standards.

  • Conservation
  • Customer Motivation
  • Environmental Consciousness
  • Health & Safety
  • Influences
  • Opinions
  • Risk Taking
  • Social Consciousness
  • Social Status
  • Traditional
  • Values
  • Worldview
  • Customer

Behavior
Customer behavior such as their shopping habits, brand loyalty and hobbies. For example, a desk chair for heavy users such as employees who work from home such that they need durability, comfort and safety at a reasonably price.

  • Activities
  • Brand Loyalty
  • DIY
  • Early Adopter
  • Experts
  • Hobbies
  • Interests
  • Late Adopter
  • Lifestyle
  • Novices
  • Shopping Habits

Geographic
Niches based on locations such as the only hotel directly connected to an airport or only Japanese restaurant in a small town.

  • Captive Customers
  • Convenience
  • Gift Shops
  • Local Monopoly

Events & Occasions
Products and services that relate to a point in time such as a birthday or industry conference.

  • Awards & Recognition
  • Celebration
  • Concerts
  • Conferences
  • Cultural Events
  • Festivals
  • Holidays
  • Life Milestones
  • Rites of Passage
  • Sports Events

Middlemen
Middlemen Jonathan Poland

A middleman is a person or organization that acts as an intermediary between a producer and a consumer. In a business context, a middleman typically adds value to a product or service by facilitating the exchange between the producer and the consumer. For example, a wholesaler might purchase goods from a manufacturer and then sell them to retailers, adding value by providing a more convenient way for the retailer to access the goods. In this way, the middleman is able to capture some of the value created by the exchange between the producer and the consumer. Overall, the middleman business model can be a useful way for businesses to add value and generate revenue by facilitating transactions between producers and consumers. The following are common examples.

Wholesale
Buying from producers and selling to other sellers as opposed to consumers. For example, a wholesaler of fish and vegetables who buys from farms and fisherman and sells to grocery stores and restaurants. This adds value as it is a great deal of overhead to deal with individual farms such that it makes sense to share this cost amongst many sellers.

Cooperative
A cooperative is an organization created by producers to pool their resources and increase their negotiating power. For example, a farming cooperative that sells the agricultural products of many farms to wholesalers.

Digital
Selling products and services through digital channels. The internet is a middleman business model when the seller is not the producer.

Reseller
Reseller is a broad term for selling something you didn’t produce.

Parallel Import
Importing things without the permission of the producer. For example, a firm that imports a variety of European jams to Japan without reaching any distribution agreements with the manufacturers of these products.

Arbitrage
Arbitrage is the process of capturing value by taking advantage of price differences in different markets. For example, a soap manufacturer who sells soap for $8 in US and $38 dollars in Hong Kong might attract parallel importers who take advantage of this price difference.

Trading House
A firm that helps producers reach foreign markets. For example, a Japanese firm that handles localization of products, sales, compliance and taxes for foreign firms who want to sell into Japanese markets.

Retail
Retail is a middleman business model if the retailer doesn’t produce what they sell. For example, a sports shop that sells snowboards from various brands.

Broker
A broker executes a transaction on behalf of another. For example, a real estate company that sells hundreds of units on behalf of a house builder.

Agent
An agent represents the interests of another. This is very similar to broker except that an agent is usually an individual and a broker is usually a firm.

Market
A market connects buyers and sellers and takes a cut of each transaction. For example, a market for vacation rentals that connects owners with short term renters.

Auctioneering
A market that sells to the highest bidder.

Cutting Out the Middleman
Business models that seek to reduce the number of intermediaries between the producer and consumer. For example, a farmers market where farmers can sell directly to consumers. It should be noted that it is common for middleman to participate in farmers markets.

Physical Capital
Physical Capital Jonathan Poland

Physical capital refers to the tangible assets that are used to produce goods and services. This term is commonly used in economics to describe one of the three factors of production, along with labor and natural resources. Examples of physical capital include machinery, equipment, buildings, and infrastructure.

These assets are essential for businesses to be able to carry out their operations and create value for their customers. Unlike financial capital, which is a measure of a company’s financial resources, physical capital refers to the tangible assets that the company owns and uses to generate revenue. The following are common examples of physical capital.

Agricultural Equipment Aircraft
Appliances Buildings
Computers Containers
Energy Infrastructure Equipment
Facilities Factories
Fixtures Furniture
Heating, Ventilation and Air Conditioning Inventory
Land Improvements Machines
Materials Media Equipment
Mobile Devices Musical Instruments
Purchased Software Robots
Safety Gear Satellites
Ships Signs
Supplies Technology Infrastructure
Theme Park Attractions Tools
Transportation Infrastructure Unfinished Goods (work-in-progress)
Uniforms Vehicles

Sales Pipeline
Sales Pipeline Jonathan Poland

A sales pipeline is a visual representation of the sales process, from the initial contact with a potential customer to the closing of a deal and the ongoing management of the customer relationship. The pipeline is typically depicted as a funnel, with a large number of potential customers at the top, and a smaller number of actual customers at the bottom.

As the potential customers move through the various stages of the sales process, the number of accounts at each stage decreases, reflecting the fact that not all potential customers will become actual customers. By tracking and managing their sales pipeline, businesses can better understand the progress of their sales efforts and identify opportunities for improvement. The following are common stages of a sales pipeline:

Lead
A lead is a contact who is viewed as a potential customer. The process of generating leads typically involves research and lead acquisition processes such as advertising. It is often a marketing or sales operations activity.

Lead Qualification
Lead qualification is a process of filtering out leads based on factors such as finances, budget, authority, needs and timeline.

Opportunity
An opportunity is a qualified lead who is engaged in conversation with your salespeople.

Needs Analysis
Needs analysis is a meeting with opportunities to discover their needs and present what you have to offer.

Proposal And Quote
A formal proposal for a deal along with an initial quote.

Sales Negotiation
Negotiation to get to the real price and terms.

Close
Agreement on a deal and receipt of a purchase order.

Win Loss Analysis
A process of learning from each close or lost deal.

Customer Relationship Management
The ongoing process of managing the relationship with the customer such as delivery, customer service, billing and cross-selling. In many cases, each account is assigned a sales representative who is responsible for the customer lifetime value for a portfolio of accounts.

Sales Activities
Sales Activities Jonathan Poland

A sales activity is any action or task that a salesperson undertakes in order to achieve revenue. This can include a wide range of activities, from strategic planning and preparation, to communication with potential or existing customers, to administrative work related to the sales process.

Sales activities can vary greatly depending on the industry, company, and sales team involved. In some cases, salespeople may be responsible for managing the entire sales process from start to finish, including tasks such as billing and order fulfillment. By engaging in a variety of sales activities, salespeople can improve their chances of success and help their companies generate revenue. The following are common examples.

Billing / Payment Processes Closing
Cold Calling Collateral Development
Conferences Contact Reviews
Cross-selling Customer Emails / Messaging
Customer Relationship Management Customer Research
Customer Return on Investment Modeling Customer Satisfaction
Data Capture Deal Approvals
Draft Contract First Call / Contact
Fulfilling Order Identifying Decision Makers
Incident Management Margin Calculations
Market Intelligence Meeting Proposals
Meeting Scheduling Needs Analysis
Negotiation Post Sales Follow-up
Presentations Problem Management
Product Demonstrations Product Training
Promotional Events Proof of Concept
Proposals Prospecting
Prototyping Public Speaking
Qualifying Quotations
Relationship Building Request for Proposal (RFP)
Request for Quotation (RFQ) Sales Calls
Sales Meetings Solution Design
Solution Pitch Submitting Order
Upselling Win-Loss Analysis

Customer Avatar
Customer Avatar Jonathan Poland

A customer avatar, also known as an ideal customer profile, is a detailed description of the specific type of customer a business is targeting with its sales efforts. This description typically includes demographic information, as well as information about the customer’s needs, preferences, pain points, and behaviors. By defining a customer avatar, businesses can better understand the customers they are trying to reach, and can tailor their sales efforts accordingly. This information can be used as a basis for prospecting, lead qualification, and the development of marketing materials and other collateral. By creating a clear and detailed customer avatar, businesses can improve their chances of success in the sales process. The following are common elements of an ideal customer profile.

Target Market
A description of your target market in areas such as demographics, lifestyle and preferences. In the case of B2B sales, you may define the industry, firm size, organizational function and job titles that you are targeting. For example, a target market of the CISO office of large and mid-sized banks.

Regions
The geographical reach of your sales efforts.

Customer Needs
A list of problems that you can solve for the customer. For example, customers who are using outdated software that you can improve upon.

Time
Defining the timeline of closing the sale. Some sales efforts may require careful relationship building that take years to close. Other sales efforts may only consider customers with strong potential to buy immediately. This has tradeoffs as your pool of customers shrinks if you’re restricted to those who have immediate needs.

Attributes
Attributes that make it more likely to close the sale. For example, a firm that currently buys from a weak competitor that you know to have poor customer satisfaction.

Budget
The financials of the customer and the likelihood they will have budget for your product.

Channels
Customers that can be reached by particular sales channels. For example, customers that can be engaged at industry events or through referrals without cold calling.

Buying Process
The processes, influencers and stakeholders involved in the customer purchase decision. For example, some sales teams may have a history of success selling to business units but not to IT departments. As such, they may avoid firms that strictly buy all technology through the IT department.

Lead Generation
Lead Generation Jonathan Poland

Lead generation is the process of identifying and attracting potential customers for a business. This is typically the first step in the sales process, and involves a variety of tactics and strategies for finding and engaging potential customers. Once potential customers have been identified, the next steps in the sales process might include lead qualification, prospecting, needs analysis, proposal creation, closing, and ongoing customer relationship management, including cross-selling and upselling. By implementing an effective lead generation strategy, businesses can build a pipeline of qualified leads and improve their chances of making successful sales. The following are common lead generation techniques.

Digital Advertising
Using behavioral and contextual ads to drive traffic to a page that pitches your product and asks for contact information.

Inbound Marketing
Creating content such as brand storytelling and interacting with potential customers in social media.

Industry Events
Attending industry events such as trade fairs.

Sponsoring Events
Sponsoring events such as training or a product demonstration in order to connect with potential customers. For example, webinars are commonly used to generate leads.

Showrooms
Physical locations that show off products.

Networking
Getting to know the people in your industry. For example, a salesperson for market data might know thousands of people in the banking industry in their territory.

Camping
Networking by going to the same events and places that customers frequent. For example, bankers in Tokyo might mostly go to the same bar in the evenings.

Cold Calling
Researching people and calling them to try to gain their interest.

Third Party
In many industries, there is a market for leads. For example, a list of people who are currently shopping for a car. These may be worth less than leads who have actively expressed interested in your particular product.

History
Lost customers and rejected proposals.

Cross Sellilng
Cross Sellilng Jonathan Poland

Cross-selling is the practice of selling additional products or services to existing customers. In a single transaction, this might involve upselling a higher-priced or more advanced version of a product the customer is already purchasing. For businesses that maintain long-term relationships with customers, however, cross-selling is a sustained effort to gain more sales from each customer over time. By identifying the needs and interests of their existing customer base, businesses can offer relevant and valuable products or services that enhance the customer’s experience and drive additional revenue.
The following are common types of cross-selling.

Complimentary Items
Products and services that compliment each other like coffee and donuts or software and training.

Seasons
Seasonal themes. For example, a back to school campaign might suggest shoes to a customer buying pens.

Data Driven
A platform might cross-sell items based on historical purchase data for similar patterns of shopping cart or page visits. For example, a site might suggest bicycle locks to someone who puts a bicycle in their shopping cart.

Promotions
Pitching things that are on sale. If a customer booked a trip to France last month, let them know when tickets to France go on sale.

Campaigns
A sales campaign to sell a particular product or service. For example, a telecom company might pitch colocation services to network customers.

Popular Items
Cross-selling popular items such as a bookstore that reminds customers that a best seller just went to paperback.

Experiments
Experimenting with cross-selling different items to see what works. For example, the food service on an intercity train might experiment with different food items such as sushi or pizza to see what sells.

Impulse
Things that people tend to buy on impulse such as candy bars.

Releases
Letting customers know when new products and updates are released. For example, a fashion brand that connects with customers to generate excitement for their Spring line.

Risk
Risk products such as an extended warranty or insurance.

Services
Wrapping products in services that deepen the relationship with the customer. For example, pitching an unlimited ebook service to people who buy an ebook reader. This results in monthly recurring revenue as opposed to a one time sale.

Sales Development
Sales Development Jonathan Poland

Sales development is a crucial part of the sales process that involves identifying potential buyers and developing qualified leads. This typically involves conducting research and planning, as well as networking and outreach efforts. By taking a proactive approach to identifying potential customers and building relationships with them, sales development professionals are able to help their companies generate new business and drive revenue growth.

Target Market
Defining your target market.

Sales Planning
A set of plans, targets and measurements for the sales process. Sales development objectives are primarily defined in terms of qualified leads that may be broken down by factors such as region, product, customer type and qualification score.

Research
Discovering information about your potential customers. Who are they? What are their needs? What is their financial position? Are they currently engaged by the competition? Who is buying right now?

Research Partners
Services that provide market and competitive intelligence. For example, an industry research organization that can provide a list of customers that are currently in the market for construction materials.

Data
Developing data and knowledge about customers, markets and competitors.

Technology
Development systems and tools to improve the efficiency and quality of the sales development process. For example, systems that automatically pull in financial information for leads.

Promotion
Marketing communication such as advertising designed to discover leads.

Promotion Partners
Developing and managing partners that can engage customers and generate leads.

Prospecting
The process of contacting potential buyers to generate leads.

Cultivation
In order to qualify leads, a sales development representative may require a fair amount of information. This may require carefully cultivating a relationship in a way that is helpful to closing the sale.

Needs Analysis
The sales development representative often begins the process of needs analysis.

Lead Qualification
Researching the needs, finances, reputation, budget and authority of leads to filter out those leads that are unlikely to close.

Handoff
Presenting everything you know about the customer and the competitive situation to the account executive who will handle closing.

Opportunities
The sales development representative may be involved in the first few meetings with the opportunity to transition the relationship. This is particularly common in complex B2B sales.

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