Imagine Amanda went to the library or online source
and found current market research reports
from credible market research companies like Forrester
or Gartner or someone like that, that already proved
an estimate of the TAM for scheduling technologies.
Shouldn't Amanda just save time and use the TAM numbers
provided by the reports?
Think about that for a second.
I think that that kind of material
and that kind of research has its place.
It can provide you with a general overview of
whether or not there's interest in a specific industry
or space.
But there's a couple problems.
One is that if you're reading about it on Google,
the likelihood is that you're too
late to get that early mover advantage,
and somebody with more money and better resources than
you are probably out there doing it
or about to do what you might be setting out to do.
And the second thing as well is that that kind of research
doesn't expose the real utility that your customer would end up
getting from your product, because you want
to be out there and talking to customers
and engaging with people to understand the pain points,
because that's really what influences
the features that you want to put into a product.
So while I think that that type of research has its place,
it's not the real guts of what will
make your business successful.
Exactly.
Secondary research as opposed to primary market research
that we've talked so much about only
gives you a top down analysis.
Tops down analysis can give you some sense
of the market and the market trends,
but such analysis is rarely, if ever,
concrete enough to the level of understanding
and the specificity of end-users that we're looking for.
How much value your solution would provide to them
is very, very important.
Specificity wins over generalities every day.
Because of that, if you just do a tops down,
you're very likely to overestimate your TAM,
and you're very likely to leave without some really
clear understanding of the market.
Too much top down analysis makes you
focus on spreadsheets, not customers, not real customers.
I've never seen a live customer hiding
in the cell of a spreadsheet, and I've
looked at a lot of spreadsheets.
Market research reports are useful as a very first step
to really help give you a little bit of a view of an industry
or how people are feeling or some statistics,
but they never are exactly what you're looking for.
If market research reports already exist,
that means somebody's already explored this market
and opportunities have already been taken from it.
Primary market research is essential,
because you really find out what your target customers are
looking for, how are they currently doing this?
What do they he about doing it?
How could you make it more efficient, better, or just more
enjoyable for them?
The best way to estimate TAM is to determine
the number of end users that fit your end-user
profile through a bottoms up analysis.
We often call the bottoms up analysis counting noses,
because you're getting very specific.
This means doing primary customer research
to determine the number of customers who will fit neatly
into your end-user profile.
Of course, you can complement this with a top down analysis,
and you should.
This will confirm your findings.
But only complement, never replace,
primary market research with top down analysis.