The Complete Online Business Handbook
Handbook 1 - Product Development
Chapter 1: How to Find the Right Business Idea
Focusing on the Customer Problem
We need to change the way we think about finding business ideas. Instead of finding a business idea to build a business around, we need to focus on finding a customer problem that we want to solve. Let me explain.
People often say, “I want to start an app like uber” or “I want to start a website like Facebook.” There are solutions. You should dig deeper into what problems these solutions actually solved.
In 2009, Uber solved the customer problem of transportation within the same city. Before Uber, customers had pain points like
- They had to call a taxi company or try to hail them on the road
- Friends and family couldn’t track user’s ride for safety purposes
- It was hard to do credit card transactions with cabs.
Uber’s solution solved these pain points by
- Having a convenient app that shows you nearby cabs that you can book with a single click
- Mobile payments through the app were easy and simple
- Your friends and family could track your whereabouts during the ride.
In 2004, Facebook solved the customer problem of remaining in touch with your friends and family. Before Facebook, customers had pain points like:
- They had to use phones, emails, IMs to stay in touch with friends and acquaintances. Generally, all these 3 solutions were part of different services.
- People would move, resulting in their contact info being changed, and the people they couldn’t update, they will lose touch.
Facebook’s solution solved these pain points by
- Having a central profile system where people could check updates on their friends, IM them, audio and video call them.
- Having a central profile that didn’t change when people moved, so they didn’t lose touch with their friends and family.
To summarize, we need to focus on the Problem Space before we focus on the Solution Space.
Problem Space vs. Solution Space
As you can see in the image above, we need to start with Problem Space and then move into Solution space. Let’s dive into it.
Solutions like iMessage, Gmail, Facebook, and WhatsApp are focused on solving customer problems, making it easier for people to stay connected with their friends and family.
Solutions like Uber, Lyft, Public transit, taxies are focused on solving the transportation problem for the users.
To summarize, before you decide on a business idea and start a business, decide on what customer problem you want to solve. We go over the process to do that in the next section.
Short Term vs. Long Term Competitors
The concept of Problem Space vs. Solution Space brings to the topic of what are our real competitors.
For Uber, other taxi services might be their short-term competitors who compete on customer acquisition, customer retention, etc. However, for Uber to survive long term, they need to compete with older traditional transportation models. Why should someone take an uber instead of taking a subway or a bus? Why should someone not ask their friends for a ride or walk to places.
The same goes for examples like Amazon and Instacart. Amazon is dominant in the E-commerce space, but they have avoided the monopoly-related regulation from the government because it still makes a tiny percentage of traditional commerce. The majority of the general population still do shopping in-person (at least before Covid).
For Instacart, their long-term competitor is people’s habit of going to grocery stores in person. Why should people choose to pay Instacart fees when they could walk to the nearby store.
This all ties to you because sure, you should be aware of the market and your short-term competitors. However, you should solely focus on solving customer’s pain points and providing value to them for long-term success.
Finding the Right Business Idea to Pursue
In this section, we will go through how to find the right business idea to pursue. In Step 1, we will brainstorm possible options based on 4 factors, and in Step 2, we will prioritize these options based on 2 frameworks. Let’s get started.
I suggest you do this exercise side-by-side while following this guide. Below are the results of me doing this exercise on myself. You should see similar results as shown below.
Step 1: Brainstorming Possible Options based on 4 factors
Factor #1 – Passion (Solving Problems You’re Passionate About)
The first factor is Passion. Here, brainstorm and list all the problems that you’re passionate about. For me customer problems that I’m passionate about are:
- Helping people stay connected with friends and family
- Improving transportation
- Improving health and well being
- Coding education
Now on the right-side column, you can see the list of possible solutions that you could build to solve these problems.
For example, to solve the customer problem of health and well-being, I can build solutions like selling health supplements, starting online fitness classes, and more. For helping connect friends and family, I can make a social networking site, build a chat app, and so on.
Note: in this exercise try to avoid thinking about the solution. We first need to figure out which problem to work on and validate that with the customers. We will focus on solutions later when we know we are solving a problem people care about.
Factor #2 – Knowledge (Solving Problem You Have Existing Knowledge In)
The second factor is Knowledge. Here, you should focus on brainstorming problems that you have existing knowledge of.
It’s true that with any business you would need to educate yourself constantly. However, you should still have an existing foundation in it. For example, I don’t have existing knowledge in medicine or insurance. For me, it would be harder to start a healthcare or insurance business.
Please do this exercise on yourself. Here are my results. I have existing knowledge in Business Education, E-Commerce, Marketing, and Product Management. I brainstormed possible solutions as writing books, building training, and learning portals to solve these problems.
Reminder: this section is about brainstorming possible customer problems based on 4 factors. Please check the next section if you want to look at how we prioritize these and find the right business idea for us.
Factor #3 – Revenue (Solving Problems That People Would Pay Money For)
The third factor is Revenue. Here, we brainstorm problems that people would be willing to pay for. This could be based on existing knowledge or more profound research.
For me, the problems that customers would be more inclined to pay money are Ecommerce and Improving Health. Commerce and Online Commerce are evergreen businesses where people always spend money on. The same goes with Fitness. People spend money on gym memberships, fitness programs, supplements, cooking classes, doctors, and more.
Factor #4 – Solving My Own Problem
The fourth factor is solving your own problems where you will be the customer of the solution you’re building.
This is important because you need to do Customer Development for any business, which is understanding customer pain points and continuously getting feedback from them. If you’re your own customer, you will have a better understanding of the customer’s perspective.
Paul Graham is a huge supporter of this. He’s the co-founder of Y-Combinator, a VC firm that helps found billion-dollar businesses like DoorDash, Instacart, Dropbox, and many more.
For me, If I build a solution for Improving Health or Improving Business Education – I will definitely be using it often. I suggest you do the same and think of solutions that you would be using yourself often.
Step 2 Method 1: Prioritization and Decision Using Fixed Weight Equation
In the previous section, we brainstormed all possible business problems based on 4 factors. In this section, we will use a prioritization framework called Fixed Weight Equation to make a decision – which of these business ideas to pursue.
We will be assigning every brainstormed business problem from Step 1 a score. This score will be based on the 4 metrics mentioned in Step 1. I suggest that you do this exercise in parallel as well. By the end of this exercise, your scoring table should look similar to this.
Factor #1 – Passion
The first factor is Passion, which means how passionate I’m for the problem space. This is important because let’s say if you’re business is going through a crunch, your passion is what will keep you going and prevent you from giving up. Passion is a significant motivating factor in building a business.
Being passionate about a problem space also means would you enjoy working on that problem if money wasn’t the motivating factor? Yes, we need the business to pay bills but enjoying the day-to-day work is important.
For example, some folks are passionate about Health & Fitness problem space, some folks are passionate about Stock Trading & Finance, some are passionate about E-Commerce, etc.
Factor #2 – Knowledge
The second factor is Knowledge, which means how much existing knowledge do you have about the problem space, the market, and potential customers?
This is important because the more knowledge you have about the space, the less research work you would need to do later. This is compared to other areas where you have no prior knowledge.
For example, I personally should not start a Crypto Currency startup because I very minimal knowledge in that space.
Ideally, most ideas related to this factor would be based on what you studied in College and what knowledge you picked up while working at a company.
Factor #3 – Revenue Potential
The third factor is Revenue potential, which means how much financial opportunity is in the market.
Let’s talk about how to figure this out about space. Start with researching businesses that are solving the same or similar problem. For example, if you want to start an Online Fitness company, begin with researching other Online Fitness companies.
After you have identified similar companies in your space, research their fundraising history, how much VC money they have raised. You can do this by using tools like Crunchbase and AngelList. You can also dig into the financial statements of publicly traded companies.
You could also get the idea from their user numbers. If a business has millions of users, that means the business idea definitely has some revenue potential. To figure out how many users a business has, use tools like Alexa or SimilarWeb.
Factor #4 – Will You Be Your Own Customer?
This factor means will you be using the solution you’re building on a consistent basis? Will you be a regular customer of your own business?
This is important because by being your own customer you will have a higher understanding of the customer mindset since you would be one yourself.
Note: This should still not prevent you from consistently talking to your customers and learning from them.
Let’s quickly go over the exercise by using my data as a reference.
For factor #1 Passion, the problems I’m more passionate about (like E-Commerce, Consulting & Communication), I have assigned them high scores like 9 or 8. For spaces I’m not super passionate about like Fitness and YouTuber, I have assigned lower scores for myself like 6 or 2. Note: your scores will look different from mine.
For factor #2 knowledge, I’m not super knowledgeable about fitness and online entertainment so I assigned them 2 and 2. Whereas, I have relatively decent prior knowledge in E-commerce, Consulting, and Communication so I have assigned them higher scores like 9, 9, and 7.
For factor #3 Revenue Potential, most of these ideas have high revenue potential so I have assigned them high scores like 8 or 9.
For factor #4 Being your own customer; For ideas like E-commerce, Consulting, and Fitness I would be consuming my own product, so I assigned them high scores here. I’m not a huge consumer of online entertainment so I assigned it a low score for myself.
Now, when you sum each idea across 4 categories, we put the sum in the 5th column. As you can see the top 2 options for me turn out to be E-Commerce (score 36) and Consulting (score 35), closely followed by Communication (score 31).
I suggest you score your ideas the same way I did above. Then you should see the top 2/3 high-scoring ideas and make a decision on which one to build a business around.
For folks who are like me and appreciate more visualization in their decision-making, you can also put the scores in Excel to get graphs like this.
This visualization confirms our current understanding that the top right ideas in the chart are worth pursuing more. The graph also helps me understand better how much better the top options were at scoring than the rest of the options. For example, Communication (score 31) might not seem too different from Consulting (35) but it’s almost 13% lower.
In the next section, we will cover another prioritization technique called Variable Weight Equation.
Step 2 Method 2: Prioritization and Decision Using Variable Weight Equation
In this section, we will use a prioritization framework called Variable Weight Equation to prioritize the ideas we brainstormed in Step 1.
As part of this framework, we assign weights to the 4 factors based on their importance. For example, if you feel that being knowledgeable about the business space is more important than being passionate about it – then you can assign a multiple of 2 to the knowledge column and multiple of 1 to the passion column.
Note: Feel free to have custom weights for these 4 factors based on their importance to you. In this example, I have assigned a weight of 1 to Passion, 2 to Knowledge, 2 to Revenue Potential, and 1 to Being Your Own Customer.
To summarize, this means that having previous knowledge about the space and revenue potential would be twice as important as being passionate about it and being your own customer.
Note: I have done this exercise on myself here. I suggest you do this on your data in parallel.
Now, based on the equation mentioned above, let’s assign scores to my options.
I have kept the identical scores I assigned them in step 1, but the final score gets multiplied by the weight we assigned the column. After that, we sum the final scores for each idea in the 5th column to get the top-scoring ideas.
As visible here, E-Commerce (Score 53) and Web Consulting (Score 54) came out to be top-scoring business ideas I should consider pursuing. I suggest you do the same exercise to your list of ideas.
Benefits of Variable Weight Equation
- As previously stated, you get to give more importance to factors you think are more important when choosing the business idea.
- When we used Fixed Weight Equation in Step 2 Method 1, all factors weighted the same and few ideas, and their scores looked way closer to top ideas than they should have. Sometimes, this could affect our decision-making. However, when you do Variable Weight Equation, you can see more granularity in the options and their scores. For example, using Fixed Weight Equation, the option for Communication seemed pretty close to the top 2 options. However, if you follow Variable Weight Equation, you can see the gap is much wider from the top 2 options.
Just like in the previous step, I plotted the scores in an excel sheet to get a graph. This can be useful in your decision-making by visualizing the difference in scores for top ideas to the rest of them.
Starting with a Niche
In the previous section, we figure out what business idea to work on. In this section, we will cover the concept of Niche. Let’s get started.
Business Niche is specific segment of a bigger business problem that is focused on specific group of people.
Let’s go through some examples.
- Let’s say you decided to build a social network. One example niche could be building a social network for a particular city. Facebook which is also a social network initially started out as a Niche focused on only 1 college (Harvard) and 1 City (Boston).
- Let’s say you decided to start a taxi business. One example niche could be focusing the business for specific routes of the city. Uber initially started out as an airport taxi service only for San Francisco airport.
- Let’s say you want to build a food delivery service. One example niche would be focusing on specific neighbourhoods of the city. DoorDash which is a food delivery service, started off focused on specific areas of Palo Alto.
This can be summarized as:
In the next section we will talk about how having a Niche is beneficial for your business.
How is Having a Niche Beneficial For My Business
Having a Niche helps your Business in the following ways:
Increased Focus & Visibility Among Customers
When you’re starting a business, it’s easy to get distracted. If you focus on too many markets at the same time, it will distract you from your core market.
Let’s talk about an example. Let’s say you want to start a marketing agency and run marketing campaigns for other businesses. However, this is too big off a market.
You can segment your market into a niche based on company size, for example small start-ups, medium sized companies or fortune 500 companies. You can also segment your market into a niche based on industry type: fitness industry, education industry, E-commerce etc.
This is important because let’s say a law firm searches for a marketing agency. Now would they go with a marketing agency focused on law firms or would they go with a general-purpose marketing agency. That’s why it’s important to know your Niche.
Once you have enough traction, you can expand outside of your Niche. For example, Uber started out as a taxi service. Then they expanded to car-pooling, food delivery and more.
More Value to Customers
When you focus on a niche, you focus on a specific problem for specific group of people.
The more specific your niche is, the less competitors you will have. Less competition means customers have limited companies solving their problems. When there are less solutions in the market, there will be even less good quality solutions.
It’s an opportunity for your business to easily provide high value solutions to the customers.
Less solutions in the market means customers don’t have enough companies paying attention to their problems. When you solve problems for them, you gain their empathy, and these early customers will become champions of your business later on.
It’s better to provide exceptional service to 100 customers than trying to provide good enough service to 1000 customers.
Building strong customer relationships is also good for the business. Strong customer relationships translate into high customer retention rates and higher revenue.
Better Profit Margins
Since there is less competition, you won’t need to compete with your competitors on pricing. Race to the lowest price to undercut others results in bad business for everyone involved and it distracts you from providing high value products to the customers.
More Business Opportunities
When there are limited solutions available to the customers, they would have higher number of underserved needs and pain points. The more underserved needs customers have, more business opportunities for you.
Supported by Real World Data
As mentioned in the previous section, popular businesses like Facebook, Uber and DoorDash all started as a Niche and then expanded later.
Note: you can always expand your business to other niches later. It’s only important in the beginning until you get significant traction.
How to Find a Niche For Your Business
In this section, we will go through 2 example business problems and their possible niches you could pursue. Let’s get started
Let’s say you want to start a Health & Fitness business.
The 1st niche could be providing fitness classes to users. This would include conducting one-on-one or group classes, preparing workout plans, giving constant feedback to customers and more. You can do this in-person, virtually or live stream it online.
The 2nd niche could be selling fitness supplements. This would include selling protein powder, nutrition bars, multivitamins, creatine and more.
The 3rd niche could be selling fitness equipment. This would include selling dumbbells, barbells, squat racks, treadmills and more.
Let’s look at another business problem. Let’s say you want to start a professional training business for software engineers.
The 1st Niche you could be teaching how to code websites from scratch. Your customers would be young professionals from non-tech background who want to transition to a tech career.
The 2nd niche could be building educational content for existing software engineers. This would include teaching new technologies like new web frameworks, teaching new domains like crypto, teaching job interview skills and more.
To summarize, I would recommend you research your possible niches for your business problem. Then use the prioritization techniques mentioned in the previous sections to decide which niche to pursue. (Fixed or Variable Weight Equations).
Handbook 2 - Competitor Analysis
Strategy #1 - Finding competitor's top-selling products by analyzing their most visited website pages
Determine and analyze competitor's top-selling products by figuring out their most visited website pages.
There are multiple tools in the market that can help us with this. In this section, we will use the 2 tools: SimilarWeb and Ahrefs.
We will be analyzing the following metrics for a competitor's website:
- Amount of web traffic per page
- Unique visitors per page
- Number of SEO keywords per page
- Top SEO keyword for a page
- Source of traffic for a page
Case Study 1: Analyzing Ikea's website
Let's assume you want to start a home furniture startup and you understand that Ikea would be one of your main competitors. As part of your competitor analysis, you would want to research the top-selling products of Ikea.
For that, let's go to www.similarweb.com and go to their Competitive Analysis Tool. In the top search (pointed by Arrow 1) enter the URL of your competitor, which is www.ikea.com in this case. Now, let's start analyzing the data here.
The column "Page" (pointed by Arrow 2) lists the most visited website pages for Ikea. The column "Unique Pageviews" states the web traffic of pages. For example, the page "ikea.com/us/en" gets 8.4 million views, "ikea.com/us/en/search" gets 5.4 million views, and so on. (pointed by Arrow 3).
In this column, you can categorize the list of pages into 2 groups. The first group of pages would be non-product pages like "/search", "/shoppingcart", "/login" etc. The second group of pages would be product pages like "/tables-desks-fu004" and more (pointed by Arrow 4). For our analysis here, we care about the 2nd group of pages that lists the product.
Now, let's look at the other columns here. Column titled "Unique visitors" states the number of unique visitors visiting that page. Column titled "Direct" states the number of users that are visiting the page by directly entering the exact URL in the browser address bar. Column "Search" states the number of users that reach this webpage when they search something on the search engines and one of the results there directs them to this webpage.
Case Study 2: Analyzing Teespring's Website
Let's go to www.ahrefs.com and go to their Site Explorer tool. Over there, enter the website address of the competitor in the search bar at the top (pointed by arrow 1).
Let's assume you want to start an online t-shirt business and want to figure out what type of t-shirts you should be selling.
You start with researching existing successful clothing businesses. Let's assume you figured out your competitor to be www.teespring.com and now you want to determine their top-selling t-shirt products.
So now let's go to the search bar at the top (pointed by arrow 1) and enter teespring.com. Now go to the tab that says "Top Pages" (pointed by arrow 2). The "Top Pages" tab will show the most-visited pages on the www.teespring.com website.
Let's look at Arrow 3. You can categorize the top pages into 2 groups. The first group would be non-product pages like "login", "signup", "about", "checkout", etc. They're not valuable to us. The 2nd group would be product pages with URLs containing either names of the products or the names of the sellers. Websites like Walmart and Ikea put the name of the products in the URLs.
Let's look at other metrics here. Arrow 4 shows the number of user visits on a specific web page. The more the user visits, the more popular the product is.
Arrow 5 shows SEO keywords used on search engines like Google and Bing. The more keywords the competitor is targeting, the more popular product would be because the company is heavily invested in promoting it.
Strategy #2 - Finding competitor's top-selling products by analyzing what products are customers searching for their website
Determine a competitor's top-selling products by analyzing what products are customers searching for on the competitor's website.
- Use a market research tool to get the data about competitor's website (using SimilarWeb or Ahrefs)
- Analyze the following metrics from the data:
- What search phrases were used by customers.
- How many users visited the product pages guided by the search phrases.
- How many users made a purchase on the product pages.
- Are the user trends increasing or decreasing for the product searches
- Are the user trends increase or decreasing for the product page visits and conversions.
Case Study #1: Walmart
Let's go to www.similarweb.com and enter the competitor's website URL on the search bar at the top (pointed by arrow 1). When you do that, you should see the data below. Let's go through the metrics listed above one at a time.
Arrow 1 states the competitor's URL we are analyzing. The "Phrase" column (pointed by Arrow 2) lists the product searches entered by the users on walmart.com. For example, you can see users are searching for products like "wipes", "paper", "spray", "Lysol" and more on Walmart's website.
The "Visits" column (pointed by Arrow 3) shows the number of times people searched for that product in the last 6 months on this site. As shown, "wipes" were searched for 7.37 million times, "paper" was searched for 5.82 million times, "spray" was searched for 4.80 million times, and so on.
This data in the "Visits" column is also useful because it shows us if the demand for a product is increasing or decreasing over time. We always want to focus on a product whose demand is growing.
The "Converted Visits" column (pointed by Arrow 4) states several product searches that resulted in a sale. For example, out of 7.37 million searches for "wipes", almost 543k of them were converted into a sale.
How can I use this for my business?
Use Case #1. Better Products for Customers
When a competitor has a top-selling product, that means there is strong customer demand for that product. The product solves a customer problem and customers do find value in the product.
By analyzing what products sell well, our goal is not to copy them but to understand what customer problems they solve. This helps us decide for our own business what customers problems we should prioritize.
As part of Product Development, our goal should be to always focus on customer problems worth solving. When we solve the problems customers care about, it gets easier to acquire and retain them.
Use Case #2. Better Digital Marketing
By knowing what products sell well and what problems customers care about, we can improve our digital marketing. By figuring out what problems users care about, you can improve value props for your business.
These value props are used in various places like emails we sent to users, the language we used in Ads and Landing Pages, and more. By improving our value props we essentially improve our conversion rates.
Strategy #3 - Analyzing competitor's customer usage patterns
The goal is to learn and analyze the website usage patterns of a competitor's customer base. We would analyze the following metrics:
- How many users are visiting a competitor's website?
- How much time are the users spending on the competitor's website?
- What is the age distribution for the users?
- What geographical market do they belong to?
Process and Case Study
Let's assume you want to start an online fitness company and consider bodybuilding.com as a competitor. To learn more about potential customers, you want to research and analyze bodybuilding.com's existing audience.
To do this analysis let's go to similarweb.com and go to the Audience Behaviour Analysis tool (pointed by Arrow 1).
Enter the website URL of the competitor you want to analyze in the search bar on the top.
Enter bodybuilding.com in the search bar on the top (pointed by Arrow 3). Upon pressing enter you should see the following data. Let's talk about each metric shown here.
Category rank essentially signifies how popular is the competitor in the market compared to other companies. In this case, it ranks pretty high at number 6 for online fitness businesses.
The graph on the left gives you the total number of user visits for the competitor's website in the last 6 months (pointed by arrows 5 and 7). It has a breakdown of web traffic per month so you can see any growth or decline in their web traffic. For bodybuilding.com there were approximately 8 million unique visits in the last 6 months.
Let's say, if analyzing the traffic of an e-commerce site, you will see growth in web traffic in the months of November and December since more people are doing holiday shopping.
Now let's talk about the metric "Average time per duration" (pointed by arrow 8). This metric suggests how much time a user spends on the competitor's website on average. In this example, on average people spend 4 minutes on bodybuilding.com. So if we are building an online fitness company, we need to aim for 4 minutes or higher for our website.
Metric "Pages per visit" (pointed by arrow 9) states the number of unique pages on the website a user visits on average. This could signify how many products are users checking on their website, how many blog posts are they reading, how many competitors features they are exploring and considering.
For example, if we do audience analysis for H&M you would see on average a user visits 8 pages per visit. Which makes sense since people tend to individually checkout page for each clothing product they're considering.
Metric "Bounce Rate" (pointed by arrow 10) states the percentage of users who just leave the website after visiting only 1 page on it. We should try to keep this number as low as possible for our business since we want customers to check out more than 1 page on the website.
Strategy #4 - Analyzing competitor's customer's age, gender and geographical distribution
The goal is to learn and analyze the age and gender distribution of a competitor's customer base.
Process and Case Study
To do this analysis, let's go to similarweb.com and enter the competitor's URL in the search bar at the top. After that you should see data similar to below:
Let's analyze the gender distribution data here (pointed by Arrow 1). As you can see the competitor's audience is 57% male and 43% female. From our perspective, since the percentage of female customers is lower, we can focus on the female market first and try to work on that business opportunity.
Now, let's look at the age distribution data (pointed by arrow 2). The competitor is most popular in the 25 to 34 age group followed closely by the 18 to 24 and 35 to 44 age groups.
That data tells us 2 things here.
- There is definitely demand for the product in the 25-34 age group. So when we are building our online business we need to make sure we do product development targeting the 25-34 age group.
- The product still has substantial reach in 18 to 24 and 35 to 44 age groups, even though it's lower than the 25-34 age group. We can use this data to consider targeting these 2 age groups solely, in the beginning, to differentiate us from our competitors.
Let's look at the geographical breakdown of the users.
As shown in the data by SimilarWeb, Bodybuilding.com is hugely popular in America and then followed by the UK, Canada, and Australia.
So if you are building your business, it's ideal to focus on English language products and maybe down the road localize your website to support other countries. When you choose which regions to run ads, it would make sense to keep the ads limited to the North American market.
How is this beneficial for my business?
Use Case #1: Identifying Audience Segments
This type of data helps us target the right audience segment when running ads. For example, when we are running ads it's ideal to run ads for the 18-44 combined age group since they make a big chunk of our potential customer base.
Use Case #2: Identifying Geographical Markets
If you are building your business, it's ideal to focus on English language products and maybe down the road localize your website to support other countries. When you choose which regions to run ads, it would make sense to keep the ads limited to the North American market.
Use Case #3: Identifying Business Opportunities
We should use this data to consider figuring out why is this product not as successful with the women demographic and maybe we can start with acquiring that demographic as customers first. This greatly improves Produce Development in our business.
Handbook 3 - Audience Analysis
Strategy #1 - Determining & Analyzing What Businesses You Share Audience With
Process & Case Study
Let's assume you work at cnn.com and you want to increase the number of readers. Let's do an analysis to achieve this.
Go to similarweb.com and go to the Research section (pointed by Arrow 1). Enter the name of the website you want to analyze in the search bar at the top (pointed by Arrow 2). In this case, we will enter cnn.com.
Once you do that, the tool will show the data similar to the below. As you can see, cnn.com share 22% of their audience with Fox News, 21% with Washington Post, 14% with New York Times, and 22% with USA Today.
Analyzing established competitors like foxnews.com and newyorktimes.com can help us identify strategies that are working for your competitors but not for you. Then you can drill down why it's not working for you and how you can make it better.
For example, if you see foxnews.com's youtube video stream gets 90% positive reviews but CNN's only get 50%, then it would be good to investigate how to improve your video streaming.
Analyzing new and rising competitors can also help you with identifying market trends. For example, if you notice Vox.com is gaining viewership with more documentary-type content, then you can also improve your product development by considering prioritizing documentaries.
You can also use this analysis to run digital ads on your competitors to capture their audience or the audience that moved to them from you. For example, you can run ads for your new documentaries directly on Vox.com.
You can also target users with ads for your products when they search for Vox.com-related content on search engines. You can do this by identifying relevant SEO keywords and then making ads for them.
How is this beneficial for my business?
Use case #1: Identifying and analyzing established competitors
Analyzing what websites you share your audience with is a good way to identify your established competitors. By analyzing establish competitors, you can determine their top-selling products which can help you identify products that customers find value in.
Use case #2: Identifying and analyzing rising competitors
You can also identify what competitors are new and rising among your audience. If you see a website that shares an audience with you but did not before, it's a good indicator that they are a rising competitor. Analyzing the rising competitors indicates where the market is headed in the next few months and years. It also helps to identify new product opportunities.
Use case #3: Identifying what websites to run ads on
You can use this analysis to figure out what websites to run digitals ads on. When someone visits your website, attach a pixel. Once they leave your site and go to a different site, you can show them ads since your pixel would be tracking them.
Use case #4: Running ads for SEO keywords related to competitors
When someone searches for your competitor or their products on search engines, you can actually buy ads for relevant SEO keywords. For example, let's assume you work for Pepsi and want to target Coke users. So when Coke users search for diet coke, you can buy ads for search terms like "diet coke" and have your ad placed on the top of the results.
Strategy #2 - Determining & analyzing what questions your audience is asking online
The goal is to research and analyze what questions your audience is asking online.
Process and Case Study
Let's say you run a UX design company and you want to research what questions your audience is asking online and what solutions they use to solve their problems.
We will be using a tool called BuzzSumo for this analysis. Let's go to buzzsumo.com and go to the Discover tab (pointed by Arrow 1)
In the Discover tab, go to the Questions section (pointed by Arrow 2) and then enter the topic you want to research in the search bar near the top (pointed by Arrow 3). For our case study, we will enter the "UX Design" topic in the search bar.
Once you do that you will see the results below (pointed by Arrow 5). It will show you a list of questions asked about the "UX Design" topic by the audience. It also shows which websites or forums these questions were asked on.
How is this beneficial for my business?
1) Building better products for customers
When you see questions related to the topic "UX design" here, you are learning more and more about the customer and the pain points they face. For example, people might be searching for books for UX design, some might be looking for new design tools to improve their workflow, some folks might be looking for UX design jobs. This data gives us insights into customer's mind.
This is important because we want to build products that actually solve a customer problem. If we build a solution that actually solves a customer problem, they will definitely consider paying for it. Otherwise, if we keep building solutions for problems that our customers don’t have, customers won't buy our products.
2) New business opportunities
You can directly engage with these customers by explaining how your offering is better than your competitor and how you can help them solve their problems. If the problem is more widespread, then you can use this in your marketing campaign.
For example, when Apple took out the headphone jack in the iPhone, Samsung noticed a lot of people complaining about it online. They used this data to address this problem in their marketing campaigns by telling the audience that they still supported headphone jacks.
3) Better digital ads
Let’s say you want to run search engine ads on google. For that, you would need to know what keywords to target. This analysis gives you exact data to help you with that.
For example, if you see a lot of questions being asked by customers for “UX design tool for iPad” then it's a good idea to target that keyword. So when someone searches the phrase “UX design tool for iPad” on google, you can show an ad for your company that shows up on top of the search results.
4) Saving money
You can save money on Ads by not targeting problems that don't have high ROI. For example, if you don’t see many results on “UX design tool for android tablet”, then that means there’s probably not much demand for UX design tools in the android market. If I’m a UX design company this will prevent me from making investments in building the android version of my tool, which means huge financial and time savings.
5) Customer acquisition channels
You can also run digital ads directly on these websites to acquire customers. For example, if you see a lot of questions about UX design are being asked on quora.com, then as a UX design company it would make sense to buy native ads on quora.com.
It also shows which websites your audience is engaged in. For example, if I want to spend resources on social media engagement, I would prioritize working on quora.com and directly engage with users there. However, since we don’t see pinterest.com here I can ask to prioritize not spend too many resources there for now.
6) Closing more sales deals
When you already know the most commonly asked questions by your customers, you can prepare for them beforehand. By this, you will come off much more knowledgeable in the sales demo and it will help you close more deals.
Strategy #3 - Determining & Analyzing what websites are popular among your customers
Process & Case Study
Let's look at an example here. Let's assume you work at Booking.com and you want to figure out what websites are popular with your audience.
To do this analysis, we will use SimilarWeb. Let's go to similarweb.com and go to their Audience Analysis tool here: https://www.similarweb.com/corp/research/audience-analysis/ (pointed by Arrow 1).
After that click on the search bar on the top and enter Booking.com URL. Once you do that you should see data similar to the one below:
Now let's go through the data here. Arrow 1 states the website you're analyzing. Arrow 2 points to the list of websites popular with your audience. You can categorize the websites listed here into 2 groups.
The second group would be the websites that are not direct competitors of yours and your audience uses them for other purposes in their life. For booking.com, you can see Facebook, Whatsapp, and Linkedin are listed as websites popular with their audience.
There are various use cases for analyzing the websites in this group. For example, as a Booking.com employee, you can see that Facebook and Linkedin seem to be popular among your audience so they would be good marketing channels to run ads on.
Also, this data helps us save marketing dollars by preventing us from not focusing on bad marketing channels. For example, Twitter is not on the list here since it's not highly popular with the Booking.com audience so we don't have to prioritize running ads on them.
Another use case would be to identify websites and influencers listed here to build partnerships and paid promotions with. For example, you can build more native experiences inside the Facebook and LinkedIn ecosystem by building partnerships with these companies.
How is this beneficial for my business?
1) Benefits in Product Development
The more you learn about your customers, the better products you will be able to build for them.
For example, let's assume you run a clothing company and you learn that a big chunk of your audience is visiting websites that sells handbags.
Knowing this, you should strongly consider building a handbag product. You should consider this because when you do build a handbag product, at least a certain percentage of your customer base that was going to a different site to purchase handbags, would stick to your site to purchase them.
2) Benefits in Market Research
Doing this analysis also helps you identify your competitors. The goal is not to copy your competitors but to be aware of new emerging trends and where the market is going.
Let's go through an example. Snapchat was the first tech company to come up with a "Stories" feature. It gained significant market traction and users loved it.
Other tech companies soon realized this and within a year various companies like Facebook, Instagram, Whatsapp, Linkedin, and YouTube released their version of "Stories".
The point to note is that the companies didn't copy the UI/UX of Snapchat's "Stories". There were deeper product management reasons. It was realized that customers wanted to share content more easily and with friction, they wanted to share content for a limited amount of time (e.g. 24 hours) and they wanted something that was in the "moment".
By analyzing your competitors, don't focus on the surface. Research deeper what customer problems their products are solving and solving really well.
3) Benefits in Digital Marketing
When you figure out what websites are popular with your users, it could really improve your business's marketing.
When you know which websites are popular with your users, you can directly run paid ads on them to attract the users back to your website. You can also work one-on-one with these websites to build partnerships to run paid promotions.
By analyzing what type of websites your audience visits, you can learn about their interests and passion. Then you can use this data to improve your ads and improve conversions.
For example, if your audience visits financial websites pretty often. That means your audience really values saving money. That way you can highlight in your ads how much money they would save if they use your product.
For example, if your audience visits sports and travel websites pretty often. That means your audience is outdoorsy and values interests outside work. That way we can highlight in our ads how using our product would save them time so that they can focus on what's important to them in life.
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