Step 3: End User Profile● Demographics - age, gender, income level, geographic location, etc.● Psychographics - values, fears, attitudes, aspirations, heroes
○ “How do they behave based on what they believe?”
● Proxy Products - what products does the customer already buy?● Watering Holes - where your products can spread through word of mouth● Day in the Life - what is it like to walk in your end user’s shoes? Be detailed!● Biggest Fears and Motivators - what keeps them awake at night? Top 5
priorities
Do not guess! Find through PMR
Source: Bill Aulet’s Disciplined Entrepreneurship
1
Why build an End User Profile?
Focus on the customer
Validate your beachhead market and deepen your understanding of the end user
Provide necessary information to calculate Total Addressable Market (TAM)
2
3
Source: Bill Aulet’s Disciplined Entrepreneurship
Example 1: Baseball Buffet ● Wanted to make a one-stop site for sports fans - to get info and interact with
other fans● Hypothesis: young online males between 18 and 34
Source: Bill Aulet’s Disciplined Entrepreneurship
Example 1: Baseball Buffet Target Audience:• Males• 18-34 years old• Online• Making $75K+• 26-30 million
Target Audience Interests:• Females (70%) • Sports (50%)
Source: ComScore Media Metrix
Source: Juniper Research, “Demographic Profile of Young Affluents”
Source: Bill Aulet’s Disciplined Entrepreneurship
BONUS!
Is there someone on your team who fits the End User Profile?
If so, they’ll have insights about what your customer actually wants and how they feel.
Assignment● Complete the End User
Profile Worksheet to understand your End User Profile
Source: Bill Aulet’s Disciplined Entrepreneurship
What is TAM?How much annual revenue there is available to you for your product if you achieved 100% market share.
Start with estimate # of end users in BHM
Then estimate the annual revenue that each end user is worth to your company
TAM = (# of End Users) x (Annual Rev per user)
Top-Down vs. Bottom-Up Analysis
Top-Down
Bottom-Up ● “Counting noses”● Very specific, you know where
each potential customer is● Sources for information: customer
lists, trade associations, etc.
● Difficult to acquire information● Time consuming
● Easier, often based on secondary research
● You will likely overestimate # of users because you are not being specific
● You will focus more on a spreadsheet than the actual user
Advantages Disadvantages
You should try to calculate using bottom-up methodology to show you understand your customer base. You can do a secondary top-down analysis to support your findings.
Annual Revenue per customerOnce you have the # of end users, calculate the Average Revenue per Customer:
1. The current spenda. How much does each product cost?
b. How many of each product does the customer buy for the end user?
c. What is the average lifetime of the product before it’s replaced? (ex: $15,000 car with 5 year life
span; Annualized Revenue = $15,000/5 years = $3,000/year)
2. Available budgeta. When you look at the market today, how much is being spent overall to solve the problem that
you are looking to solve for a typical user?
b. How much money does the customer have (household income, business revenue, etc.)?
c. What fraction of that amount could you see being allocated to solve this problem?
3. Comparable products
TAM: OnDemandKorea Example
# Koreans in US: 2.5 million
Census said 1.7M, but through interviews with bizcommunity, learned did not include international students and others not
registered with census.
Users watching Korean dramas:
1.2 million Identified 89 websites that illegally
showed Korean dramas, and then used service to determine traffic to those sites.
Adoption:
o.4 million
TAM = $15/year x 0.4M users=
$6M/year
# of Potential Users
# people who watch
Korean dramas
60:40 female:male
1. What OnDemandKorea know through primary research:
a. Loyal followingb. 1 hr/day on site
2. Revenue source: Advertisinga. Researched rates,
estimated $1.25 per user per month
Revenue Per User Estimate $15/ year
Target Customer
Subset of Koreans in US who watch Korean TV
Age: 20-35 Females
Nationality: Korean
Residency: USA
Hobby: Watches avg. 2 hrs per day Korean dramas through illegal websites
Note: Not satisfied with the illegal websites’ service and content quality
Target Dem.:0.7 million
Ran test to determine % female and age distribution
55% 20-35 range
Avg. Revenue per UserHow much would these customers pay
each year?
Source: Bill Aulet’s Disciplined Entrepreneurship
What should your TAM be?TAM is what your annual revenue could be if you had 100% market share of that market.
● TAM < $5M: your beachhead market may be too small; it would be difficult to become cash flow positive
○ Exception: you could capture market quickly and have high margins (don’t have many
employees)
● TAM $20M-$100M: this is a good target
● TAM >$1,000M: raises red flags
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