This is not about collections. This is about doing things that customers will pay for.
The folks at Pragmatic Marketing do a nice job of summing up the critical conditions for a new business opportunity. We have to be solving problems - or creating opportunities for customers - that are urgent, that are pervasive and that the market is willing to pay for.
But it's remarkably easy to forget that last one.
The other day I had some correspondence with a journalist working on a story about a new business opportunity: clearing space debris. Having recently seen Gravity, I was an expert on the topic.
The problem is urgent. Much of our information infrastructure relies on satellite communication, and space debris already poses a threat to such infrastructure.
And the problem is pervasive. It's not just George and Sandra that are vulnerable to growing fields of space debris. The global economy is vulnerable at many points to lost communications.
Often we stop right there. "Wow, what a huge deal!" thinks the entrepreneur (already logged into Kickstarter). "We can make a fortune by solving that problem!"
But there's one more question we have to answer: will anyone pay to solve it? Specifically, will they pay enough to make the venture feasible? Let's think about that one.
What is the total available market for Space Debris Clearing? NASA and other governmental space agencies would find some value in it. And so would the burgeoning commercial space explorers and users (Virgin and the lesser-known commercial satellite companies).
But they're already working around the problem on their own. And they haven't launched their own space-clearing programs, despite having pretty deep competencies in solving space-related problems. So how much are they really going to pay someone else for a space-clearing service?
From Shark Tank to Fast Company to your last trade show, we see examples of companies ignoring or over-estimating the willingness-to-pay factor.
- "Who wouldn't pay an extra $7 to have their dry cleaning dropped off? Think of the time savings!"
- "Our customers are willing to pay a premium to know this product was Made In The USA."
- "Sure, you could buy from that other company for less... but ours comes with the peace of mind of a two year warranty."
Are we solving problems that are urgent? Are they pervasive? And will the market pay for it?