Selling Secrets From The Farmer's Market

I love going to the Farmer's Market. It’s a weekly ritual that forces me out of my cave and into the sunlight. I get to stretch my legs, buy fresh produce, and meet people in the heat of personal one-to-one sales.

There are about 15-30 vendors at the two markets close to my house. They range from veggies and fruits to tamales and carrot cakes. Most f the food is organic, locally grown and the guy selling it is the guy who picked it. I feel so much closer to my food.

Okay, so I'm a little bit sentimental. But the Ralph's clerk just doesn't give a rip about what they are selling. The market vendors are intimately connected to their wares. And their attitudes and behaviors reflect that connection. I think the closeness makes the food more satisfying.

As always, there are a few lessons to learn from this weekly trek. Most of these folks are farmers and artists. They haven't been school in selling. Most of the good things they do are instinctual rather than purposeful. And many of the things they do wrong are a result of no training. But ALL the lessons can help you.

Massive competition

The bulk of these vendors are selling produce. Potatoes, celery, carrots, lettuce and peaches. It's all seasonal so everything changes throughout the year. Which is a bummer because I wish avocados were always "in season." I'm going to chat with God about that one.

A good half of the vendors at both markets are selling the same stuff. Different farms, different crews, identical product. It's displayed the same way, looks the same, and probably is grown the same. So, what makes me choose one vendor of the other? Proximity. That one is 5 feet closer.

There is nothing distinctive about these vendors. Not even their charisma (farmers, not performers). This is most businesses. You and ten other companies are selling the same product to the same prospect. You set up shop and hope that the guy walks closer to your stand.

Very few people are able to sell in a vacuum. The environment where you have virtually no competition. Usually, if you have that, it's because nobody wants your product. And if you do, it won't last for long.

Differentiate your product. Any of these vendors could do more to set themselves apart. Instead of putting all their products on the table in a pile, they could bundle them. Maybe create a "dinner" kit that has a variety of items for this weeks menu. They could even provide yummy recipes for the different items. Consultative selling for produce. Perfect.

Of course, they can grow organic products and charge a higher price, which some do. How about telling the story of the farm? Show pictures of the facilities and the workers. Create a stronger bond between the shopper and the creator. Give a feeling of involvement in the life of the worker.

One of the fruit vendors gives me a couple extra pieces of fruit with my purchase. I ALWAYS go to them while the place across the market is wondering why nobody is over there.

What can you do to be different from the competition? You don't need to change your product even. Just focus on changing the presentation.

Personal Relationships
Most of the vendors miss this. A few get it. The mystic of the market experience is personally connecting with the people who make your food. That's one of the reasons people enjoy shopping there.
The vendors that recognize me, acknowledge I'm a regular shopping and show appreciation get my business. If they ask (and remember) my name it's even better.

The fish guy stopped me a couple weeks ago and asked where I had been the last couple weeks. He doesn't know my name, but he knows I'm a regular. And he showed me that he notices if I'm not there. He values my business. And he gets it.

People want these personal relationships. They crave them. They want an authentic, connective buying experience in EVERY industry. What are you doing to create that environment in your business? Social media? Events? Community building? Consistent personal interactions?

Exclusivity

As I said before most of the vendors sell exactly the same thing. They just hope that I walk by their booth first. The fish guy, the tamale man, and the juice lady have an exclusive presence. They're it.

Sure, not as many people come to the market for those items. But these folks can charge any price, get all the business.

You must develop an edge of exclusivity. If you can't change WHAT you sell, change WHERE you sell, of WHO you sell to. There are other tamale companies, but not at this market. This guy has essentially eliminated any competition by NOT selling in the traditional stores. And oh those tamales are tasty.

What if another vendor had fresh avocados or guacamole in the off-season. How about selling a unique vegetable that no one else has? What other kind of non-produce items would fit (art, groceries, etc)? How can you be exclusive?

Pride

Most of the folks there are the ones that planted the seeds and harvested the fruit. Part of your problem is you didn't make what you're selling (in most cases). Your product was made in a sweat shop in China or a hick in Alabama. You have very little connection to your product.

But pride sells. If you are proud, you'll be excited, confident and a fervent evangelist. Those attitudes are contagious. I'll go back to the tamale man. He yelled at me across the market to taste a sample (another hint). After he reeled me in, he began spinning the story of how they created these unique tamales. The ingredients are fresh, organic and pure. They are hand crafted by his mother and daughter. They are the most tasty I'll ever experience. Oh, and here's a convenient three pack.

My wife enjoyed the tamales. As far as I could tell, they were made of chicken and corn—like every other tamale around. But I really like the guy. And I need to eat. He gets my business over Ralph's.

Are you proud of your product. Can you talk about it like parent of a newborn? Do you get a twinkle in your eye when people ask questions? Do people have to tell you to STOP talking about your business? That's a good sign, by the way.

The vendors that do well, are very intentional about how they sell. The others are accidental. Sitting in their booth hoping that someone will walk by and desperately need their carrots. Guess what…they don't. You need to help reveal that need. Position your product as the only solution to that need. And make an irresistible offer.

I encourage you to find a local farmer's market. Walk around for awhile. Watch. Learn. And get some really great food. Experience a sales environment where every dollar counts. It's a fantastic experience.

How to Estimate a Market

The goal of a market analysis is to determine the attractiveness of a market and to understand its evolving opportunities and threats as they relate to the strengths and weaknesses of the firm. Venture capitalists look for a large market, so this is the first hurdle that an entrepreneur has to do to convince the VC

Instructions

Difficulty: Moderate

Things You’ll Need:
* A sharp mind
* a good knowledge of the industry

Step1

Startups raising VC should be in industries over $1 billion in market size

By “large” I mean an industry that can pretty easily have $1 billion plus in revenues. The rational behind this is pretty simple - in order to generate 10x returns on their investment the VC’s startups need to have a real chance to hit several hundred million in size. Larger industries also have more outcomes that can be generated by trade sales to larger companies within that industry or in adjacent industries. Note that the market can be growing to be this size in the next couple of years.

Step2

Top down: Citing overall market research, and then claiming an arbitrary percentage of that market as a target.

In general, the top-down method uses a broad market size figure (often provided by an analyst, industry participant or other) and whittles it down to the target market segment. For example, an ecard company targeting kids, might start with the total revenue generated in the card market, multiply it by the percentage of revenue generated from ecards and then by the percentage of ecard revenue generated by kids.

To do each of these steps there might be a bit of behind the scenes analysis - figuring out the percentage of ecard revenue generated by kids might take some additional estimating leg work. Make assumptions that need to be made and have the details of that analysis available on a backup slide when you present. While you should be prepared to explain your entire approach, first present just the highest level drivers and the resulting estimate. If VCs want more detail about your methodology they'll ask for it.

Step3

Bottom up: Detailed research within a small part of the market.

The bottom-up method builds up the total addressable market by using the main variables of the revenue model. For example, expected price times the total number of potential customers will yield a bottom-up addressable market. Using the ecard example, multiply the total potential page views from the kids market by the average revenue generated per pageview. If you have several revenuve streams, you will likely need to calculate the bottom-up estimate for each of them independently and add them together.

The bottom-up method is generally considered more robust. There's a good reason for this - the broad market size figure used as the starting point in the top-down analysis often includes a slew of different market segments. It's easy to forget to take some of these out of the estimate. In contrast, a bottom-up method the estimate is less likely to include non-addressable revenue.

Bottom up approaches show greater understanding and depth, however top down can still be used to validate bottom up.

Step4

That means do more than just read some analyst reports that suggest that a market is a particular size - actually talk to a number of potential customers. Choose representative customers that are similar to the average potential customer for your startup. Get a feel for their potential desire to purchase and their willingness to pay. With that information, you can then multiply their projected price point against the number of potential customers who look like the ones you have spoken with. Viola, your market size!

Tips & Warnings

* In addition to being more reliable, the bottom-up analysis can be used as a starting point for financial projections and operational planning. With this model in place annual revenues can usually be created by varying a key driver, such as the number of customers. With a projection of the key drivers of the model in place you will be able to begin making operational plans. For example, with the number of new customers already projected you can back into how many sales people you will need to acquire them, enabling you to determine costs, profitability and cash burn. With either approach you will often find that one or two assumptions in the estimate are less reliable numbers - you may not trust the sources. If you're not comfortable with an assumption do a low and a high version of the estimate. For the low version, use the lowest reasonable value for the unreliable variable; for the high, use the highest. Highlighting discomfort with an assumption and offering a range for the size of the addressable market can demonstrate your thoroughness to an investor. To really impress VCs with the rigor of you analysis, you should consider estimating the market size in more than one way (if you can). You might do two different bottom-up estimates or one bottom-up and one top-down. If you can show that you can get to a big number no matter the approach, you mitigate some perceptions that your methodology might be wrong. Be sure that the two approaches yield a somewhat similar number. If they don't this tactic can backfire and create questions about the validity of your approach.

* David A. Aaker outlined the following dimensions of a market analysis:

1. Market size (current and future)
2. Market growth rate
3. Market profitability
4. Industry cost structure
5. Distribution channels
6. Market trends

* Key success factors Market Size The size of the market can be evaluated based on present sales and on potential sales if the use of the product were expanded. The following are some information sources for determining market size:

1. government data
2. trade associations
3. financial data from major players
4. customer surveys
 

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