bottom up market sizing · ave. acquisition cost per customer $150 =7500/50 ave. share price $350...

Bottom Up Market Sizing

Number in

Market Specialty Grocery

Whole Foods Marianos

Independents

Annual Market Potential

24

15

15

$5. M

$5.0 M

$2.0 M

25% $33.0 M

$11.3 M

$4.5 M

$1.3 M

15% $0.7 M

15% $0.3 M

$48.8 M

Total Spending on

Category

Total Spending on

Segment

Market Contribution

Chefs

Fine Dining Fast Casual

Annual Market Potential

100

75

$200 M

$150 M

50% $10.0 M

$1.1 M

$100 M

10% $15 M

$11.1 M

Total Market Potential $59.9 M

Sources: Annual reports, company websites, Baker Tilly, SBA, interviews

1 © 2015 New Venture Advisors LLC

More Customers

More Sales/ Customer

Three Ways To Grow

More Products

• Make it easy

• Drive pull-through

• Minimize out-of- stocks

• Optimize pricing

• Market penetration

• Geographic expansion

• Line/flavor extension

• Adjacent categories


Moment of purchase

How Do Customers Make Decisions?

Ultimately, the consumer selects a

brand at the moment of purchase

Initial consideration

set

The consumer creates an initial set of brands based on brand perceptions and exposure to

recent touch points

1

Consumers add or subtract brands as they evaluate what they want

2 3

4 After purchasing a

product or service, the consumer builds

expectations based on experience to inform the

next decision journey

Trigger

Source: McKinsey & Co. © 2015 New Venture Advisors LLC

3

2 1

Evaluation

Consideration

3 4

Purchase

Post-Purchase

• Inbound marketing – get found • Sales kit – customized pitch

Develop Tools for the ‘Decision Journey’

• Outbound marketing – raise awareness • Broadcast communication

• Sales and Ops coordination • Customer service in place

• Sales follow-up • Customer relationship management


2

Track Sales Activity

1 Evaluation

Consideration

3 4

Purchase

Post-Purchase

Number Estimated $

Value Cycle

Length Conversion

Rate

200 touches

Var. 25%

50 pitches

1 month 50%

25 new orders

1 week 20% $500 ea. $12,500

5 repeat sales

1 week 75% $1000 ea. $5,000


Build a Probability-weighted Sales Forecast

Our sales will grow because…

We know our conversion rates and have a strong pipeline

Est. Sale % Likelihood Status Target Customer

Customer D

Total Pipeline $3 million

Customer E

Customer A $20,000

Customer B

Customer C

…

$5,000

$10,000

$5,000

$7,000

100%

75%

50%

0%

25%

Committed - anchor

In discussion - pitched

Identified

Identified

Identified

Probability weighted: Σ Est. Sale × % = $1 million Matches or close to sales projection!


7

Consider Customer Lifetime Value

We know what it costs to acquire a new customer and their value to our business over time

Our profit will grow because…

© 2015 New Venture Advisors LLC

Total Acquisition Cost $7,500 = Σ below

Outbound (e.g. email, social) $500

Inbound (e.g. AdWords) $1,500

Website design and maintenance $2,500

On-farm events $1,000

Print ads, flyers, direct mail $1,000

Trade Shows $1,000

Total Estimated New Customers Acquired 50

Ave. Acquisition Cost per Customer $150 =7500/50

Ave. Share Price $350

Ave. Cost of Goods 60% $210 =350*60%

Ave. Gross Margin per Customer per Year 40% $140 =350-210

Customer Retention Rate 75%

Customer Turnover Rate 25% =1-75%

Average Customer Lifetime in Years 4 =1/.25

Simple Customer Lifetime Value $410 =4*140-150

bottom up market sizing · ave. acquisition cost per customer $150 =7500/50 ave. share price $350...

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