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LinkedIn Bottoms-Up Market Sizing

LinkedIn Bottoms-Up Market Sizing Approach

LinkedIn Bottoms-Up Market Sizing

Bottoms-Up Market SizingNote: This post is part of a series on 8 B2B Market Sizing Approaches to Quickly Assess Market Opportunity

This is a B2B market sizing approach whereby you utilize LinkedIn to try and construct a list of all market opportunities using the company classification criteria (i.e. geography, size, industry, keyword searches, year founded, etc.). This approach is pretty accurate in the US and with white collar industries. However, it is fairly time consuming and is also less effective outside of the US and with less tech and blue collar industries. Unlike other directory based bottoms-up approaches, this one does not suffer from nearly as many duplicate issues, and the company sizes are all validated.

When is it Useful?

This approach provides a list of targets when completed not just a count. This makes it a great approach for:

  1. Evaluating segment opportunities to target in a go to market strategy because it eliminates the need to build a list of targets after you select a segment.
  2. Assessing market opportunities that are highly dependent upon the size.

Market Definition Restrictions of the Approach

The restrictions of this approach are the same as with the Top-Down LinkedIn Market Sizing approach. LinkedIn’s coverage is somewhat limited when evaluating markets outside of the US or non-white collar markets. This is a result of the lesser market penetration of LinkedIn’s service outside the US.

Markets can only be defined by characteristics that can be accounted for in LinkedIn’s company searches. These attributes are: LinkedIn location, industry, employment, revenue (indirectly), year founded, ownership status, company age, hiring status, popularity on LinkedIn (number of followers), and specialties and description keywords.

Pros

  • The end result of a bottoms-up market sizing approach provides a list of actual targets that can be reviewed and further vetted to determine if they truly are realistic targets. This makes the approach more accurate than top-down approaches.
  • Double counting and counting companies that have gone out of business is less of a problem with this approach. This is because members of the community self-report duplicate companies and the number of members that are currently working for a company are tracked, so you can tell which ones are no longer in operation.

Cons

  • This approach is much more involved than a top-down market sizing approach. Depending on the complexity of the market you are sizing it could take you the better part of a workday (4 to 5 hours) to finish. So the improved accuracy also comes with accost in terms of resource commitment to the project.
  • LinkedIn’s employee range is self-reported when a company is first entered into LinkedIn, but is rarely updated and does not reflect the actual number of employees listed as employed by that company on LinkedIn.  The employee range is not near as accurate of an employee estimate as the number of employees listed.  However, many times it is relied upon because LinkedIn’s user interface for its company search does not allow you to search the number of employees listed as employed by a company. You have to manually pull this information by looking at its profile page or connect to the API to pull the data.

A Step-by-Step Guide to Set Up and Execute a LinkedIn Bottoms-Up Market Sizing

  1. Determine your market definition. LinkedIn is only an effective tool for sizing markets that can be defined within its list of parameters. So it is important to figure this out before you decide to use this approach.
  2. Figure out how to best apply the market definition via the LinkedIn company attributes. Please refer to the previous post for detailed descriptions of each of the attributes. For larger market opportunities that are not clearly defined via LinkedIn attributes, it is best to break down into parts based on the industry parameter.
  3. Now search for the list of companies within a specific sub-market and compile the list of companies into a spreadsheet. This can take some time due to the way they are displayed on a page and there is not a user friendly export.
  4. Next you will want to click on each company to make sure companies are listed as employed by company. Otherwise, you will likely be counting closed businesses in your count. This also allows you to pull the more precise company employment information as well. The only issue is that collecting this data for every company can get time consuming.
  5. Then you can move on to the next sub-market and do the same thing.
  6. Next, you will want to review each list of companies to make sure that they all look like relevant targets. This is easier for companies that are evaluating larger enterprises because you can usually just eyeball the list of companies. When using this approach for non-fortune 500 segments, you will want to manually look-up at least 55 of the companies to make sure the list accurately reflects your target market.
  7. After that, you will have to estimate average sales price.  You can do this overall, on a sub-market level, or a subset of a sub-market.  The level of detail that makes sense will depend on your specific market.  Be careful of trying to get over precise because this will lead to outliers really skewing ASPs.  Make sure you have a solid number of customers in each sub-market to ensure this does not cause a problem.  Make sure to annualize these prices so you have a one year value.  That will be easier to convert into multiple year opportunity estimates or evaluate your addressable market.
  8. Next, you will want to create a new column in the spreadsheet for estimated ASP and populate it with your estimates for each sub-market.
  9. Lastly, you will want to multiply the number of companies in each sub-market times the ASP.  This will give you an estimated market opportunity value in dollars for each sub-market which you can add together to get your final market size.

Additional B2B Market Sizing Approaches

Click here for the following how-to guides and stay tuned as more become available:

Marketing Manager, Pricing Strategy
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