How do you set a targets for user growth for a new website?
April 30, 2014 8:56 PM   Subscribe

My friend's startup company is developing a new technology platform and they are trying to set 5 year targets for the number of potential users it could have. How do tech companies traditionally project user growth for a new web service? Obviously they would establish a potential target market, but then how do you determine the rate of growth from zero into that market? Are they any resources or websites online that help with this? More details- the website is an edtech platform providing online education and resources. The potential market is 18+ lower- middle class Americans, and college students. Thanks for your help!
posted by tessalations999 to Computers & Internet (3 answers total) 3 users marked this as a favorite
This is what a marketer does, and there's no substitute for a good one. Any casual estimate from us amounts to a Scientific Wild Ass Guess and will be worth what you paid for it.

The solution to your problem is to start interviewing marketers.
posted by Chocolate Pickle at 9:54 PM on April 30, 2014 [1 favorite]

I am a marketer with some tech background; I am not your marketer, and more importantly my expertise is not very deep in calculating market share. But here are some observations:

The direct answer to your question is: we try to figure out how big the audience is, using stats 'n stuff, then we try to estimate what % of that audience is how % likely to buy. In your case, figure out how many 18+ people there will be in 5 years who fit your demographic (income level and/or college attendance plans), then somehow (and this is the tricky part) determine how many of that group are interested enough to buy.

The first part would be child's play to estimate using public figures you could easily research. That last part is VERY tricky for tech, especially tech aimed at young people, because everything moves so fast. If you were selling cookies, we could take those cookies to college campuses, let students in your demographic try them, and survey for results. 18 year olds are going to like the same cookies in 5 years, most likely. But your task here would be to take tech which might not quite exist, demonstrate it, and see how appealing it is NOW, then somehow extrapolate to 5 years from now when tech will be quite different, and when today's 13 year olds, who've grown up with certain expectations that are a little different than 5 years ago, are "of age."

One yardstick that's a little easier is to pick out something similar that's already out there and use it as a proxy. If your product will compete with some existing solution, or if there is another product that the same audience likes for similar reasons, that is at a similar price point, see if you can find out how many copies they're selling. Then make some conservative assumption, ex. You can sell 5% of that in that time.

The answer to your question somewhat depends on why you're asking it. If you're trying to figure out feasibility of the concept well enough to decide if it's a go or no-go, you can probably arrive at an educated guess, if you're able and willing to spend some time talking with people in your target demographic (surveys, focus groups).

If your question is "how big will this company be in 5 years?" - good luck! I don't think many tech companies have a clue. The good news there is the trend toward scalability and leasing, rather than buying, capacity. I agree with hal_c_on - it's more feasible to try to plan for a range of outcomes than to predict what will happen.

Feel free to DM me if you'd like to give a few more details about what the product is and why you're asking the question.
posted by randomkeystrike at 4:18 AM on May 1, 2014 [1 favorite]

There are SO MANY factors that could affect your growth. There's honestly no way to know what things will look like 5 years from now if you haven't even launched yet. You can't test a concept. You can only test a specific implementation.

Your target for the first year should be Infinite Percent Growth. I mean that both mathematically and in spirit. You're at zero right now and you should be focusing on making it grow as much as humanly possible. Run it for a year, doing the best job you can to refine and improve it, and then use that year's growth to project out 5 years.
posted by the jam at 7:28 AM on May 1, 2014

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