Market research (for people who hate research)
This post covers how to do market research for your new business, in three easy steps. It's designed for people who dread doing research, like you and me!
Before you get started, grab the free Market Research Workbook. Then follow along below! By the end, you'll have a tidy research analysis.
Does the phrase “market research” make you feel a little nervous?
(If not, awesome! The rest of us need to have a chat.)
The word “research” alone may be enough to transport you back to late nights in the basement of your school library, desperately poring over old books and clicking through JSTOR and Lexus Nexus hours before a big report is due.
I get it! You didn’t decide to start your own business so you can write book reports.
"Market research” can also evoke the idea of digging up dirt on the competition and plotting to steal their customers. Some people do that, but it doesn't need to be your approach
Let's take a look at what market research is really about, why you should embrace it, and how you can get it done without much fuss.
The Truth: Market research is an important part of your business strategy, and it doesn’t need to be scary.
MARKET RESEARCH IS NOT THE BUMMER YOU THINK IT IS.
Put simply, market research is about understanding the people you want to serve, surveying the landscape you are entering, and finding the space you want to occupy among the kindly folk already working there. It’s like researching a neighborhood and finding the right house before you pack up and move.
It's all kind of like checking to see if a seat is taken before sitting in it. Don’t sit in your competitor’s lap when they’re in the middle of dinner (unless that is your business strategy – in which case, okay then).
It also doesn’t need to involve weeks of laborious data mining, surveys, focus groups, and number crunching – it certainly can, especially once you reach a certain size. But it doesn’t have to if you’re just starting out. If you already have a sense of what people need, who is already providing it, and how they do it, you’re off to a good start. The rest may involve a little reading and notetaking. But I won’t make you go to the library – promise.
There now, do you feel better? Okay then, let’s get down to brass tacks!
First of all, let me be transparent that my approach is not the end-all, be-all of market research. I have conducted market research for large organizations and programs, but what I’m offering here is a pared down version for you DIY-ers out there who don’t want to sink $20,000 into an investment-grade research program. You don’t need to dole out the big bucks to orient your small business strategically and get up and running in an informed way.
(Of course, if you need to build a pitch for investors, then your process of data mining and intel gathering will be more thorough and methodical. But if you’re just trying to orient yourself as an entrepreneur, you can probably use a lighter touch).
In a nutshell, market research is about understanding the landscape you're entering the the main competition, and getting to know the people you want to serve, figuring out what they need, seeing who is already serving them, and formulating some initial ideas about how you can differentiate yourself. Your objective is to develop a clear understanding of the landscape you are entering, so that you can position yourself strategically for success.
1. write down your questions.
Get the most out of the process by deciding upfront what you need to know.
First things first! Decide upfront what you need to know.
You can download my Market Research Workbook which includes lots of simple questions, and here are a few more to get you started on the right track! This is not an exhaustive list, but it covers the basics for most businesses.
Does my service or product already exist out in the world?
If it already exists, who is buying it? Why, and from whom? What do they pay for it?
Who is not buying it, and why not?
What do potential buyers need? Who are they?
If my service or product doesn’t already exist, who do I think would buy it, and why?
What are the boundaries of my market? Is it limited geographically, or by language? Is it a specific industry audience?
What is the size of the market? Is it growing or stable, and do I think it will grow or remain stable in the future? Why? Do I have any evidence?
Who is already doing business in this space? What do I admire about them?
Are they missing (or choosing not to pursue) any opportunities or market segments that interest me?
Do my ideal customers have any pain points with the current market? Are they underserved by the current market? How?
What opportunities exist to differentiate myself from existing businesses?
What communities exist for businesses like mine (e.g., trade associations, local or online networking or knowledge sharing groups, etc.)?
Are there any cultural considerations I need to take into account?
Considerations for existing businesses: If you already have an existing business and a customer base, you may want to ask more targeted questions about what your customers currently love or wish were different about your offering. There are several tools out there you can use to conduct a customer survey and collect feedback, including SurveyMonkey and Client Heartbeat.
However, nothing can replace individual, one-on-one conversations. Asking real people about your product or service can give you insights and answers to questions you didn't even know you had.
2. do the research and answer the questions.
Keep your handy list of questions nearby, and take notes as you move through the next step.
TIP: Try to avoid getting tunnel vision. Personally, once I start taking detailed notes, I get fixated on each question and end up writing a ridiculous amount about one tiny thing. I can't see the forest for the trees. So I try to limit my note taking to only critical insights.
Listen to your potential customers
There are many ways you can get to know your potential customers.
Social listening: You can visit Facebook groups, Amazon product pages, and publications that are part of your potential customers’ typical routines.
Show up, boost the volume on your empathy dial, and listen closely. Put yourself in their shoes, and take note of their pain points. Record any words and phrases they use to describe what they're struggling with. What challenges do they face? What do they love? Can you relate? Refer back to the questions you wrote in Step 1.
Interviews: The bestest way to gather high-quality data about your potential customers is to talk to them, directly, one-one-one.
Wait, wait, wait. Don't run away! This sounds like a huge lift, but it's not that bad. Here is what you do.
Find a group where your potential customers hang out, ideally one where you also belong. For example, for my market research I focused on a social media group of female entrepreneurs, of which I was one, and posted a message like this:
"Hey everyone! If you're a [describe your target audience here, including the types of pain points that you want to focus on], I'd love to connect with you this week! I'm doing market research for my new biz, and want to talk one-on-one with people like you, to make sure I'm showing up and serving my audience as effectively as possible. Comment or send me a private message if you'd be willing to chat!"
Keep it light, and avoid coming across as too "slick" or calculated, because people are pretty wary of getting sucked into a sales pitch. And if you aren't getting any bites, consider whether your ask is coming across as too sales-y...
OR you may just not be asking the right people. If your people are highly visual, they're more likely to be perusing Instagram with a glass of wine than trolling the dog-eat-dog world of Facebook. So if you hear crickets, consider whether you're in the right place.
If you have friends in your target market, it's perfectly fine to ask for an interview. I sat down with several of my friends in the early stages of starting a business, and listened to their concerns and issues, so I could help them later once I was in business.
Freebies: If you have a freebie you can offer, like some downloadable content, that is great, but it's not necessary. Remember that people luuuuuuuuv talking about themselves - myself included. Humans get a rush of dopamine when we talk about ourselves.
So freebie or no, you'll likely get some people who are in your target audience and just feel like talking to someone who is semi-knowledgeable about the problem they're dealing with.
Face-to-face: If you belong to an IRL social group or network that also includes your ideal customer, definitely use it as a resource.
When I was first toying with the idea of starting helloHappen, I attended several local workshops and events for female entrepreneurs like me. I learned a lot of lessons to apply to my own business, but I also cultivated an understanding of what other female entrepreneurs struggled with when it comes to marketing and branding.
If you choose to attend a conference, expo, or other industry event, you can introduce yourself by sharing that you’re thinking about starting a business to serve this market, and you’re there to listen and learn.
If you’re further along in your product or service development, you could bring free samples or giveaways, to see what kinds of reactions you get. Do what feels authentic and comfortable for you.
Tip: There are tons of ways to gather feedback, but there's no substitute for one-on-one conversations. Surveys can give you really interesting data, but one-on-one conversations let you hear the words they are actually thinking in their own heads, rather than a filtered version you'd get in writing. Don't pass up opportunities to ask them for feedback directly!
Check out your competitors
If you’re entering a marketplace that is already occupied by other businesses, briefly check out their storefronts, their websites, their advertisements, their social media strategies.
I recommend spending only a little time here – in fact, I keep this to a minimum because I don’t want another business’s voice, tone, language, or style to leave an impression that will influence me later. Just absorbing a general sense of who your competitors are will help you differentiate yourself later.
(Also, if you’re just starting out, it can be discouraging to dwell on the big powerful presence existing businesses have built over many years. Remember, everyone starts somewhere!)
If you do notice a gap in the marketplace – like you can't find someone YOU would want to hire, because all the existing businesses seem X or Y – write that down. That is gold.
Test, if you can
If you have the means, it can be immensely useful to share your idea or even a prototype with a few people to get their feedback. If you already have customers, consider conducting a short survey, or asking a handful of them directly. You can just explain that you're a little too close to the project, so you want a fresh perspective from someone you trust.
[Note that it can be difficult for your family and friends to offer a genuinely honest assessment of your ambitions (they don’t want to kill your dreams!), so be careful integrating their feedback into your business plans.]
If you want to take it a step further, here are some additional ideas:
Offer your existing customers a free sneak peek at your new product or a free trial of your service, in exchange for their honest feedback.
Bring samples or a demo to an expo or event and see how people respond.
Hire a specialized market researcher or firm to conduct a focus group or other research.
Find a mentor who is further along in your field, and ask what advice they would give to their younger self.
There are many other resources out there that can help you. Here are a few:
The U.S. Small Business Administration offers free market research tools and resources, including SizeUp, small business statistics, questions to answer, economic indicators, demographic data for localities, and more.
Your industry may have one or more trade associations dedicated to supporting companies like yours; trade associations typically have a valuable perspective on what’s happening in their industry.
Entrepreneur and other magazines frequently feature articles on market research techniques for gaining a competitive edge.
Time to scan your findings and draw some conclusions! Try to address all the questions you set out to answer and record any other observations or ideas you want to keep.
Take the time you need, but a word of caution: Beware of “analysis paralysis.” You’re not emptying your 401K or selling the farm to fund a business based on this research plan (at least I hope not – there are entire firms dedicated to market research if you’re planning a large high-risk business venture).
Answer your questions and record key insights,
but beware of analysis paralysis.
Unless you need to woo investors, it’s probably not necessary to slave away over a dense research report. As an entrepreneur or small team, the most important thing is to know the terrain and have a set of notes reflecting your research and key findings.
The most important thing is that you are doing your due diligence and gathering the intel you’ll need to position yourself strategically in a later stage (Positioning Your Business). But before we go there, we’ll draw from your market research findings to dive a little deeper into your target market, potential customers, and specifically your ideal customer, in the next segment, Attract the Clients and Work You Want.