Market Research Done Right
Market research is a key component of any good product team management process, sales and marketing strategy, or business growth strategy.
Without owning a firm grasp on your surrounding market and its ever-fluctuating values and processes, it’s impossible to implement effective strategies and get ahead in the business.
Here are some aspects of market research that should be well known to you already:
Your Market Segment
So what is your market? Easy: it’s defined by the market segment you’ve established from the get-go. Market segmentation is the process of dividing a total market into groups consisting of entities that have similar attributes. The attributes could be common problems, desires or opportunities that prospects have. Another set of attributes could be demographics, social class, or purchase behavior.
As my colleague Firas Raouf outlines in his article “Market Segmentation: The Means to More Profitable Growth,” a segmentation strategy is not successful if it does not deliver on the following:
- Increase volume of highly qualified opportunities to the sales team
- Increase the conversion rate of those opportunities into revenue
- Reduce the time to close an opportunity
- Increase the average sale price and/or the renewal/up-sell rate
- Which collectively would result in higher sales at a lower distribution cost
The Backwards Process
Market research can be fun and often begins in an invigorating brainstorming session with your sales and marketing team. However, too often teams come to the table unprepared. Their process goes something like this:
- The Decision: You’ve decided you want to better serve your customers. Let’s say one of your main competitors recently released an update to their software program that outdates and puts yours to shame. Obviously you want to do something about that, but you don’t know where to start. That’s where research comes in.
- The Questions: You and your team concoct a plethora of questions you want to ask your customers in an attempt to understand their needs and desires more thoroughly. These questions pop up free-form—stream-of-consciousness. It feels like an effective brainstorming session because creativity is flying high and questions are flowing in by the dozens.
- … And Even More Questions: One question piggybacks off another, and another, and another. Soon you’ve filled two legal pads with awesome inquiries that are destined to solve your problems. You feel great; things are going well.
- The Survey: Skipping the editing process (your questions are incredible—who needs to cut some out?), you immediately launch an online survey. Without first researching what survey tool would be best for your inquiries, you post on SurveyMonkey, Zoomerang, or SurveyGizmo. They’re all the same, right?
- The Distribution: You have tons of questions and a functional survey URL—now it’s time to spread the wealth to the masses. One market looks good … but so does its neighbor. So you shotgun your survey to everyone in sight, knowing you’ll get a massive amount of feedback, and confident it’ll make sense to every recipient.
- The Data Analysis: The results are in … and they’re awfully complicated. You have so many answers, open-ended responses, and such an expansive target audience—what are you going to do with all this data? You spend hours trying to figure out how best to analyze it, organize it, and process it. These hours are spent thinking, not doing.
- The End Game: Okay, so your plan was ambitious, and frankly, not very well thought out. You determine that the data is too scattered, or the results aren’t eye-opening in the way that teaches you something new about your market. It’s essentially useless, so you move on. This is called analysis paralysis.
The Planned Approach
Don’t get caught in the quagmire—plan your approach to market research and get it done right. Follow these steps to conduct an organized campaign.
- Establish Goals: A great way to start setting clear goals is to the use the S.M.A.R.T. method—but that isn’t always foolproof or straightforward. Check out this piece on creating goal clarity to give you a better understanding of how specific you need to be in order to collect manageable results.
- Gaps and Assumptions: Identify the gaps in your knowledge and the assumptions you may have made that could get you into trouble further down the road. Admitting your shortcomings doesn’t necessarily mean you’re accentuating your weaknesses, but rather that you’re self-aware enough as an organization to realize your limitations.
- Transform Gaps and Assumptions: Take those gaps and assumptions and turn them into questions—then break those into sub-questions. What kind of data will you need to address high-priority questions? What’s the kind of feedback you’d want that’ll enable you to conduct a business growth strategy?
- Get Sharp on Targets: This goes back to my earlier mention of market segmentation and target audiences. You need to know whom you seek and where they are. Imagine how they think, how they talk, how they’re likely to answer your questions. Make sure you don’t create new assumptions out of this brainstorming activity, though—doing so will only further inhibit the clarity-building process. If you need a quick refresher on target markets, check this article out.
- Refine Your Sub-Questions: Hone the focus on your sub-questions in order to build a survey or interview guide. Here’s an article about creating good interview questions (the theory still applies). The article delves into the basics of factor analysis—or the algebraic process of reducing a large number of variables into a smaller set by examining the interrelationships between the variables. It sounds complicated, but you might find it’s easier done than said.
- Predict and Perfect: Go through your survey roadmap question by question. Imagine different answers to each question and imagine different distributions of answers from various participants. Ask yourself what you plan to do with the different possible outcomes. If you’re not sure, or the answer is “nothing,” change the questions until you can look at each question and say, “If the response distribution is A, then I will adjust my strategy by doing X. If it is B, then I will keep my strategy the way it is. If it is C, I will have to do deeper research on Y.” And so on. This, working alongside step #5, will give you the pin-point questions you seek.
- Research Survey Tools: If you’re set on doing a survey, you need one that can produce an actionable report with actionable analysis, and some survey software doesn’t support this in-depth quantifiable measurement. Check out this list of the top 7 survey software solutions available, replete with checklists of what you may or may not need. There are also a slew of free online survey solutions, as listed above. Before settling on one service or another, create a survey with a mock data report to make sure it gives you what you need. If not, switch vendors, or tweak your questions in such a way that’ll elicit the results you’re looking for.
- Reality Check: How manyquestions do you have in your survey? How long will it take to complete? If you received it, would you fill it out? What about if you had a reward offered, like a gift card? Also, how many people do you want to have respond? What do you think the conversion rate will be to responses? Answer all these questions, and shorten the survey, consider offering a reward for completion, and be sure you send the survey to enough people as appropriate.
- Execute the Research: Now’s the big moment—send your survey away! Double-check that it’s sent to the appropriate target segments so as to avoid the mistake of blasting unnecessary and unrelated people.
- Review Results, Take Action: Once you’ve analyzed your data (which shouldn’t be a debacle given your highly specified questions and audience), you can create a list of action items. Share this list with your senior management team, delegate responsibilities, and improve your business in ways your market research has now allowed.
- Document for Future Improvement: Especially if this is your first run around the block, you’re bound to have made mistakes or missed certain points you wish you would’ve addressed. It’s alright—just document everything you’ve done and keep those notes handy; you can utilize them when building new market research projects in the future.
The process detailed above is a far more efficient use of your time and resources.
Market research is especially important to expansion stage software companies, as a sharper focus allows you to get the data you need without expending all of your resources. Conservation of resources then allows you to put more effort into restructuring programs derived from your market research results.