Market research: it’s more than just writing your business plan

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Most solopreneurs don’t start out writing a business plan, they do what they do best. In order to succeed you will eventually need to understand your market and your customers. We wrote recently about making sure to understand your customers when looking at sponsorship opportunities to promote your business or hosting events for your customers, but it’s also crucial when laying out your value proposition and making sure you are indispensable to your customers. This market research provides valuable insights into your customers, but also your competitors and industry trends. It’s key to enabling you to make informed decisions that can propel your business forward. While the actual term “market research” might sound intimidating or overly complex, it’s a straight-forward process that can be both manageable and immensely rewarding — and you come out of it armed to better serve your customers and out-shine your competition.

The Importance of Market Research

Simply put, it informs every aspect of your business strategy — from product development to marketing and sales it is, at its core, what helps you and your business to understand the needs and preferences of your target customers, identify potential opportunities, understand your competition, and mitigate risk. For most small business — where resources are often limited — making data-driven decisions can mean the difference between success and failure.

Knowing your market inside out allows you to tailor your offerings to meet the specific needs of your customers and, specifically, it helps you understand what motivates them, what problems they face, and how your products or services can provide solutions (or provide better solutions) for them.

Defining Your Objectives

Before getting started, it’s important to lay out your objectives. What do you want to know? What will you be collecting data for (i.e. what decisions are you going to make because of the data you collect)? Understanding your customers will give you totally different information than evaluating your competition, even though they are interrelated. Clear objectives will guide your research process and ensure you gather relevant information.

For instance, if you’re launching a new product, you probably want to assess the demand for it (i.e. what problem it solves or what need satisfies for your customer), understand your customer’s preferences, and identify potential competitors (both products you’re up against and the companies that provide them). Or if you’re considering expanding into a new market, your objective could be to analyze the size, growth potential, and key players in that market area.

Types of Market Research

Stay with us here. It sounds like a lot, but it’s really not. That’s because market research can be categorized into two types: primary and secondary research, which sounds like a nightmare college course all over again.

Primary Research involves gathering firsthand information directly from the source. You are probably already doing customer satisfaction surveys (if not, then we need to talk) — this is primary data. Others include things like interviews, focus groups, and observations (not common for most businesses, but it doesn’t mean you won’t ever need it). The advantage of primary research is that it provides specific, relevant data tailored to your needs, and the downside is that it is usually time-consuming and more expensive.

The other category, Secondary Research, simply involves analyzing existing data gathered by others. Usually reports, other market studies, government data or publications, and databases. It’s usually quicker and less costly to use, but you’ll likely have to separate the wheat from the chaff because what the source collected data for might be totally different than what you need it for.

Whether primary or secondary data, remember that you can measure anything — even non-numerical responses — if you put some thought into how to take that data and transform it into something you can assign a value to.

Analyzing and Interpreting Data

So you’ve used the scary industry terms and collected data. Now what? Well, once you’ve gathered your data, it’s time to analyze and distill it down into something you can use. Most often, it involves identifying patterns, trends, and correlations about your customers or competitors that you will then base decision on. A few tips here: (1) organize everything in a way that you can sort and categorize (for actual data and values, this is where Excel can save you a lot of time); (2) identify the key takeaways (for example, if you set out to understand customer needs when developing a new product, look at the most common survey responses and notable differences between them); and (3) if there are any, use industry benchmarks to tell you where your data is versus what others have seen in their own surveys/interviews/etc.

Again, using a tool like Excel to manipulate and visualize data can be a big time saver, especially if you have to show or present that data to others. Few people enjoy them, but never underestimate the power of a good chart or graph — just don’t get too carried away.

At the end of it, you should have everything you need to accomplish the objective(s) you decided on when you started.

You don’t have to do it alone

Unless you’re us or a big market research firm, you likely aren’t excited about market research or data collection in the least. This is one of those areas where it might make sense to outsource it to someone who is excited by it. Want to learn more? We’re happy to help.