Small Business Summit Center

[Sound advice from guest blogger Chris Hawkes of MarketResearch101. For me, it all ties back to staying in constant touch with customers. — Andrew]

Market research has a reputation for being difficult to do and expensive to conduct. It’s true that there are market research methods that are very complicated to conduct and are therefore very expensive. There are simple methods that smaller companies can use to gain an understanding of their competition, their customer’s satisfaction with the services they provide and even understand the positioning that their company occupies in the customer’s minds. The truth is that market research is simply a set of methods for understanding different aspects of the market in which a company competes.

There are dozens of flavors of market research, but based upon reading the entrepreneur profiles here, I have a few suggestions:

Industry Overview - The best place to start is by learning what is already known about your industry in general. The Census Bureau may have some interesting information about total numbers of companies, average revenue, typical company size and growth rates. Trade organizations are a great source of data and are more likely to indicate exactly what parts of your industry are growing, what regions are growing faster, and even what types of products, segmentation approaches or marketing tactics seem to be beating the average growth numbers. Look for successful companies that are pioneering new approaches which you might be able to leverage. Their web sites often provide some free information and if you’re nice to them they might be willing to answer a few questions or send you some information in the hopes of getting you to join their organization eventually. The industry information which you gather should be used to evaluate the quality and future prospects for the company or product that you’re considering.

Competitive Backdrop - To understand your customers’ behaviors you need to understand their options. Play mystery shopper, and spend some time getting to know something about your most direct competitors. Walk through their stores, peruse their web site, call and ask a couple of questions about their services and prices. Consider putting together a competitive matrix that lays out the products services and prices of your competitors compared to what your company provides.

Customer Survey - Select some current customers to take a short survey about how they feel about the products/services that your company provides. Ask about issues you think may be critical factors in determining their overall satisfaction with your company. To increase your response you might include a nominal gift (like a Starbucks card or merchandise with your company's logo ). When you are writing a survey keep these things in mind:

The longer the survey takes, the fewer completed surveys you’re going to get back, people just won’t spend 45 minutes answering questions that they aren’t very interested in. For a “low involvement survey” (a topic that isn’t a personal interest for the respondent) – the rule of thumb is that you’ll get a drop-off at about 15 minutes and it really goes downhill at about 25 minutes.

Start with easy and general questions that engage the respondent, then hit them with harder questions that might require some thought or analysis.

Ensure that there is as little ambiguity in the survey as possible – if you’re asking a person to select “one of the following statements”, make sure they are worded in a mutually exclusive manner. The survey should be very well thought through, and you should perform a “test run” with a few real respondents and pay attention to questions that cause confusion or prompt clarification questions. Those questions should be reworked before the survey is launched on a broader scale.

If you want more details on how to write your own survey, see this article at eHow.

New (and Lost) Customer Survey – When people change vendors, capture their thinking so you can learn from it. Consider putting together a new customer survey (probably not the day they sign up, but not so long afterwards that they’ve forgotten why they made the decision) that asks why they decided to work with your company. At the same time, when you lose a customer (or complete a project) you might consider a post hoc questionnaire asking about their experience and for any suggestions that they might be able to give you.

Advisory Panel - Create a group of typical customers who you can meet with two to four times a year. A group with whom certain issues can be discussed and where candid feedback is encouraged. This allows an open dialog of discussion and it might be paired with a light lunch or some snacks after work. Above all else, listen attentively and try not to interrupt or finish respondents sentences – they may have been thinking about something else. Customers aren’t always very good at creating new products, but they are very good at telling you what bothers them, and how they wish some process or product would work. Try to empathize with them and feel the frustrations and desires that they have, and that should help you to advance the development of your idea.

Online Research – If you collect customer email addresses, you can also use one of the very inexpensive companies that provide Do-It-Yourself online research for only a few hundred to a couple thousand dollars, although you have to create the questions and the answer options yourself. You can even have the market research company deliver a report that doesn’t identify the respondent (and ensure the potential respondents know that it’s completely anonymous) which tends to provide more candid feedback. Once you get the survey set up and have developed a relationship with one of the online survey companies (e.g. Zoomerang, SurveyMonkey) you should be able to run periodic iterations of the same study for a fraction of the cost and time of the first study.

All businesses and situations are different, so every method probably won’t work in all cases. However, there is always a way to get feedback, if you’re truly determined. One of the benefits of market research is that the act of asking someone their opinion and giving them a chance to provide feedback, tend to increase their satisfaction with your company. So you actually may increase satisfaction with your business simply by asking for some feedback!

I’ll leave you with one more thought. Customers aren’t product managers and often have a hard time designing products, or deciding exactly what a business should do. Henry Ford famously said “If I would have asked customers what they wanted, they would have asked for a faster horse”. So take your customer input with a pinch of salt, and consider what your customers are actually trying to accomplish, instead of exactly how they think that it should be done.