Doing market research is a great way to make sure you’re on the right track with your offering. Ideally, market research is done before the business is actually established so that you can address modifications to the plans before you get headed too far down a particular path - but this is one of those things where the phrase ‘better late than never’ applies. It’s also a good idea to do before making any major changes in your business that affects your customer base. Doing some market research can help you acquire new customers and hold tight to old ones by developing an understanding of what customers want and don’t want, how much they’re willing to pay for products and services, and why they shop where they do. This can be valuable insight to keeping your business successful.
Several business writers agree that too many business decisions are based on what the owner wants to do, rather than what the business actually needs. Fulfilling a need will allow you to be much more successful than just deciding to do what sounds most appealing. You may be skilled at custom millwork and want to base your business plan off that passion, but what if your market research shows that it’s not necessarily what your customers want… and maybe there’s a need in the area for basic cabinet components, with no major source for customers to get them. It’s important to do what you’re passionate about, but if you want to make money, it’s also important to be flexible in a changing market. How are you going to stay relevant if you’re not in touch with the needs of the people who pay you? You probably already do unofficial exploration of your industry’s market by listening to customer input or watching the moves your competitors make, but you’ll have to put in a bit more effort if you want detailed and organized data.
Of course new and/or small businesses don’t generally have much extra money to pay for market research to be done for them, nor is it necessarily better to do so. There are ways to gather data without emptying your pockets or getting super technical.
Use Information That’s Available
Secondary research takes less time and energy to gather and use than conducting your own research. With a quick internet search you can find all kinds of sites containing useful information. From a magazine-type publications to research from government agencies, you’ll be able to find answers to some of the questions you have about your market. This is a free way to gather information about what kinds of decisions your competitors are making, the amount of money spent on a product or the amount spent in your industry altogether. Some businesses ONLY use secondary research, which can be productive, but you can get more personalized answers by doing primary research.
Talk To Current Customers
Both your big and small buyers can be helpful here… Getting input from the big guys lets you study a profitable market share allowing you to know more about their buying habits, making sure you’re keeping up. Plus, asking them what they want is a way to show them you listen their needs, which keeps them coming back to you. Smaller customers are good too because you you can learn why they come to you, but also maybe why they don’t buy more from you or why they don’t buy certain products (perhaps they go to a competitor for some of their needs). The best ways to get info from these customers depends on the relationship you already have with them. Surveys or questionnaires are a simplified way to gather data from a group so that you can compile the results in a useable way.
If you take many customer calls, your staff can ask when customers call to place an order or pay their invoice if they’d be willing to answer a few questions. If you conduct most of your business on the computer and your customers regularly communicate with you via email, email surveys might be the way to go.
Check With Potential Customers
Email works well for potential customers as well. Direct mailers are also still an option for surveying the general public, though they aren’t free. Before sending surveys out to the general population, you’ll want to decide who your typical target customer is (income level, education level, where they live, etc), how many people you’d like to survey (taking into account that not everyone is going to respond) and what type of area you are going to cover (local to your business vs. across state/country lines, residential vs. business). Sending a coupon with surveys can help you get attention from your intended target.
Choose The Right Questions
Asking questions relevant to what you’re planning on using the research for is essential. If you’re looking to introduce a new product, your questions should focus on what the customer thinks of that product, why they would buy, why they wouldn’t buy it, and details that are important to them regarding that product. For example:
- How frequently do you purchase ____________?
- What is your typical budget for ___________?
- How do you typically decide where you want to purchase ___________?
- What are the most important things you look for when buying ___________?
- How far would you expect to travel to get __________?
- What would keep you from buying this product?
If you’re doing market research to find out why business is slowing down, maybe you’d want to use these sort of questions:
- Where would you typically go if you needed ___________?
- How often do you purchase this type of product?
- What keeps you from purchasing ___________?
- What would make you go to another distributor?
Keep in mind that if you want to be able to evaluate the answers you receive in the most effective way, you’ll want to make the questionnaires multiple choice. This allows you to more easily organize the data, instead of having to read through each individual answer and trying to pull relevant data out. Here are three examples of how you can get more qualitative answers from your respondents:
How frequently do you purchase ___________? (circle one)
Never Every few years Every year Several times a year
How far would you expect to travel to purchase ___________? (circle one)
0-10 miles 10-30 miles 30-60 miles I’d order online and have it shipped
What would keep you from purchasing ___________? (circle one)
Out of my price range
I don’t need it
I don’t like the style
Not easy to find or order
Not worth the money
With answers like this, it will be easy to enter the data into a program like Excel and create graphs of your data, allowing you to visualize the information more effectively.
Be Open to Change
Going to all that work collecting valuable information will have been all for nothing if you aren’t willing to base development and decisions on what you found out! This may mean a new approach to the way you market to customers, changing direction with some of your processes, or focusing on customer service when you thought you needed to focus on creating a more expansive catalog.
If you’d like a system to collect customer opinions, concerns, and suggestions all in one place, you can try Allmoxy for free!
Laponsie, Maryalene. ‘3 Market Research Tips for Small Business’, www.smallbusinesscomputing.com, February, 2013.
‘How to Profit from Market Research’, www.Inc.com, January, 2006.
Cohen, William H., and Reddick, Marshall E. Marketing Your Small Business. Deerfield Beach, FL: Made E-Z Products, 2000. Print.