The right market research can help boost profits, turning more business leads into actual customers. Why should you care? Because knowing your customers gives you the information you need to reach more of them. As noted by the Harvard Business Review, effective ad targeting makes consumers more likely to buy.
The only challenge? For most small businesses, conducting in-house market research seems like an impossible task. With myriad variables to track across multiple products and services, converting raw data into relevant ads is both time- and resource-intensive. Bringing in outside expertise can close the knowledge gap — but the cost of professional research firms often exceeds SMB (small and medium business) budgets.
But don’t despair. DIY (do it yourself) small business market research isn’t just possible — it’s potentially profitable. Here’s what you need to know.
Do your own research in 3 steps
Need research but don’t have the money to hire a research firm? Here’s how to do it yourself.
- Identify desired outcomes.
- Right questions, right audience.
- Measure the impact.
Before we share our DIY steps, let’s define exactly what market research is and how it’s gathered.
What is market research?
Let’s start with the basics: What exactly is market research?
According to Entrepreneur, it’s “the process of gathering, analyzing and interpreting information about a market; a product or service to be offered for sale in that market; and the past, present and potential customers for the product or service.”
It’s easy to see why SMBs might be afraid to do their own research.
While the overall goal is clear enough, the work required to achieve results sounds more than a little daunting.
Boiling it down to basics
Let’s opt for simplicity instead. For your small business, market research offers four critical insights:
- Who’s buying your product or service right now? Why?
- Who might buy your product or service? How can you reach them?
- What type of new product or service do people in your market segment need?
- How can you effectively advertise a new product or service to existing and new customers?
Doing customer research also offers key data about competitors, such as:
- Who’s leading the market
- Who’s up-and-coming
- What strategies they’re using to turn leads into customers
- What’s unique about your value proposition compared to theirs
This is the true payoff of customer research: Actionable information that helps you target key consumer segments and sets you apart from the competition.
Demystifying market data
So how do you get started with market research? First, you need to understand what you’re collecting and how it impacts your business.
To understand market trends, research relies on two data types:
This kind of information comes from your company. It could take the form of:
- Sales statistics
- Revenue numbers
- Customer complaints about specific products or services
Primary data helps you discover where your SMB is seeing success and where you may need to improve.
Secondary data comes from sources outside your company. This includes:
- Published survey results
- Annual reports from your competition
- Articles in business or trade magazines
- Info collected and published by state, provincial or federal agencies
Secondary data gives you an idea of your market at large — which companies are making inroads? Who’s falling behind? Are there underserved groups of consumers that you could serve?
Be wary of free internet data that seems biased, out-of-date or incomplete. Wherever possible, use recent studies or pay reputable firms for research that is specific to your business vertical.
Info collection methods
Along with primary and secondary sources, there are two methods used to collect market data:
This approach relies on mathematical measurement to determine what is happening.
Let’s say you’re running an eCommerce website that isn’t generating enough revenue. You could use free analytics tools to measure the length of time customers spend on your website. If you discover that most visitors leave in five minutes or less, you’ve discovered what is going wrong — they haven’t found what they came for. Next, you need to figure out why.
Qualitative research digs into consumer insight to determine the why.
In the example above, you could use online or email customer surveys to ask why visitors are leaving your site so quickly.
Qualitative research also includes:
- Focus groups
- Phone surveys
- Post-purchase satisfaction survey
Worth noting? Survey response rates are typically low for customer-facing efforts — between 10 and 15 percent — so the bigger your survey group, the better.
The 3-step DIY solution
To conduct your own market research you’ll need to devote staff, time and budget to develop your approach and see the project through.
Here, commitment is critical.
While the data you gather may take time to fully analyze, reliable results pay off. Incomplete research, meanwhile, can lead to decision-making that misses the mark.
Best bet? Use this three-step approach:
1. Identify desired outcomes
What specific outcomes are you hoping to achieve? Given the depth and diversity of market research data, general goals such as “improved revenue” can quickly lead to complex data sets that aren’t easy to interpret or use.
Start by identifying specific issues you want to address such as:
- High customer attrition rates
- Increased service complaints
This, along with carefully defined outcomes, will help narrow your focus and properly frame your research.
2. Right questions, right audience
If you’re looking to reduce the number of customers who leave, you need to ask the right people: Former customers or those who have reduced their spending over time.
Next, you need the right questions.
You need to know what product, service or support failures led to their spending shift or departure.
3. Measure the impact
Finally, you need a way to measure the impact of your research, both immediately and over the long term.
If you’ve run mathematical models and conducted surveys about customer attrition, then applied what you learned to address the problems, you’re looking for an uptick in both return consumers and individual spending by existing customers.
Data about new customers you’ve gained — due to physical market expansion or online offerings — doesn’t address your original issue and undercuts the usefulness of your research.
Ask and learn
Bottom line? Market research offers substantive benefits for SMBs. By knowing where you’re succeeding and where you need work, you can improve your products and services to make more customers happier more of the time.
You can also use what you’ve learned to create better ads and social posts that speak directly to your target customers.
So while it takes time and effort, DIY research is entirely possible — and potentially profitable — with the right approach.