Two weeks ago we hosted a workshop discussing market research and validation. We shared several methods, tools and resources to use while researching a market opportunity. Most importantly, we covered why you should do research before building anything. Today’s post summarizes a few of those items and will give you a starting point into tackling your own market research.
The hardest part of research, or anything really, is simply getting started. I like to begin with the goal of writing a value proposition. Fortunately, I spent plenty of time during the NC State TEC program working through value propositions, particularly one based on Geoff Moore’s Crossing the Chasm. I’ve since used the same value proposition with product teams, clients and our own internal projects. In order to “cross the chasm” and avoid certain death, you need a plan, a position and understanding of your market.
A well-researched value proposition will help you think purposefully about the business or product you are about to build. The structure to follow is:
For (target customer)
who (need or opportunity)
the (product/service name)
is a (product/service category)
that (statement of benefit)
Unlike (primary competitive alternative)
our product (statement of primary differentiation)
which leads to (economic impact)
If you break down each section, it walks through market size, problems and needs. It also covers competitors and your own unique differentiators. Using the value proposition as a guide, you begin with finding market opportunity or size in dollars. I primarily use Google search for finding reports or charts that show market size. As an example, we’ll research the construction software market. Here are sample search terms I might use:
construction software spend 2016
construction industry spend on software
construction software market share
construction software market size
It’s a good idea to also look at Google Images and different file types when using these terms. The data you’re after may be in an image or on a report. For file types, add “filetype:pdf” or “filetype:ppt” to the end and you might even find a report from another company that has surveyed the industry of interest.
Often times I’ll take a stab at writing the value proposition without real numbers and then fill them in later. Your value proposition will likely get re-written multiple times during the course of research and feedback.
Voice of the Customer
Outside of Google searches, the most important tool in your market research arsenal will be talking to people. The formal research method is called Voice of the Customer. It includes in-depth surveys, discussions and tracking of data from real human beings. Most small businesses might do a light version of Voice of the Customer in 4 steps.
Create a contact list of people, including potential customers
Create a survey to use as a guide for interviewing people
Call and talk to people
Analyze the survey data and look for patterns
The survey itself should have very open ended questions. You do NOT want to lead the interviewee. Here are some examples:
What’s the most difficult part of your job?
What are your top 3 challenges right now?
If you could automate any part of your job, something that you find yourself doing over and over, what would it be?
Is there anyone else that I should talk to?
Set a goal for the number of people you’ll contact. One hundred is a good start, but 200+ is even better. If you have a team and can talk to 500, you’ll have more data to support any conclusions. It’s also good to ensure the surveys are stored somewhere for review. It’s really easy to write down notes and then lose them later.
In every product or feature I’ve seen built, the most successful ones are supported by in-depth discussions had with real human beings. In-person conversations can also lead you to other resources and connections. For example, trade associations or conferences may not show up at the top of your Google searches. As an added bonus, some of the people you interview may become the first champions of your product.
Finally, a list of all the resources I’ve used in the past for research:
Voice of the customer
Social media - Twitter, LinkedIn, Quora
Paid reports (IBIS, Gartner)
Networking events and conferences
App stores and reviews (Google Play and iTunes)
Annual reports, earnings calls
University libraries and public libraries. Most public universities, like NC State, have resources available for alumni and community members.