Market Research for Startups and Small Companies – Part 2


Following is Part 2 of this three-part blog entry, “Cutting the Costs of Primary Research”

The recommendations listed in Part 1: Secondary Information Sources, all involve secondary methods for collecting research information; that is, information that is already available, either via third party research not done for any particular company, or is information that comes from the company’s operations. This is opposed to primary research information, which is information that is gathered by the company specifically to answer particular marketing-related questions the company needs to have answered by using a market research methodology. Secondary research information can be a perfectly adequate method for answering many questions a company may have about its market and potential customers, and thus be quite useful in many circumstances. However, there are many marketing decisions that simply require that you do primary research, because secondary research can’t answer your company-specific marketing and product development questions. So, are there ways to cut the costs of doing primary research? Yes. Listed below are several areas to scrutinize with a needs/costs analysis before carrying out a primary research project.

Primary Research You Can Do (Almost) All On Your Own

There are many primary research projects that companies can do entirely on their own, or with some help from a research vendor. If a research vendor is needed, their role is to help ensure that the methodology is valid, to give instruction on specific research techniques, and to provide other experience-based pointers on various elements of the research process. However, this type of advisory help is not the same as hiring the vendor for undertaking the entire work of the project, and thus can be fairly inexpensive. While in many cases a full-service research project conducted by a research vendor is necessary, there are times when the company can do much of this work on its own. Following are several examples of how a company can do much of the research work on their own.

Focus Groups and One-on-One Interviews with Customers

Talking to your customers in a group, or individually, is a very valuable method for gaining insight into what they are thinking, what they like and don’t like about your company and products, and how to improve products and services going forward. Setting up a customer focus group is fairly easy, requiring only a list of customer phone numbers and a spare conference room, and some type of compensation for the customers’ time.

A research vendor can help in drafting a moderator’s guide, and moderation of the group. We don’t recommend the company doing its own moderation, due to the inevitable bias the leaks into the groups, and defensiveness that occurs when participants start saying not-so-positive things about you. In addition, participants are much more likely to be honest and open with their feedback if the moderator is a neutral third party.
Even with some help from an outside research vendor, the cost of doing a focus group on your own is much lower than if you were to hire out. Note, however, we’re talking here only about customer groups and interviews. If you are conducting groups or interviews with non-customers, then it typically makes sense to hire an outside research vendor to do it, in order to ensure that a valid, representative set of participants is recruited. Also, the recruiting process is trickier for non-customers, so it behooves companies to hire this work to be done.

Expert Panels

Companies often have the need for customer feedback that goes deeper than the typical satisfaction survey or new product concept tests among a random group of product category users. What is needed is the type of “expert” feedback, from an “early adopter” set of product category users, who can help the marketer or engineer to see beyond just the next incremental change to a new version of a product or service that gives it a distinct competitive advantage; or, which even creates a whole new product category.

A company can easily set up an expert panel, simply by identifying several of its high-knowledge, high-interest customers, and asking them to help in directing the development of future products. Many customers love doing this, so it typically isn’t difficult finding several who would be willing to be on an expert panel. Some type of compensation is typically offered for their time and effort.

You should bring these folks together periodically, simply to discuss the market landscape – where it’s going, what competitors are doing, etc. – as well as to brainstorm new product ideas. You should also bring these experts together as needed, on an on-call basis, when you have a specific product idea or beta to run by them and get feedback. These people can act as your “reality check” and as assistants in helping refine elements of the product before you go further with product development.
This is a very low-cost method that should be incorporated into any company’s product development process. This type of ongoing expert input can help greatly to push a company’s technology forward and stay ahead of the competition.

Customer Web Surveys

Because companies often have email lists of their customers, it is quite easy to conduct a web survey with their customers. The one element that a company should hire out for is the questionnaire design, as this is quite important in ensuring valid and actionable results. The other portion a company should consider is the reporting of the results, as experienced researchers often see things in the data that non-researchers might miss. However, even with paying for these two elements of this type of research study, a company can still save quite a bit of money because they are programming and hosting the survey, and deploying the email invitations to the customers.
Web Analytics/Website Surveys

The amount of information you can derive for free or very inexpensively from your own website is almost endless. There are two primary methods for obtaining visitor information: 1) Clickstream analysis, and; 2) Visitor surveys. These methods are easy to set up and free in terms of out-of-pocket expenses. While you may want to eventually hire an outside vendor to ensure the proper questionnaire setup and analysis of the data as your research requirements get more complex, initially you can do much if not all of your web-based research on your own.

Clickstream analysis can be done simply by obtaining a Google Analytics (or other service) tracking code and putting it on to each page of your website. Once this code is imbedded into your site, you can analyze traffic in a myriad of different ways: where the visitors are coming from, how long they stay on the site, where they go on the site, if they’re new or returning visitors, whether they completed a “goal” (i.e., a purchase or an inquiry), and many more. Google Analytics (and other services) is a free service.

A visitor survey is different from a customer web survey, in that the site visitor is invited to take a survey while on the website, about their website experience immediately after completing their task on the site. In a sense, these are like usability tests, as you are asking your users how easy or difficult their experience on the site was, what annoyed them and what pleased them. With this information, companies can make changes to their website immediately and reduce annoyance and increase positive experiences. These surveys can be very valuable and augment the clickstream analysis. In addition, these types of surveys are typically very inexpensive or even free, depending on the survey system used.

Getting More From Your Primary Research Vendor

When you do need to go outside and hire a research vendor (and when you become successful, you will need to do this if you want to remain successful), here are three tips for getting the most out of that vendor:

1. Determine what you really need from your research vendor. Do you really need a full-blown analysis and report from your researcher? Do you really need that statistical routine run? Maybe you do. It is oftentimes very enlightening to have an objective analysis and report done from a professional outside of your company. Statistical analyses can also provide outstanding insights into the nuances of your market. However, for many research studies, all you really may need are the cross-tabulations or a very short top-line written report to help you make your decision. Before saying yes to everything your research vendor proposes, decide which deliverables you really need, and those that you can do without.

2. Let your research firm do their job. A lot of time and money is wasted on research because once the project is handed off to the researcher, the client won’t leave them alone. Changes to the questionnaire, changes to and re-running of the cross-tabulations and other mid-project requests, due to a lack of clear objectives from the outset, cause not only headaches for the researcher, but costs the client money. This problem is primarily due to not laying out the research process up front. If you have clearly spelled out the objectives of the study from the outset, and agreed on the questionnaire, sampling plan and reporting of the results, and your researcher is someone you trust, then you should feel comfortable in leaving them alone to do their job once the study is underway.

3. Challenge your researcher to save you money. This does not mean hassling your researcher on every nickel and dime. But do challenge them to come up with, where appropriate, alternative methods to get the information you need, without compromising the validity or reliability of that information.