Getting the depth and breadth of market research right is a challenged for many companies. I have found that market research in treated in one of two ways:

• The company skips research and instead relies on the ‘gut feel’ of key individuals, or
• The company decides to study a problem to death and is afraid to make a decision until every last unknown has been explored.

Each of these paths is fraught with peril. The first may lead to wild swings in direction unfounded by fact while the second leads to “paralysis by analysis”. This article provides some practical information about market research to help you avoid going down either of these two paths.

Definition

Market research is defined as the collection and analysis of information about a company’s customers, competitors, or markets for purposes of business decision making. Information may come from primary sources (the buyers themselves) or from secondary sources (already published and publicly available data).

This definition has two main components:

• There are many sources from which you can gather information. It is important that in doing research you rely on several sources so as to not adopt hidden biases that may come from any one source.
• You need to deal with information, not data. In order to become actionable, the data that is collected must be interpreted to reveal its real value.

Primary and Secondary Sources

Often times the very best source of market research data comes from the people you know – in particular those that already buy from you. There is a wealth of information you can gleam from people you already have a business relationship with – provided you collect it religiously. Every company needs to have a customer database where you gather demographic information. (Note that the database may be as simple as an Excel spreadsheet or as complex as a full-blown sales force automation system.)

What should you collect?

To start, business-to-business companies want to collect information about their customers’ vertical industry, size, revenue and location. Depending on their particular product or service, business-to-consumer companies may want to capture customer information such as ZIP code, occupation, and gender. Beyond this basic information you want to collect information about how the customer found you and why they purchased from you. How do you know why they buy? Ask them!

Ultimately your goal is to be able to ask – and answer – questions such as: “Why are high tech companies in Maine buying my product?”, or “How do teachers in Holden find out about my business, and why do they buy.”

You cannot ask only your customers however, as this never helps you understand the world that didn’t (yet) buy from you. Understanding their wants and needs is harder, but can be done in a wide variety of ways.

• Read third party reports in journals or from analysts who cover your industry
• Talk to you people that you do business with to get their view of the customer needs
• Create a survey you can send out to interested parties. There are lots of good on-line tools you can use to quickly and easily create a survey. I’ve used Zipsurvey, SurveyMonkey and Zoomerang in the past and found all of them affordable and easy to use. Your on-line newsletter is a great way to distribute this.

Lastly you can look at general demographic information from organizations such as Hoovers), InfoUSA, or the US Census bureau, available through sites like www.mass.gov/mgis or www.freedemographics.com. These tools can help provide ‘big picture’ information about markets, allowing you to understand at a high level the size of your prospective market.

Not Just Data, Information

For any of this ‘stuff’ you have collected, it only becomes meaningful when you filter it with your own set of experiences. Let me provide two examples to illustrate this point:

On a recent project, I was in a discussion with an industry analyst. In it he touted the traction a particular company was getting in selling their solution to mid-size customers. When pushed on who specifically was buying, it turns out his data source was the CEO of the company in question.  

On a separate project, we did some data mining and noticed that we had large number of mid-sized banks as customers. Digging deeper into the data showed us that there was a common buying criteria for all of these companies.

In both of these cases the data only became valuable after it was further analyzed and processed. Admittedly this is sometimes the hardest part and where the ‘art’ of market research comes in. The best tool to use during this process is an inquiring mind that constantly tries to find what might be behind the raw data that you’re seeing.

First Steps

For many people, the first step in market research is to understand its elements and most companies can benefit most from getting their customer database in shape to help revel the hidden information about the people they already know.