I came across a video the other day in my Twitter feed for #SmallBiz, which answered the question: “How important is market research?” The video was featured in the Small Business 911 show on MSNBC. In it, Stella Grizont, founder of Woopaah, discusses the positive impacts market research can have on a small business.

“If it wasn’t for market research, I would still be in the testing phase and now I’m cash flow positive. I would have not gotten there had I not gotten constant feedback from my customers and done really focused testing…(market research) will save you tens (of) thousands of dollars and tons and tons of time.” In response to the question: You’ve helped grow many businesses, you are now growing your own, what’s something you’ve learned that other people should emulate?”

View the video below:

[youtube http://www.youtube.com/watch?v=ZRs9Dexc38U&w=560&h=315]

Grizont provides three good tips on market research in the video, which are summarized below:

1) Choose who you want to research. At first, many small businesses cannot afford to survey everyone. So it’s critical for a small business to work with a market research consultant to determine where to start and, most importantly, who to survey. There are lots of options for different audiences to survey: current customers, customers who have recently left, non-customers, new customers, loyal customers or the “cream of the crop” customers. The list goes on and on. Work with a market research consultant to determine priority and start there.

2) Script-out your conversation. Grizont stated that market research should not be a “free-flowing conversation” but rather a strategic approach. Having a scripted approach through the use of a moderator’s guide will allow for the answers to be dissected across different groups (ages, genders, customer tenure, etc.) For example, if you speak to 50 customers and it’s a free-flowing conversation without a guide, you may forget to ask all questions to all customers, so the sample size for each individual question may not be 50. If there is a script, you can ensure your research will be collectively exhaustive and all questions will have a full sample size.

3) Be unbiased and don’t take it personally. It’s critical in market research to be objective and not influence the results because customers may be too honest. Be open and flexible to customer feedback, no matter how good or how bad. Many clients veer away from market research because the new product is “their baby.” Clients must avoid being defensive, because if the feedback is taken too personally, the customer/participant will start providing answers that please you rather than being honest. Just remember, market research is a learning process.

Here are a few points that I did not necessarily agree with but understand the speaker’s point-of-view:

  • Grizont almost makes the market research recruitment process seem too easy. She states that a $50 honorarium and lunch should do the trick to get people to participate. That varies greatly by the type of audience you are trying to recruit. For example, current customers will be much more likely to answer the screener phone call than non-customers who are unaware of your company. Also one-on-one interviews could be more effective than inviting a group of 20+ people to ask for the feedback while eating lunch at the same time. For an inexperienced moderator, this can become very unstructured and hectic quickly. A market research firm who has credibility and experience recruiting focus group and in-depth interview (IDI) participants is recommended. They will be able to provide organization, process and structure to the market research process. This allows for the client to soak-in the findings while the market research consultant does what it does best.
  • Grizont also recommends that questions be open-ended in market research testing. The example she gives is asking “how does this product impact you?” instead of asking “is this product valuable?” This is true for most in-depth interviews but it is not realistic in a more quantitative survey. Ideally, in an IDI, you’d still want scaling and yes/no questions, which are straightforward and clear-cut. When your boss asks you “are customers satisfied with our product?”, you don’t want to have to say “give me a few days while I analyze the open-ends.” You’ll want something direct like “Yes. 86 percent of our customers are satisfied.” The key to asking the open-ends is to explain the driving forces behind the 86 percent. The value of quantitative data is to have enough data sets to compare different customers: males vs. females, young vs. old, etc. The process of asking open-ended questions and coding the responses is a tedious, time-consuming and subjective process and may even misrepresent results.
  • Here is a comment from Vance, our Senior Research Analyst at RMS: I think somebody might watch the video and assume that Grizont’s approach is the only market research you’ll ever need or the only approach. Her approach is a great qualitative approach that’s very useful in the early stages of a concept, but once the business/product is up and running, it’s advisable to keep getting  feedback on an ongoing basis and to use different approaches to study different aspects of the operation.

how important is market research?

Research & Marketing Strategies (RMS) is a market research consultant located in Upstate NY. If you’d like more information about how RMS can help you and your business, contact our Business Development Director Sandy Baker at SandyB@RMSresults.com or by calling (315) 635-9802.