February 2018

Measure twice, cut once.

Common sense tells us to test the water before jumping in.  Inventors need to know who their customers are and what their customers want before spending a lot of time and money on inventing things/services and bringing them to market.

Helen Colby, PhD, (assistant professor of marketing, Indiana University Kelley School of Business) treated us to her insights on how an individual on a limited budget can conduct high quality customer research.  This brief summary of her presentation doesn’t begin to contain all of her excellent advice.  To learn more, talk with someone who was there.

When should you do customer research?  Whenever the benefit is greater than the cost.  Customer research can answer questions about any aspect of marketing that is important to you (eg, what to invent, what to sell, where and when to sell it, how to advertize it, how much to charge for it).

How do you conduct research?  First and most important, ask one specific question to which you can find a clear, complete, and meaningful answer.  Think hard about this question.  If you ask a defective question, you will get a defective answer.  Check with your business partners (eg, customers, investors, licensing companies, manufacturers) to make sure the answer to this question will be helpful.  Don’t ask customers a question that they can’t understand or don’t want to answer truthfully.  If you want investors, don’t ask a question that won’t help them decide whether to invest in your business.

Then go to the library (eg, the IUPUI university library) and ask a business librarian to help you find information that helps to answer your question.  Meaningful numbers can be especially persuasive to potential investors and licensees.  Look at records (such as databases) that show industry trends and the traits of various customer groups (eg, age, buying habits, gender, how far people are willing to travel to buy something, income, location).  Search Google Scholar for original studies that relate to your question (be sure to read the original study, not someone’s summary of it).

Once you know the state of the market, start your own research.  Learn the best way (eg, mail survey or mall survey) to reach the right customers and ask them to answer your question.  Don’t ask a secretary if the boss makes all of the buying decisions.  Many things can bias customer answers, if customers answer at all: attempts to be kind to you, order of survey questions, self-image, time of day, wording of a question, etc.  You can’t eliminate all bias, but try to eliminate forms that most strongly interfere with answering your question.  For example, if you want to know how people like to get news, don’t post your question on a newspaper’s internet site; most respondents will prefer news on the internet.  The last question of every survey should be: “Is there anything else you want to tell me?”.

You can start small with one or more pilot studies that test your methods and tools before you do your main study.  You might post a survey or ask for customer comments on a free Google website or on SurveyMonkey.  Amazon Mechanical Turk provides a way to quickly survey a good cross section of potential customers for about $75.  Qualtrics, Emtrics, or Survey Sampling International provide a similar service.

If you decide to hire a professional trend spotter or a company that does research for you, insist that they give you what you need.  Consider writing a survey yourself.  Get the raw data and original transcripts of interviews so you can analyze them yourself.

What might customer research look like for someone who is thinking about selling cupcakes in a particular geographic area?  The research question might be: Can this area support my business?  Existing research on the state of the market, found in databases (such as Simmons OneView) at the IUPUI library, shows how many cupcake sellers are in the area, who they are, and how much money customers spend on cupcakes there.  New research using Qualtrics or Amazon Mechanical Turk might show that most customers would prefer a new business that is kid-friendly over existing businesses in the area.  Trips to shops in the area would provide an estimate of what pricing should be.  All of this information could be used to develop a realistic value proposition and model of a successful business, which could be tested in a focus group and presented in a business plan to potential investors.

Thank you, Ms. Colby, for sharing your invaluable insights with us!