Today’s question comes from Eric and deals with market research. Specifically, what’s the most effective way to do market research before launching your company?
Market research can be a real pain because a lot of founders don’t know what goal they’re trying to achieve when they’re doing the market research. There are a lot of biases.
The first step of market research is your own network (e.g. friends, family, peers, etc.). But you get the most value when get out of your own network. And one of the best ways to do that is to look up the testimonials or ratings and reviews of your competitors.
Look at your competitor’s Facebook pages, Product Hunt, Google pages, etc. and ask yourself why people love this company and why they hate this company?
When I did this for Launchpeer, I learned that people really loved the smooth on-boarding process and that they could get a price right there on the website. Or, at least that they didn’t have to go through a bunch of hoops to get a quote.
So we took that to heart and changed our entire sales process to incorporate those elements.
Conversely, one of the things people hated about our competitors were slow response times to in-website chats. So we made it a priority to respond quickly.
These are the kinds of things I wish I had done before I started the company. And I strongly recommend you take the time to do them. This type of market research can be done in 15-20 minutes and it’s well worth it.
For most industries, it’s very easy with Google to do some quick searching and find out a lot about a particular market (e.g. demographics, how much people spend, where they buy, what social groups they belong to, etc.).
How much is a startup worth? Some of the numbers aren’t as public, but there are places you can go, such as AngelList, to find out how much funding you’re competitor’s have raised, how much their startups are worth, etc. and thereby give yourself an idea of what you may be able to accomplish.
MatterMark is another place that is a huge research repository of business data. That’s where we do a lot of research for our clients.
Goals determine the method
At the end of the day, it all comes down to your goal. If you’re trying to validate an idea, follow the steps above using sites like Facebook, Product Hunt of Google. If you’re trying to figure out what you should pitch to investors, that’s where AngelList and MatterMark are going to be useful.
However, if you’re tying to find out which parts of your market you should work on penetrating, that’s one of the most difficult kinds of market research to do. If that’s the case, you’ll need a combination of the previous two methods, but you’ll also want to start talking to your actual customers or potential customers.
That’s the best way to find out what you can offer.
For example, entrepreneurs are made of many different types of people. So when we started surveying our customers, we got a huge variety of answers based on age and demographic. Because of that, it would have been really hard to get much value out of the methods mentioned above.
So, if that’s your goal, you MUST talk to your customers. And if you don’t have customers yet, talk to potential customers.
Surveying customers, or potential customers, is the difference between shooting an arrow with a blindfold or without one.
Yes, it’s hard to talk to potential customers, but the best form of market research is talking to people one on one. And if you’re willing to do it, you’re giving yourself a massive heads-tart of all your competitors who aren’t doing it.
Ask Your Own Question
Got questions about startups and/or startup culture? We’ve got answers. Head over to LaunchChat.io and record your own question to have it featured on the show.
TechCruch Disrupt Giveaway
We’re giving one Founder a free ticket to TechCrunch Disrupt 2018 in San Fransisco. We’re also going to cover the winner’s flight and hotel. You can enter the giveaway and get all the details at LaunchChat.io.