Picture this: You fulfill your lifelong entrepreneurial dream-a bicycle repair shop in your hometown. But the rush of customers you were expecting on opening day doesn't happen. Why? Because you neglected to do your market research, which would have told you that only 2 percent of the folks in your area own bikes. Strikeout.
You can prevent this scenario. Market research identifies what consumers want and how to meet those desires. We chatted with market research expert Kate Delhagen, a former research analyst at Forrester and current VP of business development for sports e-tailer Lucy.com to get the skinny. Listen up.
- Find the one. Pick one person to oversee all your market research-it's a full-time job. "[Research] is sometimes overlooked or handled in an ad hoc way, rather than a systematic, progressive, reinforcing way that will build your business," Delhagen points out. If you have one person at the helm, you can ensure there's a linear and constant flow of information.
- Play both ways. Do both quantitative and qualitative research. Quantitative looks at a general group to find major trends. Qualitative looks at more personal issues to find the whys of major trends. For example, you may look at major studies and find that juice bars are on the rise (quantitative) and proceed to do personal interviews with your neighborhood folks to find out what they like about juice bars (qualitative). Both types of research are essential.
- Use the Net. "Anyone who's not taking advantage of the Net is missing a huge opportunity," asserts Delhagen. "It's an incredible way to get real-time feedback." Which flavor do customers like best: raspberry or lemon? Conduct a flash poll on your site--you'll get instant results.
- Choose wisely. If you decide to use a market research firm, be selective. "Just like any other vendor selection," says Delhagen, "even if you're a small [company], you have every right to do an RFP and ask for references. Your company's future is at stake." Be mindful of how long that research firm has been covering your market.
- Don't treat research as gospel. You can't take everything an analyst says as the be-all, end-all of information. "The quality of research certainly varies from firm to firm," Delhagen warns. Ask questions. Understand the methodology of the researchers. Forrester's research, for example, is often based on tens of thousands of respondents. Is the analyst looking at both sides-what vendors and customers are saying-before making an analysis? Says Delhagen, "It depends on how the firm approaches that gap-whether they do both sides of the equation. Those are the things to look at before deciding which numbers to bet on."
- Make a commitment. Market research is a vital part of any business plan, but don't forget about it once you've opened your doors. Delhagen suggests molding your research into an hourglass shape. Do a great deal of broad, quantitative research in the planning stages to learn your market, then modify it into more targeted research within your customer base in order to define and launch your new company. Finally, broaden the scope again. Get feedback from your customers, and find out how you can best improve. "That's the really critical window [Lucy.com] is in right now," says Delhagen. "We've got the product out there; it's been in the market six months. Now we're back to gathering both qualitative and quantitative research, which helps us understand how we're doing."
Delhagen offers one final bit of advice: "As you move into operating mode with your business, be sure to benchmark yourself against the right set of companies out there." Monitor the competition, and make sure that no matter what type of business you're in, you're among the best of the best.