Why Market Research Matters
Position yourself for growth in 2017—join us live at the Entrepreneur 360™ Conference in Long Beach, Calif. on Nov. 16. Secure Your Seat »
The first step in launching any successful business should be conducting research into prospective markets. Capturing and sifting through such data is Dionna McPhatter’s specialty. Before co-founding New York-based marketing firm The Strategy Collective, which builds custom analytics platforms to better understand customers and influence business decisions, McPhatter was responsible for unearthing data insights for British consumer-goods company RB (formerly Reckitt Benckiser) and its suite of global health and home brands, such as Airwick and Lysol.
Here, McPhatter shares how a bit of market research can benefit startups.
What are some misconceptions about consumer research?
One of the biggest misconceptions is that it’s unnecessary. Often, new entrepreneurs adopt the “if you build it they will come” mentality, assuming innovation alone is enough to grow a business. I encourage entrepreneurs to see data as a GPS. A GPS helps only when you’re navigating streets you haven’t been on. In the same way, research should actually uncover things you don’t know to help you get where you’re going, faster.
What kind of data should a business look for?
If you have an inspiring product and know your audience, start with a pain-point study. Traditionally, it’s called the “path to purchase,” but that’s an outdated term because the path to commitment is no longer linear. It’s filled with voluntary distractions. Your goal should be to be a relevant distraction that can alleviate some tension.
One way Lysol does this is by publishing flu numbers. StubHub appears as an ad on Ticketmaster as soon as you learn that the tickets you want are sold out. If you find those pain points, your brand can alleviate the pain and bring consumers closer to your solution.
What steps can entrepreneurs take to gather data affordably?
The digital world is your biggest resource. Use Google Trends to uncover the search words that exist around your particular solution. How are people filling that need today? Get into the weeds a bit. And get to know your audience fully. Tap into your networks. You may not be a mother yourself, but if your target audience is mothers, then watch what they’re watching, read the blogs they’re reading. Go where they are and then just listen. Don’t try to sell.
If so much info is available for free, why should ’treps hire a professional?
The only way to grow your business is to exploit people’s innate behaviors. Unfortunately, research shows that in a 10-minute conversation, most people lie at least once. A consumer might say he used online reviews to make an educated decision, when he really just picked the product that was his favorite color. You need a trained eye and ear to sense that and to sift through the fog to get underneath the true motivation for consumer behavior.
What should startups do with the data once they find it?
Data always tells a story. Your job is to find the main characters—the metrics that matter most to your business. But remember, the richest part of a story is the connection between characters—the why behind the action and its result. You can only get to this if you understand the physical, social and emotional threads that reveal how people really think and feel. Then, act on what you discover. The worst data is the kind that doesn’t inspire you to move.