Customer Research Is Another Costly Startup Essential You Can Bootstrap Founders generally realize the importance of systematically learning about their customers, but the cost is often a shock.
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Market research is a massive industry. Globally, companies are pouring some $44.5 billion into market research. The cost to run a single, eight-person focus group averages about $6,000. Getting 200 completed phone surveys can cost up to $15,000. Mail surveys are more budget-friendly but can cost $7,000 or more (and, to be quite honest, they're accuracy can be dubious).
So yeah, market research is a big industry and an expensive undertaking. Major companies spend a huge amount of money on research and most products offered by Fortune 500 companies have undergone extensive research. That wacky new cereal that just hit store shelves? Human guinea pigs have probably already munched their way through countless boxes worth. Did you score tickets to a midnight showing for the next installment in your favorite cinema franchise? Great, but test groups watched it on the silver screen months ago.
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Market research is expensive, but for major companies, it reduces risks. Disney's Star Wars Story Rogue One was already running up a tab in excess of $200 million when the first cut was shown to test audiences. Viewers didn't like it. Disney realized that they had a potential albatross, a messy flop that could damage their multibillion-dollar franchise. Disney ponied up millions of dollars to reshoot various key scenes, with the end result bringing home more than $1 billion at the box office and general critical praise.
Unfortunately, most entrepreneurs lack the seemingly infinite financial resources of Disney. If you're bootstrapping a product or business idea, you're going to struggle to secure $10,000 for customer research. Fortunately, it's possible to bootstrap the customer research process, using low-cost strategies to source valuable feedback.
First, understand the limitations of family and friends.
Family and friends are often the first people entrepreneurs turn to when they want to source feedback on the cheap. This isn't a bad first step, but there are a few limitations, and if not accounted for, they could be detrimental to your efforts.
First and foremost, your friends and family are likely to be effusive supporters. They don't want to hurt your feelings, and they want to see you succeed. As such, they're likely to be generous with their praise for your product, idea, service or whatever you've come up with. This early praise will help you build confidence, but keep in mind that you need to find more objective feedback to uncover weaknesses and threats.
There are other challenges as well. Are your friends and family really your target market? If not, their feedback might be of limited use, at best, or even irrelevant. Likewise, feedback that is limited by geography, age or other demographic factors will be less revealing.
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Next, find cheap ways to reach outside of your network.
Okay, so friends and family aren't enough. What's next? As you've probably figured out, you need to source more objective feedback. If you have an unlimited bank account, feel free to reach out to an expensive market research consultancy. Of course, most of us don't have access to those kinds of resources. Fortunately, there are several ways you can bootstrap customer feedback, including:
1. Offering free samples locally.
Let's say you're a really good baker. People love your cookies, cakes, pies and all the rest. Or at least your family does. How about everyone else? One way to find out is to simply get out there, and give some of your goods away. You could set up a stand at a busy intersection, offering cookies for smiles. Or you could pass out treats at your local book club, church group or other hobby group. Perhaps there are local cooking contests?
The point is, think far and wide when figuring out where and how to give out free samples. Then execute.
2. Hitting up hack-a-thons, meet-and-greets and other related events.
Can you think of anywhere your target audience might be gathering? If you're looking to brew microbrews, you might hit up the local beer festival. If you're developing an amazing new app, you could check out a local hackathon and talk to other techies. If you want to sell high-quality camping gear, see if there's a local hiking club.
Once you join these communities, you may find people to pitch your product to. Since they are in your niche, they'll be more valuable. Beware, however, that as you develop friendships, you will run into many of the same challenges already outlined.
Related: Ready to Bootstrap? Consider These 5 Real-Life Stories.
3. Using professional services.
Just because you can't afford to hire a professional marketing research consulting firm, that doesn't mean you have to go without professional services all together. Just as apps and the internet have revolutionized shopping, getting rides and renting hotel rooms, they are also changing up sourcing customer feedback.
A few new services have emerged that will allow you to source feedback on the cheap. One service is Crowd Insight by Gadget Flow. Basically, you pay a one-time fee of $79, and the platform will match your project with frequent buyers to give you feedback on your price, presentation, marketing materials and all the rest.
Compared to $10,000 customer research campaigns, $79 is a pittance. Most importantly, you're getting your money's worth and more. Kickstarter funders offer a great target research audience as they're already active in the space, know how to evaluate ideas and always have a plethora of choices.
Either way, it's important to source honest, objective feedback from your target audience.
