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Obtaining Quality Results from Preliminary Market Research

Market Research

Ian McLean - Posted in Market Research on September 7, 2016

When should you start doing market research?  The answer is now!  You don’t need anything built, you don’t need to use a fancy prototyping program, you can literally draw out some sketches on pieces of paper and get out there to see what people think!  “Wait, someone will steal my idea and build it themselves, I need an NDA.”

As Paul Graham, from Y Combinator the leading startup incubator says,

  

“An idea for a startup, however, is only a beginning. A lot of would-be startup founders think the key to the whole process is the initial idea, and from that point all you have to do is execute. Venture capitalists know better. If you go to VC firms with a brilliant idea that you’ll tell them about if they sign a nondisclosure agreement, most will tell you to get lost. That shows how much a mere idea is worth. The market price is less than the inconvenience of signing an NDA.”

The idea is just the start, the question is what have you done, what are you doing and what are you planning to do for reaching out to customers?  Below we have summarized a couple different strategies to help you get started.

Guerilla Market Research

What does market research even mean in modern times?  Is it going out and talking to customers, finding out what their struggles are and what they really want?  Does it mean giving surveys and setting up focus groups?  Perhaps it is visiting local coffee shops and testing your prototype?  All these things can work but when doing this type of market research, it is very important to structure the questions in a way where they are not subjective or what we call “loaded questions”.

By this we mean questions such as, “Would you use this app?”, more than likely people will just say yes.  Are your results truly valid if 7/10 people said yes they would use it or were people just being nice?  Who was giving the survey? Were you a third party outsider that had no connection to the app?  Most people answer questions very differently depending on who’s feelings they might hurt which is an important factor to consider.

If you do have a prototype built or some paper mockups to show, a better way to structure the questions is to ask open ended responses such as “What are your thoughts on this app?  Tell us a little about what you liked and didn’t like.” Avoid using questions that are yes or no answers since these do not give you the feedback for making iterations on your prototype.  The more detail you can get from how people are responding the better.  Another good technique is to use the “think out loud process” where you ask them to openly express any thoughts when using your prototype. This allows you to see their pain points, likes and dislikes first hand.

Watching people’s behavior in person is the best type of feedback you can get.  Seeing them interact with what you have built or are planning to build really gives you a sense for what is and isn’t working.  If these individuals do show genuine interest in your app, form a connection with them, ask if you can get their email.  When you start making the email list, make sure to include specific details on them.  This can be done for your first 100 customers.  Don’t just have their name and contact information on a spreadsheet, make sure you you have a notes section so that you can remember specific things or interests about each individual.

This means you need to ask these types of personal questions about their interests.  After an iteration on your prototype the personalized follow-up can look something like this:

“Hi John, hope your fantasy sports league is going well.  I saw that your one player really took off like you mentioned.  Just following up from our conversations at Coffee World and thought you may be interested in seeing the updates we are making.  We really went through and sorted out several of the issues you were having and added the widget feature you thought would be good to have.  We plan on launching in the coming month, would you mind sending our private beta invite to 5 individuals you know?”

People like feeling like they made a difference and this will tell you quickly whether or not this person really did like your app or not.  How willing are they to share it with others? If they don’t want to share it, why not?  Keep the engagement going and keep it personalized.  You want to build these initial relationships because these are the individuals that are going to be your strongest advocates.  The stronger emotional connection they have to you and your product, the more they are willing to engage and evangelize for you.

The Multivariate Testing Approach

Multivariate testing? Sounds really complicated!  As a matter of fact, it is quite simple and has proven to be effective with modern startups.  Multivariate testing is a technique for testing a hypothesis which involves multiple variables to determine which combination of variations performs the best out of all combinations.  So what are the variables and what are we testing?  To keep it simple, there are two variables, social media micro ads and landing pages.

For those that don’t know, a landing page is a simple yet well designed webpage explaining what your idea is and a subscribe input box to collect emails.  For example, you will see these types of pages when Google is asking you to sign up for their new product, “sign up to be a beta user”, then you enter your email and get an email when the product is ready.

Applying the landing page concept to multivariate testing we can do what is called “selling it before you build it”.  In other words, we are finding out what people actually want before any investment is made into building the actual product.

Let’s say you have 10 different ideas or maybe 10 different ways to take the same idea in different directions.  It is really affordable to just reuse the same landing page with different messages and see which one gets the highest number of sign-ups from a Facebook ad.  You could even go one step further and use the prior guerrilla marketing feedback to really get a deep understanding of what your customer needs actually are.

So, once we have the well crafted landing pages we apply 10 unique micro social media ad campaigns to each of the 10 landing pages and see which has the highest click-through rate.  Out of 100 different possibilities you’ll have one core idea with one highly targeted ad to scale out that will set the stage before you even build your app.  You will know exactly how much it will cost to obtain 100,000 sign-ups without even having a product!

The point of all this is that you can dramatically reduce your risk and costs by doing this early market research, so don’t be afraid to hit the streets and tell everyone you know about your idea.

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