How well do you know your customers and clients? To effectively market your products and services, you need to know what types of people are most likely to buy from you. To do that, you need to conduct small business market research.
What is Small Business Market Research?
Market research is the process of gathering and analyzing data about your clients to better understand them. The better you understand your clients, the easier it is to find more clients and increase your profits.
Market research doesn’t have to be time-consuming or expensive. You can gather information in a number of ways, such as conducting a survey, holding a focus group or interviewing your current and past clients. Here is a two-step approach to conducting market research.
Step 1: Determine What You Want To Know
The type of small business market research you use depends on what questions you need answered. Here are a few questions to consider:
- Who are your prospects and clients? Where do they live? What are their demographics such as age, gender, income levels?
- Where can you find them? What publications do they read? What radio stations do they listen to? What events do they attend? How did your current clients hear about you?
- What types of products and services do people buy? What do they prefer? How have these products and services changed over time? Can you spot any market trends? What kinds of changes can be made to improve your products or services? What do your current clients like about your products and services? Do they have any suggestions for improvement?
- Why do prospects buy? Most purchases are made because of reasons like benefits, value and customer satisfaction. Why are certain products and services more popular or perceived as superior?
- Who makes the buying decision? Who is actively involved in the buying process? Sometimes, the users of a product or service aren’t necessarily the ones to buy it. For instance, parents buy products for their kids or the IT department purchases customer relationship management software for the company’s sales team. Identify the decision makers.
- How is the buying decision made? What triggers the purchasing decision? Is it influenced by economic factors? Because others in the organization complain? Because competitors just introduced a new product or service? How do purchasers decide to buy your product or service?
- When do people buy? Is it seasonal? Is it because of a life style change?
- Where do people buy? From local businesses? Online?
- How much will they pay? How unique is your product or service? How much do competitors charge for similar products and services? How do prospects and customers value your products and services?
To effectively market to your target audience, you have to understand their psychology. By developing products and services clients want and can pay for, you can dramatically decrease your sales process.
Step 2: Use Primary and Secondary Sources
Once you know which questions to ask, it’s time to conduct your small business market research. You can do this in one of two ways.
- Primary research - This involves going out and collecting data yourself, such as with surveys, focus groups and interviews. It involves talking to your prospects and clients personally to determine what they want. Primary research is time-consuming but will give you a much better sense of what clients want because you can modify your questions to suit your needs and find out exactly what prospects and clients think about your business, products and services.
- Secondary research – If industry associations, the government, or competitors have already done and published their primary research results, you can use their data as a reference.
Most businesses start with secondary research, such as by doing internet searches or checking out local trade organizations like your Chamber of Commerce. As they grow, they send clients a customer satisfaction survey to learn how to improve their products and services.