Market research methods every small business owner should know

Market research methods every small business owner should know

The best market research methods can help small business owners launch or build their venture — and avoid painful mistakes. Knowing how and where to ask the right questions can help you collect information about customers and competitors, and use that information to make informed decisions that can help grow your business, ERGO NEXT reports. Methods of market research can include interviews, online research, collecting primary and secondary market research, qualitative industry data, competitor research or hiring a market research firm for in-depth analysis and other specialized services.

Why is market research important for small business owners?

The right market research methods can help you identify your ideal customer, pinpoint their problems, and craft the ideal solution or service they can’t live without. Not only that, but you could discover where your competitors are lacking to show you opportunities in the market.

Successful small business owners use market research techniques that help them:

• Validate product or service ideas
• Provide confidence in pricing
• Build a competitive advantage
• Refine sales messaging
• Strengthen their brand
• Increase their revenue growth

If you skip out on market research, you could pour time and money into strategies that simply won’t work for your small business or your customers.

Types of market research methods and techniques

There are four main types of market research methods:

1. Primary market research methods: Gathering new information specific to your business, such as surveys or customer interviews.
2. Secondary market research methods: Digging for existing, general market information collected by a third party, such as a government agency, market research firm or a professional organization.
3. Quantitative market research: When the research focuses on hard numbers and statistics instead of words and feelings, it’s called quantitative research. This type of research can be useful for testing ideas and tracking performance.
4. Qualitative market research: This is research that addresses how or why a customer or organization makes a buying decision. It’s focused on emotion, observation and insight to help you pinpoint customers’ motivations and desires. This could involve something like watching a customer shop your online store and asking what they think of your brand or how your products make them feel. This can help you gauge their sentiment about who your brand is, what you sell and how you sell it.

You may need to use more than one method to uncover the most helpful data.

Primary market research methods: Research specific to your business

Primary market research is research you perform yourself. It provides original data from current and prospective customers. This type of market research can be valuable because it provides conclusive results that come directly from your target market, using their own words.

However, it can be expensive to perform primary market research, in both time and money. You could hire a market research firm to do the work, but it would still be primary market research since the information you’re collecting is specific to your business.

Examples of primary market research include:

• Surveys, polls, and questionnaires
• Interviews
• Focus groups

Primary market research typically involves small sample sizes. It can be useful for understanding issues like customer pain points and effective messaging.

Secondary market research methods: Market data collected by an organization

Secondary market research is research conducted by someone else that you can use to inform your decisions. It’s not specifically tailored to your business, but it can still provide useful information. Some examples of secondary market research include:

• Government data
• Studies published in trade journals
• Industry statistics or trend reports

This kind of information can often help you see the big picture in your market, customer demographics or general consumer trends.

One place to get started with secondary market research is by browsing through the government data from the Small Business Administration (SBA). This offers a wide range of statistics on everything from consumer product safety to international trade data.

Although data from secondary sources like these is more generalized, it can be a fast and affordable and often free way to benchmark your business’s performance and provide a starting point for further research.

Quantitative market research: Hard numbers and facts

While primary research and secondary research are methods to find numbers and hard data, quantitative research is the data itself; it’s the hard numbers that you find from your research endeavor.

This could look like numbers, percentages, ratings and more that can be viewed or tracked over time to offer insight into the questions you have about your business, the market or the products/services that you sell.

Qualitative market research: Customer sentiment and feelings

While quantitative research uncovers hard numbers and facts about a particular topic or industry, qualitative market research is a bit softer. It helps define why buyers or customers do what they do — the emotional drivers behind their behavior.

Qualitative market research often relies on techniques that encourage description and uses words or images to convey how people feel about a product, a problem or a process.

Small businesses can use qualitative research methods to uncover context for customer decision-making. It can show you why a customer might choose you over your competitors. It can also help identify the missing pieces of your messaging or pinpoint a new offering you hadn’t considered.

A few ways to conduct qualitative research include:

• Individual interviews
• Focus groups
• Open-ended questions
• Observing how people interact with a product or move through a business
• Asking customers to prospects to keep a diary

B2B market research methods for small business

If your target market is other businesses, business-to-business market research may help you understand how businesses you’re targeting buy from other businesses.

The information you gather could help you shorten the sales cycle, strengthen your position against competitors and close bigger deals. It could also help you determine which stakeholders you need to focus on and exactly what problems they’re trying to solve.

Some useful B2B market research methods include:

• Interviews with current customers or lost leads
• Surveys
• Observational research
• Monitoring how people talk about your business in social media (social listening)
• Analysis of internal sales data
• Competitor analysis

These methods could be hired out to a third-party research firm or conducted in-house.

Online market research for small businesses

The internet is always on. It offers a real-time and often free and unfiltered source of information about your target market.

Here are a few online market research methods to try:

• Keyword research to find what terms and topics customers look for.
• Tracks topics on social media sites like Yelp, Instagram and Reddit.
• Poll and website pop-ups to collect data and opinions.
• Review customer reviews to see what people complain about and praise the most from your competition.

You can use many of these strategies yourself if time and budget are tight.

Three market research examples

Here’s what market research might actually look like for a growing small business.

1. Local competition

Your house cleaning business is suddenly facing increased competition in your town. You review your competitors’ sales pages and pricing to see how they compare to yours, then read customer reviews on Yelp, Facebook, and Google to learn more about customer complaints. Using that information, you craft a new offering that targets house cleaning customers looking for something your competitors don’t offer, such as laundry service.

2. Attract more customers online

You want to attract and onboard more customers for your online consulting services for mortgage lenders and real estate agents. You use online data to analyze your website clicks, conduct keyword research online and interview previous customers to ask them about how they found you and what they like and dislike about your service.

3. Build up your business’s best practices

For your nail technician business, you might visit a few nail salons in your area and while you’re on vacation to observe their store design, service style and pricing. You pay attention to how customers interact with the technicians there and which services are the most popular. You use this information to get new ideas for the services you offer and the look of your shop.

This story was produced by ERGO NEXT and reviewed and distributed by Stacker.