Data and Decision Making: 4 Tips to Utilize Market Research
Allison Byers, expert in market research and business strategy, shares her tips on how to best utilize market research when making business decisions.
The number one reason start-ups fail is that there is no market need. I would argue the root cause of failure is a lack of market research, which is imperative for market insight. Whether start-ups are raising money or trying to please investors, there appears to be a stigma against using funds for market research. Funds are instead allocated towards a hypothetical increase in traction or revenue at the sacrifice of understanding the customers — the lifeblood of any business.
My educational roots lie in clinical psychology and I have spent my career using data to understand human behavior in a business context. This has translated to all sorts of endeavors including: building a model to predict B2B customer loyalty, segmenting toy purchasers based on psychographics, interpreting web analytics to decode online consumer actions and launching a digital health company. While diverse in application, market research has remained an essential constant in the success of each.
Here are four tips for utilizing market research no matter your role:
1. Please, please do some primary research.
You don’t have to be a seasoned market researcher to conduct primary research, so don’t get scared away. Whether you are investigating a new business idea or testing a specific software feature, talk to people about it. Secondary research reports are based on large numbers of representative samples (hopefully). There is also power in the gut check and personal answers you receive from those in your network or industry circles. Ask people you know for a 10 min call to get their opinion on something. People love giving out their opinions on things. Launch a quick survey using a free service to industry groups (like Springboard!).
2. You can get secondary research for free.
You can get a ton of secondary research for free. Professional associations, large corporations, venture funds, research organizations, and non-profits frequently release industry reports full of great information. You can almost always download them by providing your e-mail (of course), which is well worth it as you’ll likely find some helpful organizations in your search for data.
Another great source for secondary market research is through your alma mater. Many schools, particularly business schools, continue to offer access to academic resources for alumni. If you can’t find the information publicly, just e-mail someone at the school and ask. Trust me, they will love hearing from you!
3. Consider the right type of research.
If you are lucky enough to conduct research with a budget, it’s crucial to select the right type. Market research is just as susceptible to garbage in garbage out as machine learning. If it’s a survey, make sure the scale will produce data you can use for actionable decisions. If you ask open-ended questions, make sure you have a way to efficiently analyze the text answers. My favorite type of survey is a conjoint analysis because it measures the value customers place on specific attributes of your product or service based on their choices rather than directly asking. If you’ve never heard of it, look into it!
4. Stand up for yourself.
It is amazing how many people devalue the need for market research and make decisions based on their own misplaced confidence. Unless you can read minds, you don’t know what anyone else is thinking. Even if you knew at one point, they might have changed their minds over time and you need to find out all over again. If someone questions your instinct to conduct market research, trust your gut and explain your reasons.
At the end of the day, research provides data that will inform better decision making. Sure, it might take some time. Yeah, it might also take some money. But, if it keeps you out of the 42% of start-ups that fail because they didn’t understand what their market needed, I’d argue it’s worth some time and money.
Allison Byers has over a decade of experience in market research and business strategy. She was most recently Co-President and Director of a digital health company translating seminal IP out of MIT to objectively quantify cognitive function by applying AI to neuropsychological testing. She’s currently cooking up her next adventure. Allison received her BA in Psychology, summa cum laude with honors, from Syracuse University and her MBA from Boston University.