What Does Market Research for a Startup Actually Look Like?
“You shouldn’t go to market before doing market research.”
Entrepreneurs hear that all the time. But what does it really mean? Does every startup do that? Is market research realistic for a business with no budget, no marketing team, and no prototypes?
I’ve worked in market research for years. If there’s one thing I’ve learned, it’s that market research often makes or breaks a product launch.
That said, I also know market research can be expensive. The phrase itself scares budding entrepreneurs. After all, it’s companies like Nielsen, JD Power, and Kantar that define the market research industry — massive, multinational corporations that charge tens of thousands of dollars to deliver insights to brands like Amazon, Nike and Samsung.
Nevertheless, market research is absolutely essential. Especially for startups. There’s no way around it.
So here’s my outline for startup market research, based on my years of experience running market research projects for firms both large and small. This is a low-cost way to validate your product or service concept before you to go market, and wow investors in the process.
Step 1: Define Your Niche
Your product idea is probably not for everybody. I’m often surprised at how little thought some entrepreneurs put into who it is they’re targeting. This is step #1 not just for your market research project, but for your startup in general.
Who wants what you’re selling? Who will pay for your product? What are their behaviors, characteristics, and demographics? Be specific, and write this down.
Step 2: Ask Around
Forget asking your friends and family. Instead, go online and find a Facebook group or forum where people in your niche congregate. A mom’s group on Facebook. A front-end developer’s Slack channel. A cycling enthusiasts’ forum. Ask a few questions. Pitch some variations of your idea. See how people respond, and take careful note of their answers.
Step 3: In-depth Interviews
These are formalized interview transcripts you develop after checking the pulse of your target market and getting a sense of just what it is they need. Make this transcript concise and specific. Then go pitch it to the same groups of people you’ve already engaged. Offer a $10 Amazon giftcard to anyone who will hop on the phone and let you interview them for 15 minutes.
Aim for 12–15 of these.
Step 4: Online Survey
This is the big kahuna. Why? Because investors want to see numbers, and this is where numbers come from. Then why not start here? Because if you’re going to wow investors, it will be because your survey asked the right questions in a way that absolutely proves your product concept. You won’t be able to do that the first three steps.
Now what does an online survey look like? It’s hosted at SurveyMonkey or SurveyGizmo. It’s fielded through a startup panel provider, like PeopleFish, to your target market. And the questions are asked in a way that yields powerful benchmarks and metrics — ones that will resonate with investors and prove your concept.
Now, this survey will cost you. At PeopleFish, a general population survey audience starts at around $1 per response. But for 300 responses, that’s more than worthwhile. And please believe me — you won’t get anywhere without paying for responses (no one is just going to take your survey for free).
Once your data is collected, analyze it in your survey platform’s tool. I’ve never found one that didn’t have everything needed to conduct a basic, investor-ready analysis of your survey data.
Step 5: Presentation
This is the easy part. Put together 16 slides like this:
- Title slide
- “About you” slide
- Key findings (six bullet points)
- Methodology (explain what you did)
- Then 12 slides of charts and graphs that bolster your key findings — two slides per finding — with both qualitative (interview) and quantitative (survey) insights.
These steps are broad, I know. But everybody’s startup is different. This template is designed to apply to them all. It’s the same process you’d walk through with any big market research firm.
Following these steps is step #1 toward turning your product idea into an investor-ready concept.