While having a small business is full of its distinct trials and tribulations, there’s one tool that, more than any other, can help you on the road to success – market research. If you’ve ever wondered how to conduct market research for small business, this guide is for you. You need to know your customers, know your competition, and know what’s happening in your industry in order to grow your business and get ahead of the curve. But where do you start? This guide explains how to conduct market research for small business.
If you want to learn how to gain more insight into your audience and use that knowledge to drive real business results, read on.
What Makes Market Research so Important for Small Businesses
And market research is not just a buzzword. For small businesses, it’s an important next step to providing the right tools to create smart choices. Here’s why it matters:
-
Know your customers: Through market research, you are able to understand their needs, wants and problems.
-
Managing risks: By understanding what is trending on the market, you prevent making expensive mistakes by concentrating on the strategies most likely to work.
-
Get an advantage over your competition: Discover your competition and find out what makes you different.
-
Discover growth opportunities: Successfully launch a new product, service or enter a new market; research provides the insights into which are the most likely ways of doing so.
The more time you spend on this in the beginning, the smarter you’ll be and the more long term your success will be. That’s why it’s essential to learn how to conduct market research for small business properly from the start.
Define Your Target Audience
The very first step in market research is knowing for whom your product or service is. Understanding who you want to target will enable you to develop campaigns and strategies that will best cater to them.
Understanding how to conduct market research for small business begins with defining your target audience.
Create customer personas
A customer persona is a semi-fictional representation of your ideal customer based on market research and real data about your existing customers. A jargony way to think about that creates a persona, he says, is to answer these questions: Who is this person?
How old are they, are they male or female, and what is their income level?
What do they care about and what do they NOT want to hear?
Where do they shop (on-line, off-line)?
Which social network do they participate on?
So if you are a boutique coffee shop, your ideal customer might be young professionals aged 25–35 who appreciate craft coffee and a unique, cozy space to work or hang out.
Use existing data
Use whatever customer data you have in hand. This might be purchase records, social media views or web traffic measurements. What are tools like Google Analytics or customer management systems if not a goldmine for learning more about who is engaging with your brand?
This is a critical part of how to conduct market research for small business effectively.
Competitive Analysis
Understanding your competition is also an important element of market research. A good competitive analysis will help you with more than just your market, though, and show you exactly where you have an opportunity to differentiate yourself.
Identify your competitors
Begin with creating a list of both your direct and indirect competitors. Direct competitors are companies that offer the same or comparable products or services, while indirect competitors might serve a different purpose, but speak to the same group.
For example, if you operate a small bakery, a local supermarket that sells baked goods is a direct competitor and a gourmet food store is an indirect one.
Discuss about their strengths and weaknesses
“When people arrive, they know what they want to spend and what you have to offer,” Jung says. In the meantime, get to know your competition. Check out their websites, see what customers are writing about them, and follow them on social media. Look out for:
-
Their pricing strategies
-
Tactics and campaign in Marketing
-
Product or service offerings
-
Customer feedback and reviews
Understanding competitors is a key aspect when considering how to conduct market research for small business.
Benchmark your performance
Then, compare it against your own business: Where does your company need improvement? Is there a marketing trend you are missing that your competition is capitalizing on? Are there underserved customer pains you could address better? Put this to good use to stand out.
Surveys and Questionnaires
There are few easier things to do than ask for feedback directly from your customers. If you’re wondering how to conduct market research for small business, start here.
Create effective questions
When you design a survey, create as few questions as you can to get the job done. Don’t make them too complicated or pushy with responses. For example:
Instead of “Hate waiting for customer service?” request ”How much time can you typically justify waiting for customer support?”
Ask high-quality questions: Use both qualitative (open-ended) and quantitative (rating scales, multiple-choice) questions to get a variety of responses.
Use the right tools
Options include Google Forms, SurveyMonkey and Typeform, which are user-friendly and come standard with analytics. And if you can afford it, consider rewarding respondents with a small discount or gift to move the needle on response rates.
Deliver your Surveys through diverse Channels
To make it successful across all your customers:
-
Email your existing contacts
-
Post the survey on social media
-
Add to your purchase follow ups
For instance, a small retail store could send an email requesting that customers rate their shopping experience and, after aggregating the feedback, share anonymous top-line results and thank the participants.
If you’re asking how to conduct market research for small business on a budget, these tools and methods are perfect.
Research Methods and Research Findings to Practice
Collecting data is just a beginning; next is the most crucial component of market research: interpreting those results and incorporating them into your business model.
Organize your findings
Categorise the data you’ve received, such as customer likes and dislikes, feedback after your visit or suggestions for next time. Utilize aids like spreadsheets, charts, or graphs to clarify your analysis.
Look for trends
If numerous customers say, for instance, that your website is hard to use, then a redesign is worth prioritizing. Alternately, if the competition is pricing similar products significantly higher, you might be undervaluing your offer.
Turn insights into strategies
Now convert the information you’ve collected into something that you can act on. Here’s how you might use your discovery:
-
If it matters to your customers that your products are eco-friendly, invest in sustainable packaging.
-
If feedback confirms poor delivery times, reconsider your logistics.
-
If the customer personas even begin to suggest a need that you are lacking a product or service to address, start brainstorming new approaches.
You can’t just do a bunch of research, which, again, is hard, and then not follow it up with some action to make it worthwhile, so make sure to identify some SMART goals based on this new information to put your new strategies into action.
All of this contributes to mastering how to conduct market research for small business.
Market Research is Still Relevant Today
Market research isn’t something you do once and call it good. Small businesses are dynamic, and customers and market conditions are always shifting. By continually reviewing and refreshing your research, your tactics will always remain effective.
Even small businesses can glean big insights from even small efforts. Keep it simple, keep it up and gradually plug your knowledge into growth and adaptation. The competitive advantage you gain today can lead your business to success for years to come.
Now that you understand how to conduct market research for small business, it’s time to put it into action.
If you’re hungry for more, you can grab our free guide to advanced market research tools for small business now.
You can learn more about: What Is Marketing Analytics?