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How to do market research and test demand for your product

How to do market research and test demand for your product
 

Posted: Wed 22nd Jul 2020

You have a game-changing idea. A product that's going to make a difference to people's lives. The next stage is to start talking to people about it. Do they love the idea? Do they want to buy it?

Figuring out customer challenges is the key to entrepreneurship. You need to do market research to gauge how much demand there is and how you should go to market.

How to start talking to potential customers

Market research starts with talking to potential customers. You need to ask questions about their existing problems and challenges. Don't pitch your product or talk about hypotheticals straight away because everyone will just say your product's great.

Explain your idea later in the conversation. That way, you don't risk biasing their comments and they'll have more nuanced feedback on your product when you start talking about it.

Here are a number of useful questions for these conversations:

  1. How do you do X?

  2. What's difficult about the process?

  3. How often do you have to X and when did you start doing it?

  4. Have you tried to find alternative solutions?

If you want to read more about this, Rob Fitzpatrick's The Mom Test is great.

"Rule of thumb: customer conversations are bad by default. It's your job to fix them," Rob explains.

How important is your customers' problem?

The initial questioning process helps discover more about the potential use case for your product and how important it is.

You have lots of challenges to deal with in everyday life; what's made you go and spend money solving one of them?

You can usually measure how important a person's challenge is in time and money.

A business owner might spend a day per month completing a complicated accounting process. They are likely to be willing to pay for a £20 per month subscription for Xero, which automates much of this work.

The key questions to answer:

  1. Do people know they have a problem? You can create a need or educate people on a problem they didn't know they have, but it's much more difficult.

  2. Does your solution fix a process where there are real, measurable consequences?

  3. How much are people willing to pay to fix the problem? This is difficult but a key sign is whether people are already paying money to solve the problem in a different way.

  4. Is fixing the problem unavoidable?

The role of surveys in getting feedback

Customer conversations and surveys explore the problem your product solves. Surveys provide quantifiable data to help define the opportunity and how you're going to approach it.

There are free tools that make it easy to create a survey, eg. Typeform or JotForm. Look for every opportunity to share the survey, from your social media and product pages to asking organisations in your space to help.

Survey best practice:

  1. The longer the survey, the harder it will be to get people to complete it. You have to balance how useful the information is with getting enough responses. Don't ask for information you don't need.

  2. Demographic information like age and address help refine your audience and improve your marketing. People will be more willing to select an age bracket or region than giving exact answers.

  3. Try to avoid biasing your answers by asking emotive questions (choices can include a range of emotions) and considering different possible answers.

  4. Ask how much time and money people spend on the issue your product addresses, and how regularly.

Getting feedback through test sales

Cultureville's initial online sales helped them gauge demand for the product. That gave them confidence and let them refine their marketing.

They then used market stalls to speak directly to customers.

"We spoke to customers to find out what prints they liked better, about sizing and how they found them compared to other brands," said co-founder Ronke Jane Adelakun.

You can read more about how Cultureville built their brand here.

Make sure you're asking customers for reviews. Make it easy to share feedback. General conversations are useful, but you can also take notes or run them through a quick survey if they're really engaged.

What are your company's super powers?

Your product doesn't have to do something completely original, but you do need to have something that differentiates your offering - what makes you awesome?

Your initial hypothesis will likely be based on you and people around you. It might come out of your experience. You then need to start talking to potential customers, doing market research and making test sales to understand the opportunity.

Finding product-market fit is tough. You need to test, iterate and then repeat the process.


Market research is one of many subjects covered by the Amazon Small Business Accelerator e-learning programme. Access 16 hours of free online training. Sign up here or if you're already an Enterprise Nation member, log in to your dashboard.

Amazon Small Business Accelerator

 
 
Chris has over a decade of experience writing about small businesses and startups. He runs Inkwell, a content agency that helps companies that sell to small business owners grow their audiences through content marketing. You can find him on Twitter at @CPGoodfellow.
 

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