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How much is “market research” worth? Well, that’s just another ROI question - or, it should be. If it’s cheap and easy to get the research, great - you’ll take all you can get. If you have to pay for it, though, or spend too much of your time getting it, it’s easy to say “I don’t really need that.”

But, let’s not make a bigger deal out of this than it needs to be. Sure, you can buy market research, or pay someone a lot of money to collect it specifically for your business; or, you can use a little imagination and do a few simple things - often with the information that you already have - that will get you a lot closer to where you need to be than where you are now! Research can be surveys and polls and focus groups - the formal stuff that is usually time consuming and always expensive. Research can also be as simple as keeping your eyes and ears open, but in a very focused, organized, and disciplined way. There are things going on in your business every day and just having a “feel” for their impact is not sufficient. Taking the time to capture and use this information can yield huge dividends over time.

Let’s first come at this issue from the standpoint of what information a small business really needs and then circle back to how it can get the information and whether it’s worth the effort. There are three areas that any business needs to know as much about as it possibly can - what its customers want, how much these customers are worth, and how the business’ competition is trying to prevent it from accomplishing its objectives. There is no rocket science here - this is pretty straight forward stuff. Obviously, the more any business can learn about how it actually creates value for its customers and how much those customers are worth to the business, the better it can manage its own internal processes. Knowing what the competition really is - in other words where else your customers can buy exactly what you sell, what else they can purchase instead of what you sell, and what might drive them to just skip the purchase altogether (whether it’s from you, or someone else) - is just common sense.

There are several fundamentals for having an effective research process. First, make collecting market research a way of life in your business - in other words, do it all the time. Getting good at collecting information only comes when you make a commitment to it - when you first tell yourself and then imprint on everyone you work with that “this company” puts a premium on finding and using the information that is going to tell us what we need to know. It doesn’t have to be complex, or difficult, or time consuming; but, there does need to be a mentality in the business, where everyone involved recognizes and understands that the company puts a premium on collecting and using actionable information that helps everyone make better decisions.

Second, you have to figure out exactly what you want to accomplish by doing the research, before you start it. It doesn’t make sense to approach it any other way - you’ll end up wasting your time and money, if you do. You’re also more likely to offend, or at least annoy, those that you are researching; don’t make a customer, or anyone else go through a process that you know might frustrate, or annoy you, unless you have already determined why you need the information and what you are going to do with it.

Finally, research has to be combined with analysis. Sometimes the answer that you get to a question isn’t what you expect and really should be leading you to ask more questions, or different ones, rather than jump in and take action based on what you have already discovered. Go back to what you were trying to get out of the research in the first place; unless what you have learned from the research helps you take meaningful steps to improve, the challenge is to find a better way to ask another follow-up question, not act prematurely.

Now, let’s get back to actually doing the “market research” - collecting the information that will help you make better decisions and take the right actions. Most businesses already have a huge amount of information on hand that they probably don’t use as effectively as they could. Every day you have internal transactions that generate sales receipts, delivery orders, charge slips and shipping transactions, inventory trends etc; make sure you are pulling that information together in a deliberate, intentional, and meaningful way - again to answer the specific research questions that you identified at the beginning of this process. Customers give you feedback every day; why not be proactive in determining what you want to learn from them, rather than just trying to respond to what they ask of you.

Identify single pieces of information that you can obtain over time in an unobtrusive way and that you can “aggregate” to answer some of your specific, strategic questions. Look for this information one piece at a time - birth announcements, people moving to a new home, things people want, or do. This is a game of inches. You don’t have to collect all of this information at once; you collect the data one piece at a time, add it together and think about it, and turn it into actionable information that will help you run your business more effectively.

Most important, train your employees to always ask the “right” questions when they talk to anyone outside the company - in other words, the questions that you want them to ask and that fit into the overall approach that you have for collecting information. Make sure they understand the strategy behind what you are asking them to do. Build this into their performance plans and make their performance rating partly contingent on getting answers to your questions. Help them to collect this information in a “conversational” way that is unobtrusive to customers. One of the keys to good market research is for people to never suspect that’s what you’re doing; help your employees understand that you never want the “target” of your research to go through anything that you wouldn’t want to go through yourself.

Finally, think outside of the box; look for ways to collect information that others might not think of. Talk to your customers’ customers. Mystery-shop your competition. Keep tabs on who might be selling your product(s) on E-Bay and why they are doing the things they are doing. Look for other companies that might be willing to share your research costs with you - companies that would also benefit from having the same information, but who are not direct competitors. Contact the Dean of a local business school to see if a couple of students would be interested in taking on an unpaid research project as part of their college studies. In other words, use your imagination to come up with inexpensive ways to collect the information that can really make a difference in what you do.

You don’t have to pay a fortune for market research and you don’t have to make the excuse that there just isn’t enough time to collect it. You do, however, have to commit yourself and your business to make it happen. You do have to make it part of your process and help your employees understand why it’s important to you and what their responsibilities are to help make it happen. You do have to create the mentality and then the simple “systems” that will make it happen.

Jim Deyo is the President of Business Advisor Online, an internet based service that provides small businesses with the ideas they need to grow and the resources they require to make the right decisions. As a former Sr. Vice President with a major banking institution, Jim worked extensively with small and medium sized companies and has over 30 years experience in commercial and consumer lending, accounting, finance, marketing, and strategic planning. Visit the website at http://www.businessadvisoronline.com and sign up for a six week free trial of the service, or e-mail Jim at jimdeyo@businessadvisoronline.com.

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This entry was posted on Sunday, May 18th, 2008 at 8:01 am and is filed under Business. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.