The Startup Series: 1 - Market & User Research Basics
Welcome to the first installment of The Startup Series.
Market and user research are so important for startups, to really get to know your customers and potential customers. Customer is king. So knowing their demands and needs is imperative.
Having an in-depth understanding of your customer base can improve business success through delivering products and services that solve your customer's problem, improve the likelihood of fitting well into the market and allow businesses to develop a well-rounded strategy.
Market and user research both fit within Eric Ries's Lean Startup's idea of Customer Discovery:
Market Research and User Research
Now is a good time to understand what market research and user research are, and the differences.
The purpose of market research is to understand customer needs, the market and competition. This information will provide insight into whether a market is crowded, niche or growing, what customers look for in products and where a startup could see itself standing out from the competition.
The purpose of user research is to explore how a potential customer, or actual customer, a user interacts and uses a product or service. This is a useful exercise to understand pain points, benefits and areas of improvements that could be made to a product or service.
Tools for Research: Designing Your Research
Although market and user research have different purposes, the tools are largely the same but are used in different ways.
To help choose your tools for research, having hypotheses to test is a good strategy as it focuses the research aims and helps you decide what you need, whether it be a survey or interviews.
Research can be seen as part of a cycle of iteration. You test hypotheses, you gain insights that change your hypotheses and then you may want to gain more insights.
For in-depth data, qualitative research methods are used - these are broadly interviews and focus groups. On a small scale, with a carefully recruited set of people, that as much as possible match your customer, concepts and attitudes are tested in-depth. Lots of data is generated here and this needs to be synthesised. The article in August will go through this in much more detail.
For wider data, quantitative research methods are used - this is to explore ideas, attitudes and demographics - perhaps to segment a market or to test an idea on a wide range of people. This is usually a survey. The blog post in September will go into this in more depth.
Sampling, that is who you will be involving in your primary research should be carefully considered. Having an exclusion and inclusion criteria, even a customer persona to start from can be helpful when deciding who to include. The sample should reflect the customer and should not be close family and friends
Desk research can be used to understand a breadth of information such as competitors, the market growth, future trends and customer behaviour. Secondary research should draw upon a wide range of resources, from reports, White Papers, forums, customer reviews and beyond.
For some markets, there is a breadth of information, you can electronically organise this for easy reference. Either by having an excel spreadsheet or by using hyperlinks and footnotes.
Analysis of the data collected can be done in a number of ways - usually themes are elicited but more complex statistical analysis of quantitative data can draw out findings that go way beyond descriptive statistics (for example, bar graphs). Survey data can be modelled to explore correlations and further explore customer behaviour.
Research design is integral to a successful research project. This begins with the research aims and objectives, which should be as clear as possible. There could be hypotheses to explore to outline assumptions to be tested. The project will be defined to some extent by budget, time and resources. Usually a mix of primary and secondary research will produce a holistic response to the research question.
There are plenty of resources that give an overview of market research basics.