70% of businesses fail due to poor market research*. Getting yours right is critical for the success of your venture, as well as for your investors, partners and banks. This is all the more essential for innovations.
Here are the four steps to nailing your market research process, and maximising your innovation’s chances of success.
1. Define a clear objective
So you’re an entrepreneur with an exciting innovation, and want to scope out its business viability. The first step is to answer the question: what value does my innovation bring? In other words, what problem does it solve? If you can’t answer this question clearly, your innovation is not ready.
Once you have the answer, you can define the research objectives of your study, and get specific about what data to gather for analysis. For example, are you looking to scope out whether there is a potential market ready for your innovation? Or is it a question of whether or not to launch (go or no-go)? If it’s a go, which markets and when? Do you need some feedback to improve certain aspects of your project?
Clear perimeters must also be locked down for the study. Get specific on which territories and industries you want to reach.
2. Choose your method
Next, choose your research method and make a plan. You have several options. A sector analysis can provide some general data, but won’t be enough for investors.
A traditional custom market research study carried out by an agency can provide data tailored to your needs. However, these tend to be heavy in cost, both financial and time-wise, with a typical timeline of 3 to 6 months.
An alternative is automated market research. This research process is cheaper and faster, with a timeframe of around 15 days. Data is aggregated from surveys completed by highly targeted professionals with relevant expertise and/or interests. In addition, the survey allows respondents to express an interest in working with you, whether as client, developer or distributor.
3. A well thought market research process targets the right people
It is important to have a representative panel of respondents to your market research study. Being able to differentiate helpful feedback from useless or fake information (such as from competitors) is essential. You must also have an adequate sample size. For example, UMI’s automated market research design takes qualified feedback from 40 individuals.
A warning: for the purposes of this exploratory research, avoid technical experts in your field. They will tend to judge the technical aspects of your innovation, not its business potential. They will also likely have an enthusiastic bias in favour of your solution if it’s within their field of interest, but market research insights should be neutral and objective.
Instead, focus on targeting potential clients, and others who would be impacted by your project, such as distributors and industrial partners. Be sure to avoid re-contacting the same people repeatedly, as they risk losing their critical sense.
4. Make the most of your data
Having gone to the trouble of reaching out to people, make the most out of what you get! Positive feedback alone won’t be enough to sway the decision making of bankers and investors. For that you’ll need figures.
Quality data consists of not just simple feedback, but figures and insights. You stand a much better chance with investors if you can bolster your innovation with data-backed, applicable insights that offer business value, and possibly new perspectives on your market. Even if experts judge that your innovation has little potential in your target market, they are well-placed to suggest a range of other possible applications.
Finally, by reaching the right people for your study, you also reach potential leads. Do nurture these contacts, as they may prove instrumental for the future of your innovation.
*According to Paul Millier’s Study markets that don’t exist yet (L’étude des marchés qui n’existent pas encore) 70% of business failures are due to deficient market research.