4 tips to help you grow your business with market research
Knowing your customers' needs and preferences is key to growing your business. Here's how you can use market research to your advantage.
If you’re launching a new product or service, you’ll need more than your instinct. Market research can help ensure your startup finds a customer base.
When Kyle and Katie Wilson launched Soul Chocolatefootnote 1 in 2015, they had ample market research on sourcing and pricing cacao beans, and insights on popular flavours. A long-time barista, Kyle started selling the company’s single-origin chocolate bars direct to coffee shops, and he knew that industry well.
The rest of the market insights were gathered during a year the couple spent running a coffee and chocolate subscription service.
“In terms of research before launching, I probably did none,” Kyle notes of the subscription service, which lasted a year and had up to 60 subscribers before fizzling out. “It was a failure leading to a success,” as suppliers and other industry players provided valuable information.
The knowledge transfer paid off when, in 2015, the couple took out a $20,000 loan to buy equipment and Katie quit her job as a baker to make chocolate full time in a rented space. Kyle quickly found wholesale clients for Soul Chocolate, including coffee shops, retailers and hotels.
In 2017, the duo opened their own combination coffee shop and production facility in Toronto’s east end. Now, they work with five trained production staff and made six tonnes of chocolate in 2019, up from four tonnes a year earlier.
Get to know your market
For the Wilsons, it was a live-and-learn approach to market research, but Scott Bowman would like to see business owners put more time into this process before launch. “Everyone is very excited about their product, their great idea that they’ve been working on for a long time,” says the vice-president for Ontario, Prairies and Northern Canada at Futurpreneur Canadafootnote 2 which funds and mentors startups.
“Who wouldn’t want to have this product?” That’s often the response he gets when he asks a business owner about their ideal buyer. “I’ve been told this so many times. And I tell them there’s somebody who doesn’t want that.”
Since the vast majority of new companies fail, some within their first year, smart entrepreneurs find out all they can about the market and identify what Bowman calls “your best customer” — all before they put too much money on the table. It takes legwork, but not a lot of money to get this valuable information. Here are some tips for gathering useful knowledge about your target market.
1. Use numbers to gain insight into your customers
Basic data on the size of your market segment, how many players are in the industry and how it has performed over the years are key starting points. Many would-be entrepreneurs find some of this information online for free — and can likely come across more if they’re willing to pay for it.
But you don’t necessarily have to spend money to get that data. Sunil Sharma, managing director of the Toronto Founder Institute,footnote 3 a startup accelerator that takes new companies through a 13-week bootcamp, suggests looking to government data and those held by startup organizations such as the MaRS Discovery District in Toronto.
Bowman from Futurpreneur says realtor associations, Chambers of Commerce, business improvement areas (BIAs) and local city hall libraries have information about demographics, income levels by neighbourhood and more, usually for free.
Checking out industry associations and their trade shows, industry breakfast meetings and conferences can yield even more data, plus you’ll hear big-picture and company-specific talk about the sector that can give you a strategic advantage.
Market data can help you discover:
Size and value of your market
Information about key players and competitors in the market
Information about customer demographics: how much they earn, where they live, what they buy
Trends over time, such as whether the industry is being disrupted
2. Expand your network and get talking
Connecting with players in your target industry, like Kyle Wilson did, can help you build a network of people to consult with — people who know what sells and what the obstacles are. You can hang out at a trade show and chat casually with attendees, or you can work more closely with industry people and find a mentor. “I’ve even seen it where a mentor becomes part of the company,” Sharma says.
Why not connect with other startups, too? “Peers can be useful,” says Sharma, who encourages Founder Institute attendees to use each other as resources, sharing ideas for where to find information and lending expertise such as financial skills or marketing know-how. “Build two networks,” he suggests.
3. Learn to survey before you launch
Potential customers and industry experts have information you need, so figure out how to effectively survey them. That might mean crafting something on a free digital tool such as SurveyMonkey, and emailing it out. Bowman has had entrepreneurs stand in malls and approach shoppers with one or two questions, starting with “Would you buy this product?”
Survey data can help you discover:
He likes surveys that are simple, straightforward and focus on the product and the possible buyer.
What aspects of your product offering people like or dislike
Whether your ideal customer would buy what you are selling
4. Keep up with the changing market
Kyle Wilson does more market research today than ever: he tracks what larger chocolate companies are doing and, instead of launching new products as they’re developed, tests out the market first. “I’ve inverted it. I need to know who’s interested, what they’re willing to pay, and then we shape the product around that.”
Bowman thinks staying on top of market info is the smart way to retain existing customers and grow a company over time. “You can never have enough information,” he says. “There’s always something you don’t know.”
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