Tag: customer interviews

break even analysis

Can your small business make money? Try Market Testing

Market testing is a great way to estimate sales. What’s better than the opinions of potential customers and their own estimates of their annual purchasing?

Let’s review the steps of market testing:

  1. Develop a prototype, model or description of the product or service that you can show to others. Most ideas for new products or services don’t work the first time. With a model or prototype, you can photograph it or create a picture of some kind and demonstrate it to a prospective buyer. It also allows you to try it out for yourself to make sure it works. (Be sure to keep accurate notes of your research; you may come up with an even better idea later.)
  2. Seek out potential customers with your sample or prototype and ask if they would buy it, how often and how much hey’d buy. Be sure to call on the individual who makes buying decisions. Then ask them how much they’d pay for this product. If people criticize your new product idea, ask them why. Ask how the product could be modified to make it more attractive.
  3. Listen carefully to comments and objections of the prospective buyer – their feedback is priceless. Most importantly, listen for their interest to purchase and comments on what they’d pay. From there you have the beginning of your sales forecast.

Even if you haven’t actually started your business, this live market test of interest will be an inexpensive way to see if you really do have what it takes to run a successful business. Good luck!

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What to do when your customers want different things

primary_market_researchWe’ve said it many times before – getting customer feedback is a great thing for your small business. It can help you figure out what you’re doing well, and what you can improve on. Maybe your customers don’t want you to make a change you think will be great (see the reaction to Twitter’s latest algorithm change for an example). Maybe they can’t wait for you to improve something and are dying to let you know.

But what do you do when you’re hearing different feedback from your customers?

Recently, this question was asked of Rob Campbell, one of our expert entrepreneurs featured in our Ask an Expert section. If you’re getting feedback from your customers that’s conflicting, you might want to check out what he suggests. Let us know what you think, or if you’ve ever dealt with conflicting customer feedback!

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Quick eight-part customer survey

Want to get preliminary feedback on your product or service idea? What better way than to ask your customers directly? Administering a small convenience sample of 20-30 consumers or industrial buyers is a good starting point to get well-rounded feedback.

Here’s an eight-part sample customer survey:

  1. Describe your product or service idea to the respondent.
  2. Note their reaction to your idea – what they liked/disliked about it, problems it would solve for them, needs that would be satisfied, and other comments about your idea.
  3. What benefits would they get from buying your product or service?
  4. What price would they pay?
  5. How often would they buy your product or service?
  6. What level of service and support would they expect you/your company to provide?
  7. Do they currently buy a similar product or service to yours? If so, from whom? Why? What do they like/dislike about the company that offers the product or service they currently buy?
  8. Collect demographic information (things like age, sex, and income) from your respondent to help you analyze your data and, later, to segment your market more conclusively.

There you go – quick, painless, and infinitely informative!

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The four types of primary market research

Primary market research is a great way to gather information about your small business’ product or service idea. You might conduct market research to determine things like the size of your target market or the demand for your great product idea. Primary market research is tailored to your small business’ specific needs and can be customized to suit. There are four ways primary market research can be conducted – all with their own benefits for your product or service idea.

The four types of primary market research:

  1. Observation – Just as it sounds, observation market research involves watching your potential customers and their behaviours in action. This means – without interacting – watching customers buying products or services similar to yours, listening to what they say as they shop, noticing what they buy and how much they paid. This type of market research works best if your business caters to customers, not to other businesses.
  2. Focus Groups – Focus group market research means assembling a small group of eight to 12 potential customers to gather information and opinions about your product or service. These groups are led by an objective discussion moderator. Focus groups are a great way to get feedback on a product or service idea directly from several potential customers.
  3. Interview – Interviews are like focus groups, but there is only one participant speaking to one researcher, who leads the discussion. Interviews are well-suited for product or service ideas that could be too personal or private for group discussion, like personal hygiene products or financial services.
  4. Survey/Questionnaire – This method of market research involves getting feedback from potential customers through a structured, multi-question survey. Market research surveys or questionnaires can be done over the phone, through mail/email or in person. You may need to conduct several surveys to several groups in order to get feedback from all possible types of customers. One note about surveys – if you don’t have the resources to conduct a large amount of them, small sample groups are okay – but be cautious of making major business decisions based on this small amount of feedback.

Do you have questions about primary market research? Ask us in the comments, or visit our website’s Q+A section to get market research advice from experienced entrepreneurs!

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