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Market research session with people gathered around a table

3 simple market research techniques I use to validate business ideas

Introduction

During my career as a UX Designer, I have collaborated with many talented people, from entrepreneurs to marketers, to developers, and beyond. 

However, it still surprises me when I see people jumping into projects without knowing exactly who, why, or what they are building!

When you land on an idea, the excitement of getting it to market can be overwhelming and can cloud your judgement.

I have been guilty of this myself in the past.

Photo of person organizing sticky notes on wall

However, if you are reading this article and want to understand your customers and the competitors at a deeper level, you are one step closer to making more informed decisions that have a better chance of succeeding.

The insights I have collected using simple and inexpensive research techniques have not only helped me deliver successful projects but have saved time and money.

“You never really understand a person until you consider things from their point of view.”
― Harper Lee

Without research, you are opening yourself up to unnecessary risk. Therefore, you owe it to yourself and your business to give your idea the best chance of success.

Here are a few points to keep in mind when approaching your market research plan:

Know your customer

Google and Amazon are giants for a reason; they understand their customers so well that most of their customers could not do without them. So how do they achieve this? Well, a huge part of their success comes down to research.

Time lapse photo of busy high street shoppers passing shops.

You don’t need a multi-million dollar budget to get great feedback. In fact, the reality is that most entrepreneurs and startups get feedback on very tight budgets. 

I personally have collected invaluable feedback for many projects on a shoe-string budget, and I discuss this in more detail below.

The fact is, there are lots of quick and effective research methods you can experiment with, and all of them are slightly different from each other.

However, all of them share a common goal; to collect insights that help you make more informed decisions and deliver more value to your customers.

Know your competitors

It is also essential to understand your customers at a deep level and there are many methods to achieve this, whether it be free or paid.

A common strategy for many entrepreneurs starting out is to simply find ways to improve on what their competitors are doing.

However, this approach can also be risky, as you may be inheriting strategies that may not be working for that competitor behind the scenes.

In order to get a more holistic view of your competitors, you will need to know them inside out.

Also knowing who your direct and indirect competitors are, will help you differentiate your offering in a more strategic fashion.

In business language, this is achieved by doing a competitive analysis.

In the next section, I will highlight some of the free methods I use to analyze my competitors.

1. Competitive analysis

Who is paying for ads vs ranking organically?

One of the free and easiest ways to analyze your competition is by simply researching your competitors on Google.

Firstly, I always like to know who is spending money on Google Ads versus who is investing in SEO and ranking organically.

Screenshot showing paid results on top of google. Red box highlights the paid results
Paid results on Google

Websites that rank high organically, are usually more established brands that usually have been around for longer.

Screenshot showing organic results on top of google. Red box highlights the organic results
Organic / natural results on Google

However, it is also good to know who is spending money on Google ads.

This will tell you who you’ll need to bid against when buying Google Ads in your market segment.

Obviously every market is different, however, no matter what business idea you intend to explore, getting insights like this will help you in the long run.

Either way, you’ll have to compete for rank on Google in some way, shape, or form.

Capture key insights about your competition

When researching an idea, I personally make a list of my competitors using Google Docs.

I start by reviewing their website and then describe their business model in my own words. Taking note of their pricing model, and the markets they are targeting is also a valuable exercise.

I also keep links to their website, as well as screenshots of any marketing material that explains what they do.

You don’t need to be too detailed at the start, as you can develop it over time.

Use these questions as a guide when documenting insights about your competitors:

  1. Who are your top 5 competitors?
  2. What products and services are they selling?
  3. What is their pricing structure?
  4. What markets are they targeting?
  5. What are their strengths & weaknesses?

Free market intelligence

SimilarWeb’s free Chrome extension is another great tool that can help you gain insight into your competition.

Similarweb free chome extension showing website statistics
SimilarWeb’s free Chrome Extension

Similarweb is a paid market intelligence tool, however, they have a free extension for Chrome which shows helpful website stats like Avg monthly visits, Bounce rate, etc.

As I say, this is perfect if you are exploring your competition on a budget, however, there are great paid tools out there that give you a lot more detailed insights about your competitors.

Tools like SEMRush and Ahrefs cost an average of $99 USD / month, so you’ll need to ensure you can afford to sustain these costs, especially if you have a lot of additional monthly costs.

If you would like to know more about these competitive analysis tools, check out my related article which reviews their features in more detail:

SEO Basics: A beginners guide to optimizing your content for Google in 2020

2. Online Surveys

Performing online surveys is a great way to gather insights from potential customers in your market in a short timeframe.

I personally use either Google Survey or SurveyMonkey .

Screenshot of SurveyMonkey audience tool
SurveyMonkey’s cost estimate tool

They both offer similar services and allow you to collect feedback by asking direct questions to your target audience. The cost of the survey is usually based on the number of responses you receive.

Keep in mind though, the more you need to target a specific type of audience (e.g age range, job type etc) the more expensive it can get.

For more information on these tools and how to use them, check out my related article How I created a memorable online brand for my business in 5 steps

I have also used Facebook groups to research countless business ideas. Being able to tap into real-time conversations within your potential market is a powerful thing!

Once you find a group that is even loosely related to the idea you are researching, have read through the comments and conversations. Ask some questions, and find out more.

You could even go a step further and create your own group and build an audience that can then be marketed to.

The opportunities are endless!

3. Face-to-Face interviews

Face to face interviews is by far one of the best ways to get feedback and understand your potential market.

Apart from the value of meeting potential customers face-to-face, you will get to uncover your customers’ pain points, and find out exactly what is on their mind. 

Photo showing interview between two people. One guy on laptop, the other taking notes.
Photo by José Alejandro Cuffia

The scientific term for this type of approach is Qualitative Research, which is essentially the study of human behaviour.

Being face-to-face gives you the advantage of interacting with your audience in real-time. You have the option to ask open-ended questions and probe on the fly, unlike online surveys and remote methods.

Create a prototype

Even in the very early stages of ideation, it is a good idea to create a rough prototype so you can observe your users as they interact with it.  This could be in the form of a paper prototype, or if it’s a physical product you could observe them interacting with a tangible prototype.

Offer an incentive

While the cost of a face-to-face interview is going to be more than online surveys, I usually find the results are a lot more valuable.

Starbucks gift card photo

The reality is that you don’t need a big budget to get great feedback. I have collected great feedback on a shoestring budget, by offering participants a $20-$50 gift card as an incentive for participating.

Small incentives like this go a long way and you’ll find your respondents are a lot more receptive.

Usually the more the participants the better, as you will have a larger pool of data to analyze.

However, this is not always practical as it will increase the cost and time needed to complete.

My rule is to get feedback from a minimum of 5 participants. Any less than that is too little, and you won’t get good insights.

Feedback from friends is nice, but not that useful!

Getting feedback from friends and family is nice, however, in my experience, the feedback you will get will be biased and not very useful.

Instead, it’s best to get feedback from people you don’t know who will give you an honest and unbiased opinion.

Finally, remember to be patient and be prepared for no-replies! Recruiting people for feedback can take a few weeks. However, the end result will be invaluable to the success of your project.

Conclusion

I have explored countless business ideas over the years many of which morphed into better ideas because of research and gathering feedback.

As I highlighted above, these days there is an abundance of ways you can gather insights and feedback from your competitors and your customers.

Use free and/or inexpensive online tools and forums like SurveyMonkey, Quora, Facebook groups, etc, to gather fast insights and make something that is informed by data.

You can do so much more with cold hard data that tells you exactly why and who you are building for.

Keep it simple and cost-effective when starting out.

Sometimes the thought of planning, coordinating, and executing a research plan can cause you to put research on hold and proceed with a vague notion!

However, from experience, this is not where you want to be as you’ll waste time and money.

Investing a bit of time in the early stages is essential to your success.

Trust me, you’ll never look back.

Niall Conway

Niall Conway

Founder & Marketing Director
FounderCopilot.com

I am an online entrepreneur who helps people build, launch, optimize and monetize their online business with Wordpress, SEO, Affiliate Marketing, Adsense and a whole lot more.

On my website and on my Youtube channel, I share the skills and insights I have built up over the last 10+ years while working as a freelance designer/developer and while founding several digital businesses of my own. Read more...

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