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How Can I Use Market Research to Help My Small Business?

How Can I Use Market Research to Help My Small Business?

Update: 2020-06-17
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Description

Change is an integral part of growing any small business. After all, businesses must constantly be evolving if they wish to stay competitive in their respective fields. Still, prior to altering an existing product or launching a new service, it is important for small business owners to examine how these changes could potentially impact their current consumer base. In this episode, Gene Marks and Jon Aidukonis discuss how small business owners can utilize various market research strategies to determine how well a new product or service will be received.



Executive Summary


2:56 —Today’s Topic: How Can Market Research Help My Small Business?


4:16 —Before you commit to changing one of your business’s staple products or services, it is best to conduct a trial run to ensure that your current customer base will respond positively to this change.


8:47 —If you are launching a business, you should examine the leading competitors in your field. Consult their customer base to find out what their strengths and weaknesses are and then, model your new business accordingly.


11:02 —Market research is particularly important if you are presenting a new product or service. Regardless of how optimistic you may feel about your idea, there are often very practical reasons behind why a specific product or service has never been successfully executed before.


14:32 —While it may seem expensive, investing in some initial marketing research can save you even more money in the long run.


16:13 — Be sure to explore some lesser known or previously untapped resources when conducting your research, particularly professional networks and community organizations that have a close tie to your market.


16:59 —As a small business owner, you need to be patient and open enough to listen to constructive criticism.


Links



Transcript


Jon: Hello, welcome to the Small Biz Ahead podcast. My name is Jon Aidukonis. I am a director of marketing at the Hartford. I’m here with my cohost Gene Marks, small business extraordinaire.


Gene: I always thought it was Jon Aidukonis, actually. It’s Aidukonis.


Jon: Yeah, it’s a super phonetic last name.


Gene: So we were talking right before we started airing this and by the way everybody, Jon is our new host and partner here on the Small Biz Ahead podcast. So welcome.


Jon: Thank you.


Gene: Taking over for Elizabeth and we’re glad that so glad that you’re here, but you were sick over the holidays. I was sick over the holidays. You had bronchitis though.


Jon: I did. Yes. It was a nice excuse to relax and kind of have an easy holiday season.


Gene: Yeah, I got violently ill on Christmas Eve. I went and saw the Star Wars movie, which did not make me violently ill, although it was okay, but then I went out to dinner and it was bad. It was like food poisoning. So same thing. So like all of Christmas day I just laid around and I did nothing. And you know what? That was okay.


Jon: Yeah. I think it’s the first year ever where I got to relax at the end of the year and take an inventory and recharge and the circumstances that prompted that weren’t good, but it was actually good when I started to think about what am I trying to do in 2020 because I was stuck with myself.


Gene: Yeah, yeah, yeah. It’s funny here and it’s because it was two weeks this year, it was a Wednesday and a Wednesday it was Christmas day and then new year’s day, it’s like both those two weeks were just gone.


Jon: Sure, it went by very fast.


Gene: Yeah. Here at The Hartford, it was empty from what I heard. It was like a ghost town.


Jon: Yeah. I feel the second week I worked, so I took the first week and then I kind of did half days the second week so I didn’t come back to being buried from a total absence.


Gene: Right.


Jon: So it was kind of nice. It’s a good time to catch up as well.


Gene: It’s cool. All right, we’ll get to it. You know what? We have to talk about stuff about holidays, vacations and days off for businesses. Like during this two week period of time, like my company, I run a 10 person company outside of Philly and we didn’t have any days closed.


Jon: Gotcha.


Gene: I mean we were not even closed Christmas, because all my employees work from whenever and wherever and for whatever clients, it’s up to them when they want to work, but it’d be interesting to know from our listeners and from other business owners like what their policies are over … another topic for another time.


Jon: Yeah, it varies a lot too. I mean, we work with a lot of small groups as enterprise partners.


Gene: Right.


Jon: I feel like it’s a 50, 50 bag. Right? How did I might a take a solid two week … everyone takes their time, goes back home, comes back refreshed, some are kind of nonstop. I’m the kind of person where I work 24 seven I can’t detach.


Gene: Yeah.


Jon: It’s a personal flaw. So it’s nice to sometimes remember that people understand that they can have a balance and take it. So …


Gene: Very good. Yeah. Very good. All right. So onto our topic.


Jon: Yeah. So we are here today to talk about something a less relaxing than the holidays, but really about market research and when you’re thinking that you have this great idea or product or service that you want to launch into the world. I’m sure with your communities and take that risk as a small business owner, how do you find out about what the need is, what the opportunity is, how you can kind of refine and optimize that and end up with something that really serves the need of your customer base.


Gene: And we, both of us, and I guess we’ll take a break for a sponsor, but both of us have some stories to tell. I made a giant market research mistake with my company. I think you also in a prior life did as well, right?


Jon: Yeah, so in a prior job on, not so much on launch, but failing to research something before we decided to put it into the world.


Gene: Okay, that was … yeah, that’s exactly what I did. Okay. Let’s take a break for a short break for a sponsor and let’s come on back and let’s talk about how to do the right kind of market research for your product before you really sit out. Fair enough.


Jon: Sounds good.


Gene: Okay, we’ll be right back.


Our Sponsor


This podcast is brought to you by The Hartford. When the unexpected strikes, The Hartford strikes back for over 1 million small business customers with property, liability, and workers compensation insurance. Check out The Hartford’s small business insurance at TheHartford.com.


Gene: And we’re back. So you were saying Jon, that … let’s talk to your story first. So what mistake did you make with a product launch?


Jon: So I was managing a restaurant at the time.


Gene: Okay.


Jon: And we were switching food vendors, right? And so it was a largely American kind of casual menu. We had everything from burgers to chicken, steak dinners, pizzas, things like that.


Gene: Right.


Jon: One of our most popular items was a grilled chicken sandwich. And you don’t think when your sales are largely dependent on probably four items out of 20 that something as simple as grilled chicken could make a huge difference. We had one with a vendor who used a different brand of chicken. Cost was comparable, quality was supposed to be comparable and we took that at face value and just put it out to the other restaurants in a group. I think there were four at the time. In combine probably some version of a chicken sandwich made up about 15% of our sales.


Gene: Okay.


Jon: The first week, we noticed that that starts to dwindle a little bit and within a month beef has come back, so …


Gene: So wait, so let me get this right. You’re selling the chicken sandwich in the restaurant, you change vendors.


Jon: Change vendors.


Gene: So it’s a different kind of chicken. Doesn’t all chicken tastes the same?


Jon: You would think. But this was literally the rubber chicken skin.


Gene: No kidding. Wow. So people were getting the sandwich and clearly hating it and not buying it again. I guess you had a lot of regulars at the restaurant as well.


Jon: Yeah. It was very much kind of like that stable your community. We had a couple of different neighborhoods. So you have an air amount so that the joy of that is that the voice of customers really easy to get because they’re comfortable telling you. And so you start to hear when it’s like, “Hey you switched it up. Yeah, your chickens rubbery.” But what do you mean our chicken’s … Like it’s been around for the past three or four years. It was a newer concept. Did really well. You had this very kind of interesting mix and just did not go well. So in order to get back then you’re trying, you go to your vendor and like, “Hey, people hate this chicken.” Which again looks …


Gene: Yeah, it looks like chicken.


Jon: Regular chicken.


Gene: And I’m sure the vendor was like, what are you talking about? It’s our chicken. Like everybody loves our chicken.


Jon: Right. So, you start testing through different brands. We finally landed pretty quickly. And so it was within the two or three week turn around on a better chicken product.


Gene: Right.


Jon: But yeah, it was a …


Gene: I mean, and the repercussions of that is that if I go into a restaurant and I have a lousy grilled chicken sandwich, I’m probably not going to order it again.


Jon: Right.


Gene: So you lose customers for like long-term, maybe I’ll still order something else.


Jon: Sure.


Gene: But that food, that product that was a big seller for you suddenly dries up. Right?


Jon: Yeah. And I mean, when you’re working in a small business your cost of goods is everything.


Gene: Sure.


Jon: That was a really efficient product to sell.


Gene: Wow.


Jon: So when you start switching a comparable meal, but it has a higher cost to sell. Yeah. And I mean, you can hit your profit three or four points within the span of a week if that’s your primary product. Right?


Gene: Right.


Jon: So not only are you leaving kind of a bad legacy and probably impacting a little bit of your business one, but now it’s costing you more to do the same business, and …


Gene: Brutal.


Jon: It’s just not well thought out before we put it-


Gene: Okay. So if you could go back in time and do it again, what would you have done differently before introducing this new chicken sandwich?


Jon: Yeah, so I think test and learn, right?


Gene: Right.


Jon: So I think anytime you want to change a staple of your business or a staple ingredient, if you’re in the food service world or a product, if you’re in retail you don’t have to go all in. If it’s a little tweak, it’s not going to kill you to try it for a couple of days or give it a week or kind of maybe do a, even a soft opening like “Hey these are new menu items or a special event.” Kind of gets some feedback before you say like this is going to be my core. Good because you don’t know in your head you can make a lot of assumptions and they’re logical like instinctually it feels like, “Oh, this an even swap.” But you never know how that’s going to land.


Gene: Right.


Jon: And I think that … and in our current state brand more than ever is tied to customer experience. It’s not just a reputation that people think about anymore. Like they feel it. And if you’re in a physical type of business, then they’re going to experience that through the products and the service that you sell.


Gene: Right.


Jon: So I highly recommend before making any decision, figuring out how to get that in front of your community, getting some feedback from that community and really not making a bold decision on a key decision.


Gene: Or not, on a key product as well for the business.


Jon: Right, until you have enough input or at least kind of a gauge outside of your four walls, outside of your own head and figure out how the people who are actually going to be consuming and experience your product feel about it.


Gene: Makes sense. So, okay, so as a marketing guy, I’m going to test you again. That example that you gave me was an existing restaurant with an existing product line with existing customers. So that was a kind of all built in and you had the community there. What would you say to somebody starting up a business that doesn’t have, and maybe they’ve got a brand new product to launch, what would you them to do?


Jon: So I think there’s two ways you can think about it. So it might be a new product, but it’s an existing category.


Gene: Right.


Jon: So look at what your peers are doing. So, if we were to bring it back to a restaurant example, if you’re trying to open the next neighborhood kind of fast casual or fine dining or whatever that is that you’re trying to kind of put into the world. Look at three or four peers, like who do you want to be? What do they do? How do people think about them, talk about them? The internet is kind of amazing in that sense where you get the extreme, so you’re going to get the people who are online, they’re very open with their feelings and those can tend to be negative.


Gene: Yeah.


Jon: But you can also kind of get those advocates who are really kind of praising the brand. I say look for the middle ground. So say it’s something on the Yelp, look for the three star reviews. If people are being fair, kind of what are the pros, what are the cons? And then you can start to build a baseline. It’s like what do people enjoy?


Gene: Right.


Jon: What don’t they?


Gene: Right.


Jon: Kind of where is there room for growth or to kind of peel back.


Gene: So in other words, what you’re saying though is that you’re launching a new product. It’s unlikely that the product that you’re launching is something … nobody’s ever seen it before. There’s probably something similar that’s out there or there’s obviously there’s competition that’s out there already. The idea there is to see what the competition is doing.


Jon: Right.


Gene: And what they’re doing potentially wrong. Or you can at least do better.


Jon: Right. Or what they’re doing really right. And how can you learn from it. So I think that the key there is not to then try and replicate your competition or not to let their praise drag you down.


Gene: Mm-hmm (affirmative).


Jon: But take it as a textbook, right? So here’s a case study. This is what worked, this is what didn’t. This is what I can learn.


Gene: Right.


Jon: And figure out how you can start to kind of measure those metrics that you’ve now identified against your own product. And that can be a lot of different things. So if it’s, putting together a focus group, if it’s reaching out into an independent research vendor, if it’s just talking to your friends and family because maybe they are the target audience that you’re really trying to reach with this new idea.


Gene: Sure.


Jon: And start to kind of poke at those things and get a little bit more in depth on what does that mean and what does that mean to the consumer? Because we might call it one thing, but someone experiences it in a different way.


Gene: Makes sense. That’s great. So I’m going to tell you my story and then we can dovetail this back to some takeaways. Okay. So my company, we sell five software products. We sell CRM applications, customer relationship management.


Jon: Sure.


Gene: Like Salesforce dynamics, Microsoft products, that kind of stuff. One of the products that we sell, I wanted to have a website that was going to provide training for this product and it was going to be like yo all throughout the day live video training for this product. So if you’re using another company and you want to learn how to use, certain functions of it or whatever you would sign up for the live training. We would have people doing that throughout the day and you pay like a subscription fee you get. Right? So I built this website, built this training platform, launched it, nobody came.


Gene: I mean we spent like 50 grand getting this thing up and running and nobody visited this website. And this is even after getting out there and with Google ads and trying to drive … People visited the site but then nobody signed up for the actual service. It was like a complete and total failure. And this happened like about a year ago and it was not pleasant. But what we did is we turned it around and we moved it to something else. Like I’m doing something else with it as well, which I have better expectations for. So what were my mistakes? You had mentioned about serving your existing customers. Okay. I didn’t do that. I mean, it’s like I had this idea in my head and I thought that it would work because it was my idea. So why wouldn’t everybody love it?


Jon: Right.


Gene: Instead of opening myself up and actually asking what the community would want.


Gene: And I had customers I could have gone out and surveyed and I just didn’t do that. secondly, the other thing that I didn’t do is, and you had mentioned this earlier with the … you’re launching a new product for a startup. I didn’t survey the competition. There was nobody out there providing training, live training all day for the products that we were selling. And there was probably a reason why.


Jon: Right.


Gene: But I mean, people, I mean, I’m not that bright to come up with some brand new, innovative … I’m not inventing Uber. You know what I mean?


Jon: No, but that’s a good point. Because if absolutely no one is doing it. There’s probably two reasons, right? So one, it’s-


Gene: You’ve invented Uber.


Jon: Right? It’s like a brilliant idea. That’s like it comes to you in a vision …


Gene: Which is probably unlikely for most of us, right?


Jon: But then there’s the thing, did it not work? Or is it not of interest or is there a different way to execute it? Right?


Gene: Right.


Jon: So, I hear you’re talking about training. So is that more of a value add where then you can think about like an increase in your base price.


Gene: Right.


Jon: Then it becomes adding value to a service and kind of helps cement like your expertise, versus someone thinking about like, “Oh I can do it myself.” Because we also live in the world of Pinterest and DIY, right? Where-


Gene: Correct.


Jon: People want burlap. Like they-


Gene: That’s correct.


Jon: They don’t, they want a napkin that looks like it at their wedding. Right? And so I think part of the hurdle is understanding this level of self confidence that so many people have and, which is great. We have things like YouTube and technology and we can teach ourselves a lot in a really short time. But when you are so deep in a category and you’re the expert, there might be other ways to sell that where it feels like a true additional value than an additional sale.


Gene: But this conversation you and I are having right now after I lost the $50,000 on the website, because I need it because I didn’t do any of the market research.


Jon: It’s 2020.


Gene: Yeah, we should. I mean, you and I could have had this conversation a year ago would have saved me a lot of money. So the other thing that I also think what comes out of this conversation is a lot of people when they talk about launching a new product, whether it’s for an existing business or for a startup, sometimes we don’t have the patience and we don’t have the budget to put into to research it first. So many people were just go, go, go.


Jon: Sure.


Gene: Instead of just saying, you know what, I’m going to take 10 grand or 15 grand or whatever. And I’m going to do some surveys and I’m going to do some focus groups and I’m going to hire somebody to help me with a lot of research, part time to put together all the data I need before with the intention of saying I’m not going to … I’d rather spend 15 grand. I would have rather spend 15 grand not to have spent the 50 grand on that website. But obviously the other way around.


Jon: I think you’re in a unique situation where you’re an established business, you’re in your category, you’re trying to kind of add something new. I think if it’s a brand new business and they’re kind of one of those local based, folks and they’re trying to figure out can this work, will this work?


Gene: Right.


Jon: They might not have the luxury of even two grand for research.


Gene: Right.


Jon: Right? So I think the first piece of advice I’ve given that I think I’ve learned is that people always like to share their opinion. So if you’re comfortable or if you have a friend or colleague who’s comfortable asking, what do you think about this? People always want to tell you what they think, I think as a product owner or as a company owner, what you want to start to do is separate true feedback from when someone switches into like well I would do it this way mode and not that there’s not something to be learned there, but you shouldn’t lose sight of what you’re trying to do.


Jon: But just to figure out where you’re comfortable moving and how that will still serve your constituency. Right? I think another thing is that there’s probably a lot of resources out there that we don’t think about. So, say you have a new retail store launching in a downtown district, right?


Gene: Mm-hmm (affirmative).


Jon: We’re based in Hartford. We have a great young professional group that brings, a thousand folks to events on a monthly basis across the city in different ways. But they have a pretty big network and they’re all about economic development. So as a new company, you’re trying to kind of get set up in an area, look for groups like that, that might have large cohorts of people who closely align to your market and see if you can reach out and get some free feedback.


Gene:


I also I have to interrupt you that’s another great idea is that if you’re looking to launch a product, yes you can ask your customers, but there are networking groups, there are business community groups, there are associations in there. You should be reaching out to them. But again, you said earlier in our discussion, people like to give their opinions. I mean, somebody comes to me and says, what do you think of like I have a new scotch tape dispenser that I want to, that I want to sell. What are your thoughts on that? I’d be more than happy to give you my thoughts on that. You’re asking it.


Jon: People like to talk about themselves.


Gene: They do.


Jon: Even the most humble love to express how they feel.


Gene: It’s just that we don’t have enough patience to go out and talk to enough people and get their opinions.


Gene: And in my opinion, because my ego is so big, I don’t think I wanted to hear bad news. I don’t think I wanted to hear people say to me, that’s a dumb idea, Gene. People aren’t going to be wanting to do training. They’re busy at work all day or they’re not going to want to pay an extra $99 a month for training when they could find that same stuff in a YouTube video somewhere for it. It’s like, I didn’t want to hear that. And I think as business owners we have to be prepared to hear bad news about the idea because we should know that that bad news will help save us money in the long-term if we do that research.


Jon: For sure. And I think, you made a good point too where you don’t want to just hear someone, being a Debbie downer, on something that you think is great.


Gene: Right.


Jon: And I think that’s fair. I think you know we have the responsibility as a person trying to get information from is really setting up the conversation. So we’re getting actionable feedback.


Gene: Right.


Jon: And so not necessarily like, well why don’t you love my idea?


Gene: Right.


Jon: Because you’re making that really kind of qualitative and personal and you’re not going to get a ton out of that. But okay, this feels like you’re not totally vibing with it. Like what would you do to make it better? Or how could I tweak this to make it more suit your needs? So kind of focusing on that, like what and how so you get an action out of it versus the why I think is a really important part is we’re asking people if it’s more of an informal kind of conversation so we can take something out of it that we can actually, make some changes and come back and be like, well what do you think of this? Or does this kind of feel more right to you? Because you can make it an ongoing conversation, right? Like Rome wasn’t built in a day. This is probably going to take time. And with any research you need a certain amount of scale so you can weed out opinion from fact and kind of find that middle ground and figure out what it is that you can do to kind of knock it out of the park.


Gene: Perfect. Well Jon, was a great conversation. I think we have some great takeaways. Obviously do your research. Put some money away in advance. Don’t be afraid of getting bad, negative feedback.


Jon: That can be your friend.


Gene: Yeah, bad feedback can be your friend. Talk to not only customers but people outside of your company, you know as well. Take your time when you do your market research. Before I let you go, just one … What are your thoughts on market research reports for small business owners? Do you think they’re worth it or do you think the things we’ve talked about today would be sufficient?


Jon: So I think it depends on one the size of your organization.


Gene: Right.


Jon: Like two your budget and three what you’re really trying to accomplish. So if it’s just getting like initial feedback to kind of guide you along next steps. I think something more informal and something probably more local is better because you’re really in the community and the audience that you’re trying to serve. I think that if you’re trying to scale or if your audience is changing or if your audience is a very, I don’t want to say inconsistent, but if there are continually evolving one, then you want to probably put more rigor around it and find out a consistent way you can start to measure and access them. So your regular be ahead of meeting their needs.


Gene: Makes sense.


Jon: Because it takes time to put something out back into the world too. Right?


Jon: So you want to kind of … the benefit of a program like that is that you also kind of build on the cadence of release and research.


Gene: Right.


Jon: I don’t think you can ever have enough insight. It’s just figuring out how you can use it. Most of it probably shouldn’t be reactionary because you are your own business. You’re not everyone else, but you’re taking a huge risk when you become a small business owner. And I don’t mean that in a scary way, but it’s a really bold move. You had a dream or you found a need and you’re like, I can do this. So you kind of owe it to yourself to put the work behind it to make sure that you’re giving your kind of your dream the best shot at success. Right? And I think that input and feedback and research is a really critical part of that.


Gene: Awesome. Well guys, I hope you enjoyed listening to this podcast. So the whole discussion on market research. My name is Gene Marks. Jon Aidukonis, has been with me here, my partner here on The Hartford Small Biz Ahead Podcast. Please subscribe to us on all the major sites that are out there. If you’re just hearing us just on a one off, our podcast can be found on smallbizahead.com and any final words Jon?


Jon: Yeah. So in the spirit of research and feedback, this is my first show. So please leave us a review. Let us know what you think. If these topics are interesting to you and we’ll listen to your feedback and take that into the next one.


Gene: Five stars from me, that’ll get us all down the first reviewer there. So that was a great job. We’ve got hundreds more to do together, Jon. So get ready, we have a lot more coming. Now Jon is a … specializes in marketing, but knows a lot about all other aspects of small business, so lots more conversations to have. Everyone. Thanks for listening. We’ll see you next time.


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How Can I Use Market Research to Help My Small Business?

How Can I Use Market Research to Help My Small Business?

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