The key advantage a smaller player in a market has is in choosing how you spend your energy to develop a solution for a market.
Larger organizations will do lots of market research, then ignore it. They will have thousands of support tickets, chat logs, complaints data, and then, ignore it. They will operate from deep-rooted assumptions and biases and ego of vying interests, and then ignore their audiences/customers in the process.
I know I’m generalizing. But the extent to which established players ignore their audiences or take their customers for grants, you have the opportunity to better understand and then use that understanding to more deeply serve the unmet needs.
When a beginner’s mind beats the curse of knowledge
If you are just starting on a new venture, you will, by default, have the beginner’s mind (shoshin). That is, the openness to learning, the ability to see details more established players might take for granted, and with fresh eyes, let what’s most interesting and pressing guide you actions.
The curse of knowledge on the other hand is a well-documented cognitive bias where we assume others know what we know. What’s obvious to us must be obvious to everyone else. We get frustrated acting things out in charades (“How could you not know I was an ostrich!”)
And so we can’t help but explain things as though we are explaining them to a bunch of people like ourselves.
Market research on a new venture means taking advantage of that beginner’s mind, not making assumptions, or guessing what other’s want, need, and most importantly, would pay for.
Cost-benefit of market research when starting out
I would argue that validation for a direction and the resulting confidence is the most important piece to starting a new thing.
Market research aims to validate a service you want to offer for a market.
You take steps on a journey. What market research and really getting to know a group of people is about your ability to course correct every so often so you don’t end up in the weeds or wasting a bunch of time and money.
How many of us “try Facebook ads” or “launch a new website” as the first steps in getting new business, without really knowing where we should be focusing our energy, designing our messaging around what for who, or building the much needed momentum that leads to early success or at least the scent of success that we can follow.
Market research is a low cost alternative to trial and error
The cost associated with doing your own market research is nominal.
It pales in comparison with the cost of trial and error marketing tactics associated with “testing” Facebook or Google Ads, mailers, spending a bunch of time on a website, all using only your own best guesses as your guiding force.
Market research as risk reduction
The cost is so low, not just because the stakes of getting it wrong are so high, but also because it can be as simple as starting a conversation with those you want to serve (or might want to serve).
I sent 1,000 “how do business coaches handle online marketing” surveys out and got just under 100 responses. I then interviewed 6 high performing business coaches.
I thought I wanted to work with these people.
But coming from a background in corporate SEO, I realized I really didn’t have much to offer that they were interested in.
The successful coaches are all focused on meeting people and providing value, resulting in referrals and word of mouth. They use the web as a way to keep in touch with an existing network to stay top of mind and drum up business when things got slow.
And so, I decided not to serve business coaches.
But in that process, I found that training companies (that do coaching), have a ton of content, are very interested in online marketing for new business, and have no idea how to get that content to better perform for them online.
And, they have money. By closing one door, it’s hard not to open another door. By assessing a market it becomes impossible not to compare it to adjacent opportunities.
Market research as a guiding force
Will I therefore focusing on serving training companies?
Meh. I don’t know.
But I do know that it would be much easier, and they would benefit much more than what I originally would have tried to do, left to my own devices, begging coaches to change their minds about what the wonderful web can do for their business.
But I don’t think the value of invalidating a direction ends there.
I also see patterns common to training companies that are good signals. And patterns common to coaches that are bad signals.
Identifying those patterns were important clarification for me. For example, I learned that experienced consultants who in the last 15 years of their career want to primarily think of themselves as coaches are a better fit for me than experience coaches who also happen to consult.
They realized coaching was a solution to the people not listening to consultants problems. And so in my mind, they are more advanced.
There is a quality filter there somehow. Maybe I shouldn’t say quality. I should say something like “fit” but it feels like a quality filter.
Anyway, it was good information for me!
Patterns found doing market research can be repurposed.
For our current example, we learned that training companies care about SEO. They can afford to care about it. They will not go under because they bet the house on a marketing layer that they do not understand.
Meanwhile, new and unsuccessful coaches do that kind of high risk gambling all the time. They don’t see the alternatives of simply becoming better coaches or networking as lower friction/higher value activities.
SEO won’t fix a broken business.
It will only amplify the value of a sound business with other things going for it that can be leveraged to make SEO easier. That’s why training companies would be a good fit.
So I can swap “training companies” with any other market for which the following statement would be true:
__________ companies would be a good fit for my traffic getting services for site with a lot of content because they are sound businesses with lots of leverage that could benefit SEO if only I was there to pull those levers for them.
The characteristics of training companies that make them a good fit is market research findings I can use even if I don’t opt to focus on training companies.
So now you are convinced as you will ever be. Where to start?
Start with your existing network
The shortest path to quick wins you could find, to your first clients, without doing direct sales outreach, is market research to those around you. I have learned this from Jonathan Stark and Philip Morgan, applied it in my own work, and found it to be 100% true.
You undoubtedly know five people in your target market OR if your target market is highly specialized, you know people that can refer you to at least 5 in your target market.
You also may know domain experts who serve that target audience.
If you are seeking to serve growing families in a specific geographic area, a well established Realtor will probably know a lot about them.
If you want to work with accountants, an admin at an accounting firm will know a lot about them.
What are you looking for when you do market research?
If you are building a business from scratch, the most important thing you are looking for is an expensive problem common to a group of people that you can engineer a solution for.
And so, your first step is to compile a list of people in your network that may be in your target market or related to it somehow.
You are looking for the warm connections, that is, those weak ties with which you are friendly, comfortable enough to reach out to, with an email like this:
Warm email outreach template
Subject Line: <<20 minute call)>>
Hi <<their name>>,
<<one sentence personal note>>
I am doing some research for a service I’m considering offering. You are exactly the type of person who I would like to serve, so I was hoping you might have time for a 20 to 30 minute chat. It would be immensely helpful for me to understand what kind of challenges <<target market>> faces on daily basis and make a better decision about moving forward with this idea.
Are you around next week? I’m pretty open on <<half day time block >> and <<another half day time block >>.
(optional) PS. <<another personal note>>
Your goal here is very specific. It is just to get a reply and a time for a call scheduled.
Here’s an example of what the above template looks like for me with someone I know very well (less formal):
Less formal warm email outreach example
Hope your family is holding up with this heat wave.
I’m doing some research for a service I’m considering offering and hoping you might have time for a 30 minute chat next week. I thought of you, I know you work in B2B consulting, so of course thought of you first. I’m looking to understand what kind of challenges consultants are facing these days given everything with COVID.
Are you around next week? I’m pretty open on <<half day time block >> and <<another half day time block >>.
Or you can be more formal, especially if the power differential is high. This person is busy, I want to respect their time and we probably wouldn’t spend 15 minutes catching up first, like I would with a less formal, closer friend like above.
More formal warm email outreach example
Hope you and your family are safe and well as can be expected.
I am doing some research for a service I am considering offering and hoping you might have time for a 20 to 30 minute chat next week. I thought of you first given your work in B2B consulting.
I’m looking to understand what kind of challenges consultants are facing these days given everything with COVID. A call would help me make a better decision about whether or not I should move forward with this idea.
If you are amenable and have the time, I am open on <<half day time block >> and <<another half day time block >> next week.
PS. If you are too busy, please don’t give it a second thought.
There are lost of other ways to frame your outreach email. I have never borrowed an email outreach template and simply copy and pasted it, and I don’t think you should either. You need to use your own language and personality. If my emails seem to formal or informal, too long or short, then adjust accordingly.
There is also that power dynamic to consider. You’re reaching out for a favor. You want to respect their time, but you also (likely) have tangential expertise.
Often, you could have a call stemming from an outreach email like this, and then say, “thank you, can I do anything to reciprocate?”
I’m always surprised when someone takes me up on it, but it’s usually when I get some initial sense of their situation and how I might be able to assist. eg “you mentioned (on the call) you were redoing your website. If you like I’d be happy to take a look once it’s live and make sure everything transferred over properly so you don’t lose any of your Google traffic.”
How to follow up
Often, people are on vacation or your email gets lost in the shuffle. If you’re comfortable enough, I would send a text message. If not, and 4 to 6 days have passed, you can reply to the first email so they see it with a one liner like:
Hey Mike, just following up here in case you missed this email (forwarded below). Don’t worry about it if you’re too busy these days, we can always catch up another time.
At this point, you should have gotten a fair amount of positive responses. And curiosity.
It’s important, though, to wait for the call to divulge specific details or start the research conversation. You want some semi-structured questions that you can run them through to keep the call on track.
You wan to minimize pre-framing the conversation, or starting the conversation by email. The exception there is if they are too busy to talk and would prefer you to send them the questions.
Efficient, high powered people are often good at protecting their time like this and you shouldn’t take it personally.
Next part in the series will review interview goal, structure, and questions ideation.