A recent Forbes article on startup failures* provides us with a sobering glimpse on their miserable plight – a 90% failure rate! Andrew Chen’s Feature Fallacy** article pulls no punches and further explains where the product development team loses the plot.
Let’s be honest; in the rush to develop and polish your product, how much effort are you giving to understanding and meeting the most critical consumer needs? StartupGenome points to identification and validation of consumer needs as essential first components of the startup’s growth strategy, yet the majority of startups fail because as Forbes.com puts it, “The product is not right for market.”
Stages of Growth - StartupGenome (2015)
So the startup can change the script and end on an epic note instead of a tragic one, let's explore some consumer research fundamentals:
- The need for consumer research;
- Unpacking the components of consumer research;
- Planning and executing a course of action.
1. The Need for Consumer Research
Consumer Research helps to characterize the consumer‘s journey (particularly exposing barriers to technology acceptance, usage and adoption) and validate market assumptions. The entrepreneur has to be intimate with both of these topics. Becoming intimate requires a near singular focus.
Consumer Research is a straightforward concept: engage your consumers (or targeted consumers), observe consumer and product being used or abused, and ask lots of questions. Finally, validate what you’ve learned, but with a broader research group. When you continually repeat this cycle, data is transformed into understanding. Ideally, this cycle should never stop because consumer preferences are always evolving.
2. Unpacking the Components of Consumer Research
Behind Consumer Research are assumptions that people seek “the biggest bang for the buck.” Consumers are asked to respond to questions within this context. Survey results claim to have predictive power based on their answers. From personal experience, when was the last time you purchased a product just because you loved it? The price didn’t matter. What mattered was your immediate gratification. So, consider carefully which assumptions apply before you start your research; not all consumers have the same goals and motivations.
Tools of the Trade
The researcher’s primary Instrument is typically a series of structured questions. Questions should use common, everyday language to deliver vital semantic cues for understanding, information construction, retrieval and response. These questions should be structured in empathy with the behavioral assumptions that apply to your business scenario.
A good researcher will be able to take plain language descriptions along with the structured response and map them into analytic constructs for further analysis. If you are unsure about the vocabulary associated with an object, focus groups are a great way to develop the correct terms and evaluative dimensions.
Gathering Personal Viewpoints
What type of research approach will best fit my needs? Well, it depends on your commercial context. Typically, if your product idea will be “new-to-market,” you will evaluate whether the product meets important needs, indicating a qualitative approach.
Data are often represented textually or pictorially. Results are assumed to be less generalizable across a population, but are credible and authentic. Consumer insights are more likely to be generated with this approach.
Gathering Collective Viewpoints
On the other hand, if your product is “mature-in-market” and competes for market share, productivity measures that are relative to your market’s gold standard may be relevant. This context suggests a quantitative approach, focusing on statistical techniques that count and categorize, as well as construct data and relationships.
The consumer may also be asked to make evaluations regarding events, behaviors and their attitude towards the product. Results are typically more generalizable across a population. If you have an idea you want to test, it’s a way to validate consumer thinking.
Due to unseen influences, consumers often say one thing but behave in a completely different way. For example, studies have shown that people who neglect to wash their hands after a bio-break, answered that they had washed their hands – exactly opposite their actual behavior.
Fool’s Gold
Your organization should establish who is accountable for delivering consumer insights. Ideally, accountability needs to rest where there is little or no vested interest in the outcome. Objectivity and personal neutrality is the name of the game here.
If the research data indicates that the big idea is a “box of rocks” in the consumer’s eyes, that reality must be confronted immediately. And when you have a vested interest, there could be a propensity to influence outcomes or to torture the data to see what you wish to see.
3. Planning and Executing a Course of Action
Your options are primarily driven by the type of research questions that you need answers for. The research question then shapes your resource consideration, which then influences your research strategy. Additionally, as with any strategy, there will be constraints to consider. The remaining factors are all resource related: Cost, Time, and Skills.
Concluding Thoughts
Consumer Research is simply an organized method for data collection to explore, describe, and explain consumer behaviors. These insights help you make informed strategic decisions. Look at Apple. Market-leading products aren’t born; they are made. Apple generates consumer intelligence and acts on it. Consumers share similar journeys. They suffer from similar mundane issues. Digital apps and technologies that solve these non-sexy problems in a simple and effective way will win in the marketplace.
Your research can be added later in your process, but do recognize its importance for your success; it shouldn’t be an afterthought. Also, contemplate other key stakeholders. For example, if I represented a venture capitalist, I would be asking you some pointed questions about your knowledge of your target consumer in terms of needs and key assumptions. Nonetheless, it's a pay-me-now or pay-me-later scenario. Paying later is typically more expensive economically and psychologically, for both you and your consumer.
Successful Consumer Research exposes the most important and the most underserved needs, so you can focus on the critical few. The fundamental questions you should ask yourself are, “Do I know my consumer?” and, “Do I know what she needs?” If your answer is “No” to either, you should figure out how you’re going to build and execute a Consumer Research Strategy. We can help you with that.