How to <em>Really </em> Do Market Research

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We're about to launch our first product to a group of clients, and it's been a long time coming. I'll tell you why: we did too much market research. Wait, let me rephrase that: we did too much traditional market research.

What's Traditional Market Research?

It's googling for what customers say they want. It's buying research reports. It's looking at market trends. It's looking at what people buy in the past, and trying to make a calculated decision on what they'll buy in the future. It'''s crap. It doesn't work. What people say they want rarely translates into what they need -- and more importantly, what they'll buy. Too bad we didn't know that earlier. We focused too much on our first product. We focused on building the next-generation business desktop, with all the bells and whistles--or so we thought. When we finally completed the dang thing, no one wanted it. It was too expensive. It was too complex. It provided no value to switch from their current providers. It was a costly, major mistake. During the product phase, we forgot one crucial step before the process. Instead of building, we should've done what we knew we had to do all along: sell!

The Best Market Research You Can Do

In most traditional product cycles, the company decides to build the product first--then try to sell it. Too bad that last part rarely happens--explaining the 80% rate of products that fail. What should you do then? Sell something. Before you have your product, sell that product. Sell what you intend to build. When you sell before you have your product, you conserve cash, resources, and time. You'll know for sure what people will buy, since of course, you'll already have their orders. This eliminates risks. Dramatically. Take a story from RightNow's Founder and CEO Greg Gianforte:
Gianforte started trying to sell that nonexistent product. Armed with a data sheet outlining what such a product might do, Gianforte sat in a spare bedroom and cold-called customer-support managers at hundreds of companies. After talking them through the sheet, he told them that the product would be released in 90 days and asked whether they would use that type of software on their Web sites. If someone said no, he asked why. Sometimes the potential customer needed a feature that Gianforte hadn't thought of. If he thought that he could deliver it in 90 days, he added it to the data sheet. Some might say that Gianforte was peddling vaporware -- the much-criticized practice of hyping the imminent release of new software that is far from ready. Gianforte disagrees. The key is not to promise anything that can't be delivered within the specified time frame. "You never want to lie to your customers," he says. What he did, he says, is "really sales as a method of market research. It allows you to determine very quickly, without much money, if you have a viable business idea."
It's the best market research you can do, yet so few do it: Before you build: Sell!

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Posted on May 03

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