What’s stopping SMEs from doing market research? A new book busts common misconceptions. This is an edited extract from ‘Do Penguins Eat Peaches? and other unexpected ways to discover what your customers want’ by Katie Tucker, left, (Practical Inspiration Publishing, PB, Oct-23)
The market research industry has its fair share of stubborn myths that so easily morph into convenient excuses not to do the work. But excuses hold you back. They comfort you in your own inaction and so often send you on the wrong path. Let’s expose a few, shall we?
- Customers don’t know what they want (so there’s no point asking) Henry Ford (1863–1947) was an American industrialist. He founded the eponymous car company Ford Motors and was widely credited for building the first mass produced car assembly line. Henry famously (and allegedly) said: ‘If I’d have asked them [people] what they wanted, they would have said faster horses.’ This quote is often taken out of context and used as evidence that there is little point asking customers. True. Customers don’t always know what they want. But they do know what they’re trying to get done (in the case of Henry’s customers, getting from A to B faster). They probably knew how they felt about existing transport methods (frustratingly slow). Could they imagine a metal box on wheels would be the answer to their transport woes? Unlikely. It’s not up to your customers to come up with innovative solutions to improve their lives. They’re too busy living it. It’s up to you as a business to identify their biggest problems (which need to be painful enough for them to want to pay to solve them), their delights and ultimately what they’re trying to get done. Once you have a solid grasp of the problem, you can start to think of solutions.
- It’s only for big business Big businesses spend big bucks on understanding customers. The global market research services industry was worth $81.13 billion in 2022.¹ That’s a hell of a lot of money spent on customer research with larger businesses making up the bulk of that spend. As the competitive landscape becomes more crowded and the economic pressures more acute, larger businesses are increasingly seeking out answers to why their customers behave as they do. The fundamental rules of business are, by and large, the same, however big or small you are. You have something you want to sell, and you need customers to buy it. So, no, market research is not exclusively for big businesses. It’s for you too. To reduce risk and gather evidence so you can build products and services people want and buy. Big companies have bigger teams and bigger budgets. Sure. But the bigger you grow the more effort you need to make to stay close to your customers. You get heavier, and you’re slower to respond to customer changes. Big brands fear you. Small can be your superpower.
- I already know my customer. You may well be an absolute legend in your field of business. That doesn’t mean you’re a customer-know-it-all. You started your business solving your own problem? You are still not your customer. Both these starting points will give you a head start but don’t get cosy. Customers change and evolve. Having a grasp on your customer demographics (age, gender, average income, etc.) is no longer enough.
- You can have a successful business without it If you’re lucky. Right time, right place, and all that. There are businesses that launched and scaled successfully without officially doing market research. This can happen for a few reasons. First, they tackled a really obvious customer want or need (no-brainer) and had what we call a first mover’s advantage. Second, the founder was particularly good (albeit subconsciously) at understanding customers and tapping into consumer trends. Market research in anything but name. Problems tend to arise when these so-called lucky businesses launch their second product, try to scale or when their empathetic founder moves on. Because they never consciously understood why things worked so well the first time around.
- You need to speak to hundreds of people Great one to use as an excuse for not speaking to anyone. Especially when we are small and have little resources. Yes, having a large sample size when putting out a survey can be useful for high-risk business decisions. Or for governments responsible for shaping policy. But when it comes to interviewing customers, you don’t need to speak to hundreds of people. There are pages and pages online about the optimum number of people to speak to. The important law at the heart of this debate is the law of diminishing returns. Research shows there is a point at which you stop learning anything new. The type of research you are doing will determine the number of people you need to speak to. Here are a few guidelines to use:
- For surveys, Survey Monkey has a handy sample size calculator. It does all the complicated number crunching for you.²
- For usability testing (e.g. does this website work for my audience? Does this app work as expected? Does this product function as expected?), research gurus at the Nielsen Norman Group (NN/g), a global reference in the design research world, recommend five users.³ I know. Doesn’t sound a lot, does it? But 85% of all usability issues will be flagged by speaking to five people. Five!
- For customer interviews recommendations vary. For small-sized businesses, interviewing 7–12 people is usually enough. But even five real conversations will go a long way in deepening your understanding of customers.
- It’s a waste of time Market research is anything but a waste of time. Yes, it takes a bit of time upfront, but the biggest waste of time is surely building stuff nobody wants. And besides, once you get stuck in, it can be fun. As Erika Hall, author of Just Enough Research writes: ‘Unless you are naturally curious about people, research can seem like annoying homework at first. Once you get into it though, you’ll find it totally fun and useful. A little knowledge opens up a whole world of new problems to solve.’⁴
- I don’t know how Not knowing how to do market research is another real barrier for smaller businesses. It’s the premise of my book, Do Penguins Eat Peaches? There’s plenty of support out there for everything else you need to know. Marketing. Social media. Design. Branding. PR. Sales. But market research? A gaping hole in many small businesses’ toolkit. Not for long folks.
- Someone will copy my idea Our final excuse. Some of you fear that if you talk about your idea, someone will pinch it. Playing the copycat card as a reason not to do research tends to be more prevalent in competitive business landscapes. However, smaller businesses can fall prey to it too although this excuse rarely stands up to scrutiny. For starters, an idea without implementation is just an idea. Nebulous. Hopeful and probably not all that unique. And second, doing market research well is always about exploring the problem first before testing solutions.
Beyond these common excuses, there are usually a few other (deeper) things holding us back. Another reason we don’t engage in much customer research is because we fear failure. Subconsciously perhaps. What if we’re wrong? What if people don’t like our ideas? What if they don’t buy our products? We often don’t even realize fear is driving our reluctance to do the work when it comes to understanding customers. But nine times out of ten it is. We need to reframe failing as learning. Recognize the fear and acknowledge it as a normal human response and go find some customers to talk to and observe anyway.
Ego is another barrier to understanding customers. When it comes to understanding customers, ego often shows up as resistance to doing the work. The checking, the finding out and talking to customers. Ego is so crafty; it sometimes even makes us believe it’s our gut doing the talking. If I got a pound for every social media post written about listening to our gut, I’d be rich. Always be aware. Is it really your gut? Or is it just your ego in disguise?
So, what lies beyond excuses, egos and fear when it comes to business? Three simple qualities: curiosity, empathy and courage. In Do Penguins Eat Peaches? I look at how to reframe these sometimes-nebulous qualities as tools and use them to your advantage.
¹ Market Research Society (MRS), UK research sector worth increases to over £8billion following a 6.4% growth in 2021, MRS reveals, mrs.org.uk (December 2022).
² Survey Monkey, Sample size calculator, surveymonkey.co.uk.
³ M.Rosala, How Many Participants for a UX interview? Nielsen Norman Group (NN/g), (October 2021)
⁴ E.Hall, Just Enough Research (2nd Edition), A Book Apart, p.21 (2019)