Your Top Five Explanations for Not Doing Consumer Research
(Along with the Top Five Explanations for Why You Should)
"I am my own customer."
Yes, you may be one of your customers. You don't represent all of them.
Even the most intuitive, in-touch entrepreneur can't be certain about the ways in which consumers will respond to a particular offering. By talking to a range of people who represent different attitudes and behaviors, you will deepen and broaden your understanding of (and relationship with) your customers. You will prioritize your offerings to appeal to your most important customers. You might even identify types of customers that you hadn't thought of. Trust us, we've seen this happen a thousand times.
"I'm a risk-taker. I'd rather spend my money on development and marketing than on consumer research."
You like risks? Fine. First, conduct audience analysis. Then, take all that money you raked in from your successful IPO to Las Vegas and take risks.
Development is critical. Marketing is key. Of course. But, you can minimize your risk and your costs in these areas by encouraging your customers to help you decide how to allocate your resources. After all, there's no point in spending time, effort, and money on things your customers won't use, right? Think of it as insurance to know your audience within the context of a specific product or service.
"We have time-to-market pressures. We just have to get something out there."
A start-up (read: you) can't afford to wait until after the product launches to get to know its customers.
In these competitive economic times, you need to know what will and won't work in the future. Simply knowing what does and doesn't work in the present probably means you're already too late. You may have missed opportunities and misallocated resources by building something that is "almost" right. Your competition might not be making the same mistakes, and you don't want to be in the unenviable position of playing "catch-up."
"We're going to find out about more our customers after we launch."
Sure, if you wait that long, then you'll learn all about the people who like your product. But, what will you know about all the other people you want to like your product that either don't know about it or who have given up on it?
By this time, you will need to know who should be using your product but isn't. You'll also want to know what you have to do to attract these customers. Simply analyzing your products current users won't help.
Think of internal research as a snapshot: it reflects the current situation on your product, but it doesn't explain how that situation came to be. In addition, internal research rarely helps you plan for the future. Internal research on current users typically allows a company to learn about one segment of its potential audience, not the entire potential audience. Finally, internal research won't answer these critical questions:
- Who will use your product only once and never again (and why)?
- Who will never even use your product once (and why)?
- How will you get your most desired users to become loyal customers?
"Call us arrogant, but we're still going ahead without talking to our customers."
You said it, not us. How about some cautionary, real-life tales to address this one...
Example 1: Leading Investment Firm Makes Faulty Internet Play
An online investment brokerage launched a web site and assumed its offline customers would migrate to its online service. The company felt comfortable marketing to these customers and developed the service and the marketing with this "key" segment in mind. The company failed to either consider or attract the lower hanging fruit: people who have never traded, people have traded a little with an offline broker, and tryer/rejecters of the online competition.
Example 2: Online Toy Store Targets the Wrong Market
An online toy store (without a brick and mortar business) assumed that it would cannibalize customers from brick and mortar toy stores and their web sites. The company did not talk to various customer segments prior to launch, when it received less than anticipated traffic and low repeat traffic. If the company had conducted research, then it would have found out that the people who would be attracted to its site were not the competition's brick and mortar or online customers. The first time visitors to this site were used to shopping for children's presents from specialty stores, and they were hoping that this unaffiliated site would provide high-end, specialty toys for children. Brands like Toys R Us did not appeal to these overlooked customers, who tended to avoid busy toy stores and commodity products. The company missed its opportunity to accommodate these users and convert them into customers.
Example 3: Content Site Ignores Key Segment of the Market, Resulting in One-Time Users
A content web site about Ireland assumed that its audience would consist mostly of people around the world with an Irish heritage. The site launched without conducting research. The site positioned itself incorrectly. Most people who visited the site wanted to travel to Ireland, even though they were not of Irish descent. These users did not return, but would have if the site had learned about this target market
and their needs prior to launch.
Example 4: World's Leading Software Firm Squanders Opportunity to Be Internet Leader
In 1995 an online service assumed that it would acquire customers by sending CD Roms to the target customers who were the company's software users. They believed customers would log on, use the online service, and become loyal customers. Once the CD Roms were shipped, the company wrongly assumed that because people did use the CD Rom once to access the service, then they must be satisfied with the whole service. The company launched the service based on un-tested hypotheses about what the audience wanted from such a product. This company failed to realize that users didn't use any of the content channels that the service was designed to offer and which had ties to revenue. Instead, users used the browser portion of the service, which did not have ties to revenue.
Bottom Line?
Method believes that you should never launch a product without talking extensively with a wide range of people from your target market about the particular product or service you're about to offer. We believe this money will prove to be one the best investments you'll ever make.
