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© Jeff Skinner 2013
Researching your Market
Prepared for KCL 4th December 2013
© Jeff Skinner 2013
‘Why do it?
Predicting whether customers will buy your product
Anticipating blockages in value chain
Figuring out the optimal product design or business model
Identifying likely heavy & lead users
Common theme – look/learn before you leap
© Jeff Skinner 2013
Advice to Henry & Alexis:Mortgage the house and go for it?
© Jeff Skinner 2013
An Entrepreneur is…Someone who jumps off a cliff hoping to assemble a parachute on the way down.
© Jeff Skinner 2013
Assumptions, leaps of faith?
Any ways of testing?
© Jeff Skinner 2013
© Jeff Skinner 2013
Most babies are born ugly• You do not have a product• You have a hypothesis, hunch• Success depends on a number of ‘Leaps of Faith’ &
assumptions on customers (pain and/or your solution) • Identify these & design experiments to test. • Outcome:– LoF confirmed or falsified – ‘go/’no go’.– Lots of learning (if you listen) and:
• Better product/service• Better business model (who, what, how)
• Cheaper & faster than ‘launching’.
© Jeff Skinner 2013
Process
• Who needs to do what for my business to succeed?
• What assumptions am I making about needs, behaviour, motivations, of each (leaps of faith)
• Design experiment or research to test, inform, learn, iterate, ‘pivot’.
• Venture evolves as you go, insight by insight.
© Jeff Skinner 2013
Secondary & Primary evidence
• Can learn a load from secondary sources: – Blunt (usually high level, macro)– Cheap, fast, insightful– Boring, not very ‘entrepreneurial’.
• Some evidence can only come from primary research, experimentation:– Specific to your product (or pain it’s solving)– Expensive in time and resources– Gets you the ‘hell out of the building’– Builds relationship, reputation.
© Jeff Skinner 2013
Secondary research
• Market size, growth, trends (why & why now)?• How big a pain is it really• Competition (live and ‘deadpool’)• Existing market segmentation – ‘tribes’ • Likely heavy-users - (‘X% of y’ better than ‘x% of Y’)• Industry segmentation – ‘value chain’• Regulation, insurance• What else they buy, where do they aggregate?• Opinion leaders, experts, commentators• Analogy (‘UK lags US by 3yr’, ‘AirB&B for hitchikers’)• Industry standards – cpm, margins, conversion rate …
© Jeff Skinner 2013
Then…. Primary Research
• Informed by Secondary Research• Potential targets include users, influencers,
distributors, investors, suppliers …• Ask question, ‘who needs to do what for my
product to be a success’. • Identify main assumptions about their
behaviour, needs, motivations • Design research (to test those assumptions)• Figure out ‘tools’ needed…
© Jeff Skinner 2013
Then Primary Research - Prerequisite
• Need something to test• Better precisely wrong that vaguely right. • So - define the ‘product’ (best guess):– The thing itself & revenue model– User/customer characteristics– Supply/distribution channel (value chain)
• Product can be:– Existing tech to solve unmet need– New tech to do something better/cheaper
© Jeff Skinner 2013
Tools
• Pitch:– Not to sell but to communicate, prime.– Focus on Benefits if testing ‘pain’ (or opportunity)– Focus on Product if testing ‘solution’.
• Prototype, demonstrator, ‘veneer product’, Minimum Viable Product (MVP) if:– Thing hard to explain, visualise– Seeing, playing, touching need to believe– Cheap to do (within ‘affordable loss’)
© Jeff Skinner 2013
“People can’t visualise their way into deciding whether you’ve got an interesting offering”
Mark Suster in http://ecorner.stanford.edu/authorMaterialInfo.html;jsessionid=43123E74A8A17A8DE4C1B13DBDCA5C41?mid=2520
(but a good MVP may be is expensive – outside your affordable loss)
© Jeff Skinner 2013
Research Methodologies(without product)
Methodologies– Structured conversations (‘SPIN Selling’ – Rackman)
– Surveys, questionnaires (‘Guerrilla Market Research’ Ch2 – Kaplan)
– Focus Groups– Observation (how they current solve)
Talk to: – Users, decision makers, suppliers– Influencers, those who know DMP*– Those who know customer behaviour – distributors, consultants,
opinion leaders
For traditional methodologies see for example:http://www.mymarketresearchmethods.com/an-overview-of-market-research-methods/
*Decision Making Process
© Jeff Skinner 2013
Research Methodologies(with MVP)
• Market stall, exhibition, pop-up, demonstrate• Limited trial (with feedback, observation, ‘split test’)• ‘Smoke test’ – promote - then source if demand• Crowdfunding platform – believers invest.• Shallow front end:
– Landing page (with adwords?) – Source product elsewhere to begin with.
• Consultancy, ‘concierge’ service• Video & observe, question (http://
techcrunch.com/2011/10/19/dropbox-minimal-viable-product)
© Jeff Skinner 2013
Tips• Remember, to test (not confirm) hypothesis• So be objective, unbiased• ‘Split test’ - offer choices, not perfection• Actively seek out the disquieting evidence:– ‘surely ‘x’ would be a problem?’– ‘why wouldn’t you buy this?’
• Mix personal with third person:– ‘what would this have to do before you’d buy one’– ‘why wouldn’t HR managers…’
• Seek nice places to fail
© Jeff Skinner 2013
Yes Minister
© Jeff Skinner 2013
All proxies poor substitutes, but
• Every venture is a “lot of ‘ifs’ in a row” • ‘Gold standard’ is to launch (but expensive, slow)• Market research can test some assumptions:– Gap between what customers say and what they do.– Minimise by asking right questions in right way.
• Research also enables you to gather insights that move (pivot) you to plan B:– learn fast, learn cheap– as well as fail fast fail cheap.
© Jeff Skinner 2013
Ever learning
• Comes a point where a few, imponderable, ‘leaps of faith’ remain
• Only way to find out is to launch• But best companies continue to experiment,
listen, refine, adapt well after launch• Market research (listening to customer)
continues forever.• But they often don’t know what I want!
© Jeff Skinner 2013
“If I’d asked customers what they wanted, they would have said, ‘a faster horse’.”
Henry Ford
