The UK’s market research industry is the second largest in the world, according to the Market Research Society. And no matter which sector a business is operating in, understanding the economic, social and cultural context in which it is trading is essential.
For small businesses, commission market research may seem an unnecessary expense, particularly when starting out with little cash to spare.
Market research vital for small business success
SMEs may dismiss market research as something that’s only necessary for large businesses. However, starting market research out of the gate can save time, cash and problems later on for small businesses too.
Customer opinions affect every business, no matter its size. They often have fixed perceptions and clear ideas about what they will or won’t buy. So, if a small business has made a fundamental error early on with its product or service, finding out as soon as possible could save them from going under.
Jose Scheuer, business and marketing lecturer at the London School of Business and Finance says: “In the past a small business had competition from other, often local, small businesses and their customers were known. Today a small business competes in a much larger field. Not only does it face competition from local as well as international companies, often these competitors are much larger and have greater negotiating power to source and sell at cheaper prices. In addition to this, small businesses face competition from the unstoppable growth of e-commerce.”
Using less to achieve more
Small businesses inevitably have fewer resources and less money than larger companies, but they may also have more to gain from effective customer market research. It’s about being careful and strategic.
According to the Federation of Small Businesses, small and medium sized (SMEs) companies make up 99.9% of all UK businesses. This means that SMEs form the core of the economy, and it’s more important than ever that they do their market research in order to gain customer insight. If they get this right, then they will make better decisions leading lead to improved product or service design, and eventually higher profits.
When carrying out market research, small business owners must consider exactly what they want to gain. For example, what they need to know from customers in order to improve their service, product or communications. Choosing a market research consultant and working with them as a partner will benefit the process.
It’s essential to be realistic. If the research shows there is a flaw in the service, then use it to improve. Working with the right kind of consultant that will be honest with research is the most useful. Here are some initial steps to get started with market research.
Analyse data you already hold
Most businesses already hold a lot of customer information in one form or another. By systematically analysing it, you could be surprised at what you already know about current and potential customers.
If you do already have data, check how useful it is. Is it biased by the questions that were used to gather it, for example? Before adding more customer data into your files, organise the pieces you have. Think carefully about how you can use it to your best advantage. This will put in you in a good position to work out any gaps in your knowledge, so you can create a solid plan for your research. Always factor in GDPR considerations when handling customer data.
Look for high quality data
Putting quality over quantity is vital for research. Don’t get carried away with trying to amass endless pieces of research. SMEs in particular should ensure the process is streamlined as much as possible, so that time and money isn’t wasted. A vast amount of data is no use unless it can be properly utilised.
In today’s online world, it’s possible to access a lot of data without incurring any costs. The Census is always a good place to start, and Royal Mail’s MarketReach database is useful for direct mail. Social media accounts are also vitally important in ascertaining what your target demographic likes to do, buy, wear and see. However, always bear in mind that the people who tend to express a lot of information that’s readily available on social media tend to be a relatively small group. They shouldn’t be considered as a complete resource, as they are not representative of entire demographics. Don’t make the mistake of relying too much on one source of data, as this could exclude a lot of important information.
Be flexible in your approach
Gaining insight into your target market should include qualitative insights. Simply listening and talking to small groups of people, and individuals, can give a lot of usable information. Use your own observations alongside the numerical data you’ve amassed to make decisions on actionable points. This flexible approach is particularly important for small businesses that are working with smaller budgets.
James Turner, Managing Director of Turner Little Limited says: “Market research is a fundamental aspect of small business success. Start-up business owners, entrepreneurs, and established SME managers need to know the market for their service or product. They should be asking who their potential customers are, how much they’re likely to pay, how often they will pay it, and is it possible to make a profit based on this information?
“It’s also important to learn how best to analyse the information extrapolated from customers and potential customers. If the wrong questions are asked, then misleading information will negatively impact on later business decisions.”
About Turner Little
Founded in 1998 in Yorkshire, UK, Turner Little is a specialist UK and offshore company formation, banking and corporate services provider. Our services include company formation, UK and offshore banking, asset protection, credit correction, trademarking and trusts. Other services include Internet services, mail forwarding, wills and probate. Turner Little’s vision is to offer the best possible service, together with market leading products.