A Comprehensive Guide to Market Research for Small Businesses

With market research, you'll never be short of options. Unfortunately as a small business, this means choosing the right market research approach can be easily overwhelming. Some larger market research firms may try to sell you the farm when you only need a cow. However, the best market research consultants will work with you to understand your needs and most importantly, help you define what your are looking to do with the data?

For example, is your small business looking for data to help guide marketing strategy including channels of choice, budget, and messaging? Are you looking to talk to your customers to understand their satisfaction and drivers to loyalty? Are you looking to attract new customers by better understanding new markets and their needs from a company like yours? All of these can be answered through market research but all would require a much different scope of work.

The first job of a market research company is to listen to your needs and offer advice. It's essentially market research on your market research.

As a first step, you'll want to ask the following question: does our small business want to measure or explore? Your answer to this question will help determine whether you need to start with qualitative or quantitative market research. Each have their own unique advantages and disadvantages but when coupled together, can prove comprehensive.

A Comprehensive Guide to Market Research for Small Businesses


Option 1: Qualitative Market Research

The goal of qualitative market research is to explore a topic. It's largely subjective and unscientific but it helps small businesses dig deep into motivations, emotions, and the "why" behind actions and decisions. As a general rule, qualitative research is typically the 1st step in market research before commissioning a larger quantitative study, although it's not a necessity.


Option 2: Quantitative Market Research

Whereas the goal of qualitative market research is to explore, the goal of quantitative market research is to measure. It's aimed to be reliable, scientific, and quantifiable. Its goal is to better benchmark specific measures and key performance indicators (KPIs) for your small business. These KPIs may include awareness, satisfaction, loyalty, competitor usage, or levels of customer service. Quantitative research covers a much larger scope than qualitative.


What Are Some Common Forms of Qualitative Market Research?

Qualitative research deals in smaller sample sizes. Remember, its goal is to dig deep into a topic and peel back the onion through what's often called root-cause analysis. It asks "why?" continuously. Although quantitative research can ask why it doesn't acquire the level of detail qualitative market research can offer.

Each of the methodologies chosen to feature below is accompanied by an evaluation of cost, turn-around time, and quality of data. These are subjective ratings for comparison. For example, conducting 2 focus groups is less expensive than conducting 8. Conducting 2 focus groups will be quicker than conducting 8. Conducting 40 focus groups would be more expensive than most if not all online survey you could scope.

The ratings for each are relative but aimed to help educate a small business on expectations.

  • The cost ranges from expensive, to average, to inexpensive.
  • The turn-around time ranges from long, to average, to short.
  • The quality of data ranges from weak, to average, to strong.

Focus Groups

Cost: Expensive

Turnaround-time: Average

Quality of data: Strong

Focus groups may be the most common and well-known form of qualitative market research. A focus group is a gathering of 4 to 12 participants for a discussion. Focus groups can last anywhere from 60 minutes to 2 hours. The focus group is led by a moderator who organizes and guides the discussion.

Focus groups need to recruit participants to sign-up for the discussion. This is typically handled through telephone calls placed to a list or through the use of an online survey for recruitment purposes. Depending on the make-up of your focus group, you may need to qualify participants (e.g., if you're holding a focus group with those who have used a competitor, you'll want to ask questions accordingly.)

The focus group lifecycle is broken down by a warm-up, introduction, main topics, and conclusion. In addition to the live discussion, moderators often use a participation packet for written activities. Participants are provided a stipend or reward as a thank you for your time. This can range, depending on the difficulty in recruiting participants. You'll have to pay more to recruit a focus group of doctors than you would college students.

Focus groups may be the most common and well-known form of qualitative market research.


In-Depth Interviews (IDIs)

Cost: Average

Turnaround-time: Average

Quality of data: Strong

Research interviews are another common form of qualitative market research. These can be completed in-person or over the phone. If conducted by phone it will save a small business money because less time is required for fieldwork.

Similar to focus groups, participants are recruited to participate in in-depth conversations which can last anywhere from 20 minutes to 1 hour. Interviews are pre-scheduled for a future date and time. Pre-scheduling interviews of this length ensure the participant sets aside enough time to devote his or her full attention to the research. Oftentimes when you call and conduct on the spot, respondents have another obligation or want to rush.

The interviewer follows a guide of pre-scripted questions. Unlike a survey, the idea is to fully explore answers before moving to the next question. The interviewer probes and digs deeper on responses for context and insights. The benefit of IDIs over focus groups is it allows the interviewer to spend more 1-on-1 time with participants. In focus groups, you are forced to share 2 hours of time across 4 to 12 participants. IDIs also eliminate any group influence or bias.

Still can't decide between focus groups or in-depth interviews (IDIs)? Here is some more information.


Ethnography or Observational Research

Cost: Inexpensive

Turnaround-time: Short

Quality of data: Weak

This form of qualitative research is often overlooked but can prove valuable when combined with other methodologies. This can be both formal and informal. Formal ethnography research typically leans more quantitative because cameras or tracking points are set up to measure interactions or traffic patterns in a store.

More commonly, informal ethnography is simply watching your customers in your store or branch. This could be as simple as stationing an analyst to sit near a teller at a bank or credit union to monitor common requests, common questions, and levels of customer service the teller provides.

Ethnographic research employs the mentality of "why ask when we can see for ourselves?" As a standalone methodology, it's weak because you'll record actions but you won't understand the context or detail behind why they happen. It should be coupled with another methodology.


User Experience (UX) Research

Cost: Average

Turnaround-time: Average

Quality of data: Strong

This has been one of the most popular and fastest-growing areas in market research over the past 5 years. As customers interact with brands digitally more and more (essentially 24-7-365), businesses understand their website and apps are crucial to the customer experience (CX.) UX provides a small business with context and the "why" behind all of the traffic data collected through Google Analytics.

UX research works as somewhat of an IDI where a participant screen shares or sits with an interviewer while he or she browses a website on desktop or mobile devices. Participants are given common scenarios to search for or find on the website while talking aloud. They are recruited similar to an IDI and focus group and UX participants are compensated for the time. Some market research firms have an expert UX analyst on-site who can evaluate your website using an audit in addition to the feedback received from users.

Is your website a critical piece of your business plan? Make sure it's set up for successful conversions and leads through user experience (UX) market research.

Here's how UX research produced a 665% ROI for this e-commerce website.


What Are Some Common Forms of Qualitative Market Research?

If your small business is looking to measure with your market research or wants to reach out to a larger sample of customers or non-customers to obtain statistically reliable feedback, quantitative is the route to take. If the budget and timeline allow, the proper approach to take is qualitative first, followed by quantitative.

Online Surveys

Cost: Inexpensive

Turnaround-time: Short

Quality of data: Average

Nowadays, online surveys offer small businesses the best ROI. They are inexpensive, offer a quick turnaround, and provide quality data if structured well. The process here involves drafting a survey document to review with your team. Once finalized it is then programmed into an online survey software and tested.

A few options exist for fieldwork and collecting data. One is to post the survey link online (website, social media, etc.) and create awareness around the survey and encourage participation. Another option is to create an email invitation if you have a list of customers or a database. If you opt for this route, in order to boost response rates you should plan on sending the initial invite with at least 1 or 2 reminders.

If you are surveying your customers, it also helps to send an introductory email or letter from your small business (President, VP, etc.) to explain the importance of the survey, what will happen with the results, and when to expect an invite. If you send an email invitation to a list of your customers, it is recommended you complete a pre-test or soft-launch to start. A small batch of invites to 100 customers or 1% of your list is a great way to ensure everything is working properly before you send the invite to all.

Don't have a list of customers or want to reach the entire market including non-customers? This can prove difficult to do through social media and other networks. Obtaining a strong enough sample size in the hundreds can be a challenge. The path you'll want to take here is using an online panel company.

An online panel company offers pools of pre-registered participants across geographies who are willing to participate in market research. Your business would design the online survey the same, but you would essentially "rent" the online panel to survey its members. You'll pay a cost per complete (CPC) which ranges depending on the incidence rate and complexity of the study (e.g., B2C is easier than B2B.) The online panel company handles all of the rewards on your behalf.

Time and respondent fatigue is a major concern in the market research industry, which has been driven by the saturation of the market with online and mobile surveys. Drive Research recommends not extending your online survey beyond 7 minutes as this has proven to be a major threshold for drop-out. Higher incentives can help but as a small business, you should focus on cutting your survey down to the core objectives. The trade-off is more data on the questions that matter most to your business.

All things considered (budget, time, quality of responses), it's tough to compete with online surveys.


Phone Surveys

Cost: Expensive

Turnaround-time: Long

Quality of data: Strong

The days of large-scale phone surveys are dwindling. Although the process is very similar to an online survey (drafting, programming the survey for computer-assisted telephone interviewing or CATI, testing, etc.) there is a large cost involved with administering the fieldwork.

For a phone survey, you'll need to commission a call center who will call on behalf of your small business and administer the survey to participants. These call centers will use a customer-provided list you own in-house or they can purchase a random list based on geographies and head-of-household (HOH) demographics. The decline in phone research is also correlated to the erosion of landlines and the difficulty in targeting cell phone samples.

The benefit of a phone survey is it allows for two-way communication. In online surveys, a small business is at the mercy of how much or how little a respondent is willing to type. Whereas with phone surveys your interviewers can communicate, clarify and probe on specific responses which help with analysis. The quality of the data is strong.

For an online survey, with one click of the mouse, your invite can go to hundreds of thousands of customers. They complete the survey at their convenience. Think about the amount of time it would take a telephone interviewer to speak with each of those 800+ respondents to capture those same answers by phone at 7 minutes each? Plus all the additional time spent on those who disqualify or refuse to take the survey. You can see how the additional expense (and additional time to collect these completes) are making this methodology a dinosaur.


Mail Surveys

Cost: Expensive

Turnaround-time: Long

Quality of data: Average

Another more ancient form of market research is the mail survey. Similar to the online survey and phone survey, the process works much the same. This survey is administered by mailing a paper copy of a survey to an address list.

Additional costs will be incurred from printing, stuffing, and postmarking envelopes to send the mail surveys, as well as data entry on the back-end. When your small business receives hundreds of survey completes (or more), someone will need to enter all of this data for analysis. A staff member of the small business market research company you hire.

Mail surveys are often chosen if it is a requirement from a higher authority (e.g., hospital surveys or HCAHPS) or situations where an organization cannot communicate with customers through any other means (e.g., some banks and credit unions promise to never email customers or members outside of account information.)


Intercept Surveys

Cost: Expensive

Turnaround-time: Short

Quality of data: Strong

Another form of quantitative market research survey is what's called an intercept survey or exit interview. The key benefit of this methodology is obtaining real-time feedback in-the-moment when an experience is occurring. As a small business, you can capture feedback immediately rather than waiting a few days or a week to send a survey. Because these often occur at an event (fair, concert, conference, etc.), time is crucial. It is recommended your intercept survey not extend beyond 3 to 5 minutes maximum.

One option is to have interviewers on-site to administer the survey via clipboard. This is easiest for the respondent because the interviewer can record responses quickly in writing. Similar to mail surveys, there is some cost in data entry on the back-end.

Another option growing in popularity is the use of tablets to administer the surveys using WiFi or mobile hotspots. This methodology saves on cost but inherits some risk with the technology working correctly when needed. It also takes longer for an interviewer to peck open-ended responses on a tablet keyboard than it would to write responses on a clipboard. Something to keep in mind and consider if your intercept survey captures open-ended comments.

Intercept surveys are excellent at capturing in-the-moment feedback at the time of your event. Why wait a few days or weeks to collect feedback when you can do it right there and then?


Mystery Shopping

Cost: Expensive

Turnaround-time: Average

Quality of data: Strong

This methodology is a little tricky because it can be both quantitative and qualitative. Mystery shopping is the process of evaluating a customer experience with trained professionals acting as real-life customers. As part of a mystery shopping project, a client and its small business marketing research firm creates an evaluation form of items to monitor (customer service, cleanliness of store, ability to answer questions, etc.) As a small business, you'll either need to recruit or hire a team of mystery shoppers (for quantitative) or use a market research firm and have their team complete the mystery shops.

One option is to provide a mystery shopper a scenario with no details and have him or her complete the experience. Then, as a follow-up the mystery shopper would complete an evaluation form.

A second option is to train the shopper before-hand and show him or her the evaluation form before the mystery shop so they are aware of what to monitor during their experience.

Each has its pros and cons. The first option is more natural. Here is an example we like to use to explain the difference. If you tell a mystery shopper to evaluate the cleanliness of the store beforehand by sharing the evaluation form, they may notice all of the dirt and dust on the shelves when walking around the grocery store. All of which negatively impacts their overall experience rating. However, if you didn't tell the mystery shopper before-hand to evaluate the cleanliness, he or she may never notice it and rate their experience much higher.

Which more is more realistic to true customer experience? Most likely the 2nd option. With a more natural approach, respondents will rate the overall experience on what matters to them and what they notice without any bias from the process.


In Summary

There is no right or wrong approach to small business market research. However, each methodology has its own pros and cons depending on what questions you need answers to, what audience you want to reach out to, what your budget is, and how much time you have. All things being equal, our team at Drive Research believes in-depth phone interviews (IDIs), user experience (UX) research, and online surveys offer tremendous returns and value for the cost.

Here is a summary and breakdown of each methodology described above:

small business market research comparison

 


Need Some Guidance from a Small Business Market Research Company?

Wondering which route to take with your market research? Drive Research is a small business market research firm located in Upstate New York. We work with small businesses across the country to assist them with their market research needs, but we happen to call Syracuse home.

Questions? Contact us at info@DriveResearch.com or call us at 315-303-2040.

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