Do you have a great business or product idea? Are you entertaining the idea of launching a startup? Perhaps there is no more exciting time than the spot you are in right now.
How do I know? I’ve been there. My startup idea just happened to be a market research firm, so I am very excited to share my expertise on both of these topics.
Startup market research can answer the common questions racing through your mind.
Combatting the excitement and potential of your startup idea are likely some seeds of doubt.
Will this work? Will customers buy my idea? What do I need to charge? How do I need to market it? How do I solve the cash flow issues? Is it worth my time?
The good news is market research can help a new business by solving some of your most challenging questions. Market research for startups can also help remove your doubt and give you confidence in making informed decisions based on facts and evidence.
Article contents - go directly to each section by clicking one of the links below
- What is market research?
- Primary vs. secondary market research
- Why market research is valuable for a startup
- Common startup challenges (and how market research helps)
- Best market research options for startups
- What is the process for a market research project?
- How long does startup market research take?
- How much does startup market research cost?
- What to look for in a market research partner
- Startup market research case studies
Very simply, market research is a process of collecting information on a product, service, business, market, or topic to apply that knowledge to help with data-driven decision-making (DDM).
Market research comes in many shapes and sizes. The two highest-level paths include qualitative research and quantitative research, which are both considered primary research.
Before we get into primary vs. secondary research, we’ll first cover the difference between qualitative research and quantitative research.
Qualitative research is not scientific and aims to explore topics and ideas. This would include a focus group with 6 participants or individual in-depth phone interviews with 10 potential customers.
Talking to 6-10 participants would be extremely insightful and provide you with a wealth of information to consider, but it will not be statistically reliable.
In no world will 6 people you chat with represent a pool of millions of potential customers.
If you use qualitative research, it’s essential to understand that it’s exploratory, which means you can dive deep, but the findings should not be broadly applied to large audiences.
Quantitative research is the opposite of qualitative. It involves statistics and numbers to create reliable and statistically significant information.
There are many common forms of quantitative research including online surveys of 400 respondents, phone surveys, in-person intercept surveys, etc.
This is critical if you are trying to test the viability of your startup.
Primary vs. Secondary Market Research
Is one better than the other?
Not necessarily. But both primary and secondary research carry specific roles, as we touched on before. Below, we’ll list a few key differences and benefits of both methods.
Primary market research
Primary research is data you are collecting on your own/custom. It is many of the methodologies we discussed above: online surveys, focus groups, intercept surveys, etc.
The top benefits of primary research include:
- The data is yours. You conducted the research, therefore it belongs to you. This works as a fantastic benchmarking opportunity for your brand. In order to grow, you need to be able to have a steady record of key data to work with.
- The data is fresh. Unfortunately, studies with great data that are from years ago don’t hold up. With primary research, the data is brand new and reliable.
- The data is controlled. Primary research ensures the data and entire research process is tailored to your needs. You don’t have to rely on outside sources.
Secondary market research
Beyond primary research, there is also secondary research.
Secondary research uses data that has already been collected to help with decision-making.
This might include Census data, customer database information, paid subscription services that give you access to data, online searches on Google to pull up past reports and information on a topic, etc.
The top benefits of secondary research include:
- The data is free/low cost. In many cases, the data found through secondary research is free, or low-cost.
- The data is varied. There are secondary data sources on countless topics. Whatever your company needs data for, it’s likely secondary research exists on it. However, this is not always true for niche topics.
- The data will save you time. It doesn’t make sense to run research on a topic you know already has fresh data. This saves you time (and money), but still gives you reliable data.
Why Is Market Research Valuable for a Startup?
You may not only be wondering how to do market research for a startup, but you may also be curious if market research is necessary for testing a new product, business concept, or service.
🚨🚨 Spoiler alert: it is.
There are many benefits that can be leveraged from a market research project. The key theme with these benefits is the ability to repurpose the data across various departments, assets, and uses.
Benefit 1: Helps with concept development
Do you have a general idea of your product or service but are unsure of the details?
Market research can help a startup with a variety of things around your concept:
- What should I name it?
- Which logo should I choose?
- What features of the idea should I offer?
- What features are not important?
- How appealing is the new product concept?
- Is it different or unique?
- Would you consider purchasing it? Why or why not?
And testing is relevant even past these beginning stages. Take a look at our ultimate guide to ad concept testing surveys, which can be used down the road to help market your startup’s campaigns.
You can also watch this brief video on the same topic:
Benefit 2: Marketing insight
Do you need to know more about what messaging to use in your marketing, or find out what is most important to your potential customers when they are considering buying your product or service?
Market research can help you formulate a marketing plan, including what source(s) to advertise to capture the attention of your target audience.
Maybe you are developing your website and want to test your homepage layout. Perhaps you are looking at running social media ads. Or maybe you are looking to run an ad in a publication.
You can use portions of your market research project design to test these to ensure you are on the right path and featuring messaging and imagery that resonates with your customer.
One of the most common product concept development survey questions is asking about how important factors are when purchasing.
You can ask about the importance of price, customer service, shipping time, expertise, hours, variety, or any other feature or benefit of your startup idea.
If you learned through the survey that your customers only care about shopping time, customer service, and online payment, you now have the 3 items you need to feature in your marketing. They become your lead messages.
Benefit 3: Strategy
This is a broader benefit, but market research will allow you to make higher-level decisions about your startup. Understanding how to do market research also means understanding the core principles of your business strategies.
- Do you need to shift the model of your startup from in-store to eCommerce?
- Do I need to change my business hours to accommodate evening customers?
- Where should my business be located/which market offers the most potential?
These are all more strategic questions where market research can guide you.
For more ideas to consider, read our blog Factors to Consider Before a Product or Service Launch.
Benefit 4: Profiling your target customer
So, what is a customer persona?
A simple survey can provide you with a ton of data on your target customer. You may find out through the survey that the profile of the buyer to target is female, aged 30-40, with children in the household, earning a household income of $100,000 or more.
This data benefits your advertising budget and marketing campaigns and prevents you from wasting money marketing to less fruitful audiences.
The profiling data points on your customers are endless:
- Demographics (age, income, gender, marital status, children, ethnicity, etc.)
- Behaviors (competitors used, how often they buy, what they buy, why they buy, etc.)
- Attitudes (feelings towards brands, emotional triggers to purchases, etc.)
- Geographical (where your audience resides/works - ZIPs, counties, DMAs, states, regions, countries)
Benefit 5: Choosing the right market
If your startup is a brick-and-mortar location (restaurant, bookstore, etc.), you are probably wondering where the best place to set up shop is.
Market research can help you define what area in your region offers the most potential for purchases. This could be accomplished with a simple survey that divides responses across 6 counties.
By asking a simple appeal of your concept or likelihood to purchase, you may find that 1 of those 6 counties is significantly greater to purchase your startup idea than all others combined
Benefit 6: Choosing the right price
Asking yourself, “how much does market research cost?” It depends.
Understanding price points is one of the most common reasons for commissioning market research.
It is true not only for startup research brands but also for Fortune 50 companies. How much is someone willing to pay for the product or service?
There are several ways to approach pricing in market research through systematic methods.
Unfortunately, the easy way of asking a respondent how much they are willing to pay open-ended does not work. Survey respondents are savvy and often view it as a negotiation session to lowball the value.
A market research company like Drive Research can help guide you on the best approach, whether the Gabor-Granger model or the Van Westendorp process. Each has a scientific way of reaching an optimal price point for your startup idea.
Benefit 7: Using the research for funding/investments
Before a venture capitalist provides you funding to fuel your startup, they often want to see data to ensure the money they give you will make it back to them. It usually requires third-party validation through market research.
Although this is not often a standard driver of commissioning market research, it is something to keep in mind for your startup.
Market research can be a powerful tool as you gear up and need additional investment funding to scale.
Benefit 8: Loan acquisition
Suppose you plan on going the more formal route by taking out a loan from a bank.
In that case, they will almost certainly require a feasibility study or some objective market research to help validate the potential success of your idea.
Banks are businesses too, and they want to invest in ideas where the lessee can pay back the amount borrowed in complete confidence.
Benefit 9: Eliminates risk
In essence, market research is all about reducing risk. Could you launch your startup without any market research and be successful?
Sure. If you found your start-up using market research and the valuable insights you collected, do you stand a better chance of success? Yes.
Take for instance these product failures from the last decade and how market research could have helped.
Common Startup Challenges Market Research Helps
While new businesses have a risk of failure, there's also plenty of hope they'll take off. The key here is understanding the issues before you get in too deep.
For this section, Drive Research spoke with business experts and owners about how to navigate these issues.
Challenge #1: Not having enough content
We'll put it this way: you can never have too much content for your small business website.
Content is the very foundation on which your branding strategy is built. Because of that, you must have plenty of resources on your site.
Startup company challenges can begin when you lack content for your website. This can mean not enough blog posts, effective landing page copy, and so on.
How Market Research for Startups Can Help
First, make sure your business has a website!
Recent research revealed a whopping 1 in 3 businesses still don’t have a website.
Without an online presence, you're missing out on significant connections with your base.
Secondly, ensure you have pre-written content you can use on your site in the early days.
As for the type of content? That will depend on your business objectives.
This step will take the stress off of having to churn out a quickly-written copy just for the sake of throwing something on your site.
Additionally, consider the user's experience from this angle.
- Is the content easy to read?
- Can the user quickly navigate to the content?
- Is the content relevant?
Marketing challenges for small businesses frequently arise when the answer to these questions is "no."
The best thing you can do when starting a business is to build a foundation of content on your website.
The more you can have potential brands and clients reaching out to you for new projects vs. you having to spend the time to develop new relationships cannot be understated. Invest heavily in your website content, copy, and SEO.
If you are considering starting a new business down the road, start writing today because all of that can be leveraged for your site.
Coupled with this suggestion, hire a solid UX consultant to review your initial website prototype to point out simple flaws, navigational issues, and layout concerns.
I did this in the first month of starting our company for a few hundred dollars.
The insights and ROI I received from our UX assessment were implemented immediately and still resonate with how we design our website design to this day.
The return and perspective of having a third-party user experience market research company evaluate your website or app cannot be understated and paid for themselves 100X over.
George Kuhn, Owner and President of Drive Research
Recommended Reading: How to Improve User Experience (UX) For Your Website
Challenge #2: Client/customer needs aren't being met
Your customers are the reason you have a business in the first place.
This is why customer needs must come first if you want your brand to thrive. Not only does this help with customer retention, but it also builds a bond between you and them.
Take this recent statistic, for example. Up to 78% of consumers will return to a company after a mistake if its customer service strategy is solid.
Small business challenges pop up when this strategy is forgotten.
How Market Research for Startups Can Help
Thankfully, customer satisfaction surveys can help you out here.
These surveys target your customers and reveal how they feel about your business. In fact, we think surveys are one of the best customer retention strategies to build brand loyalty.
With the survey data, you can:
- Improve customer service strategies
- Gain better insight into customer demographics
- Develop marketing/advertising campaigns
- Make a video of positive results using free video maker software or tools
Additionally, Raissa Simpson put it best, when she said, "Building a business always reminds me of the importance of being mindful of how to meet the client's needs without losing my own personality and creativity."
She continued, "I bring my years of experience as an artist while also approaching what I have to offer by listening first to feedback and then taking appropriate actions to our services.
People like to see that you listen to them and make responsive and responsible changes where needed."
Raissa Simpson, Artistic Director at PUSH Dance Company
Challenge #3: Your Niche Is Too Broad
It's good to have a big picture for your business when starting.
But if that picture becomes overly broad, you can end up juggling too many services and lose sight of your core business goals. While it's good to have ideas for your brand, this can be a challenge for small business and startup owners.
If you want to target a niche market, then you have to know what you're getting into.
- Do your research
- Locate your target audience
- Understand your capabilities: can you properly serve this audience?
“One challenge I experienced in my small business was narrowing my niche. It's easy to get excited and have the desire to serve everyone. Then overwhelmedness sets in." Says Robin Camarote of Robin Camarote Coaching and Consulting.
She continues, "There is so much need, so many ways to reach people and so little bandwidth to cover them all. Narrowing down who you serve and how makes delivering on your promise so much easier and dramatically increases the value you can deliver to a smaller group."
Camarote says, "Narrowing down my niche required personal reflection, some business coaching, and testing. I knew I had to love the people in my niche and want to help them."
She continues, "I also needed some input from coaches further down the road.
Their feedback helped me get clearer on the series I should offer. And lastly, testing and refining the offer is essential as you find the right words that resonate with your chosen niche. It's not a failure until you give up."
How Market Research for Startups Can Help
Conducting a market survey will help you narrow down the demographics you want to serve.
Aside from growing your business, a market survey can also:
- Aid in developing new locations
- New product or service creation
Since small business challenges can arise when you cater to multiple niches, it's important to focus on the market most relevant to your services. Eyes on the prize!
Additionally, Chauncey Zalkin, SVP of Marketing at HouseAmp, says "Be ruthless with yourself in questioning whether what you are doing is something people want."
Zalkin continues to say, "Is what I'm doing to promote my business just what I like, or is it going to clearly communicate the value in a way people will want to take action? Don't just do things because you hear you should, make sure in the early days you are doing things that are good for your business."
Challenge #4: You don't have enough clients/customers
Remember when we talked about how customers are the foundation of a business? Well, you need to make sure you have enough of them, too!
A common small business challenge is simply not having a populated customer base. This plays directly into our previous point--not having a solid niche.
If you don't know who you're serving, you won't have anyone to serve.
For instance, Gene Marks, President of Marks Group PC, told us “My business is project-oriented, not subscription-based, so we go from project to project."
Marks goes on to say their biggest challenge is to fill a big enough backlog of projects to keep their revenue stream growing, while at the same time performing current projects and looking for more work.
Marks has done this through diversification: hiring people to do services while he focuses on marketing.
"Many years ago when we were only a two-man shop (my father and I) it was more difficult to maintain this momentum. We are now able to do this with the people we have, but it's still a major challenge."
How Market Research for Startups Can Help
A useful small business administration tool to attract more clients is market surveys with target buyers.
The data collected from market surveys will reveal key insights that can help boost your outreach strategies.
Additionally, competitive assessments can be useful in understanding what marketing strategies work well for competitors (and what don't)
These assessments measure your rivals and are ideal if you want to survey non-customers.
There are many ways to collect data for a competitive assessment survey, but online surveys and IDIs are the most beneficial.
Challenge #5: There's not enough time in the day
Many times, startup business challenges arise because owners simply don't have enough time to allocate to each moving part. In turn, your business can (and probably will) suffer.
In fact, new businesses take roughly 6 months to a year to fully come together, so include that in your overall timeline.
Before you dive into your business idea, make sure you're ready for the following:
- Long(er) hours
- Researching relevant industry trends
- Juggling multiple tasks (website/social media management)
"Dedication, tenacity, and a bit of stubbornness were important for us [when] getting Recess off the ground. Be prepared to work long hours and work very hard to get your small business going." Says Jesse Daino, Co-Owner of Recess Coffee House & Roastery.
Daino continues, "A lot of people get into the food service industry thinking it will be an easy way to make some money. But any food service business comes with high daily operating costs. It takes a long time to build the customer base you need to make it profitable."
Daino recommends startups focus on reinvesting in their business to keep that customer base happy.
Best Market Research Options for Startups
When it comes to options for startup market research, you are never short of them.
Understanding the pros and cons of different market research methodologies is essential. What you are trying to learn will help guide you in which approach to take, qualitative or quantitative.
We’re only listing the best here, but we go into detail in our blog post 11 Types of Market Research to Consider This Year.
Or, watch our video for a short synoposis of market research examples to fuel your business growth.
Option 1: Online surveys
Running a concept test using an online survey (in my opinion) offers the best bang for your buck as a startup.
With online surveys, you can acquire a lot of responses and a statistically reliable sample for your decisions around your business model, marketing, and strategy.
The extensive data set will also allow you to slice and dice the data by demographics to truly understand what’s driving concept appeal and purchase intent.
We rely on only the highest quality online survey respondents, so you can be sure the data is top-notch.
Online surveys are affordable, timely, and can be run quickly, all of which are vital for a startup. One of the most basic types of startup marketing research, new product demand surveys are also versatile and can be used in any industry.
Option 2: Feasibility studies
This multi-pronged project is typically best suited for a development project or brick-and-mortar idea.
The key components to a market research feasibility study include a market analysis using Census data and 5-year estimates to help you understand where the market is going (is your target audience growing or shrinking).
Additionally, a competitve assessment of other businesses/products in your category is included, along with a survey of your audience. Feasibility study firms have a patented process they follow to help you understand the feasibility of your new idea.
Option 3: Market analyses
A market analysis uses all secondary research or desk research to generate information for you.
This is one of the components of a full feasibility study.
It focuses on Census data and publicly available information/articles on the topic. Again, with secondary research, like a market analysis, you are not collecting anything new. It’s information that exists online.
The tradeoff is that this can often be quick and inexpensive but may not be as relevant to your startup idea as a customized survey with relevant and very specific questions.
See our market analysis pricing packages, here.
Option 4: Competitive assessments
This is another piece of the full feasibility study mentioned above.
It takes a deep dive into your core competitors to understand key differentiators, pricing, product availability, and other data points to help you understand gaps where you may be able to stand out with your concept.
For more information, check out our Ultimate Guide to Conducting a Competitor Analysis.
Option 5: In-depth interviews (IDIs)
These are longer in-depth conversations you have with participants.
The participants might include potential customers, subject matter experts in your field, or other stakeholders. These are often 30-60 minute conversations held over the phone or through Zoom.
A research firm can help recruit and schedule these participants and even moderate the conversations as a third party.
Additionally, IDIs can often be a great starting point if you are dipping your toes into the startup waters and looking to go deep into conversations.
What Is the Process for a Market Research Project?
Although the steps differ somewhat depending on your chosen methodology, most market research projects follow a similar flow.
Whether it be ongoing research through pre or post-product development, the steps showcased below are what it would look like to work with a startup research firm to assist you.
However, if you are interested in DIY research, several of these steps would not be applicable. This process below primarily focuses on primary/custom research (qualitative or quantitative).
Use our list of free market research resources for start-up small businesses if you're looking to conduct something in-house.
Step 1. Define your objectives
It is critical to determine this before you start the marketing research process.
- What are your objectives?
- What do you want to learn from the research?
- How would you like to use the results?
Those 3 questions are a great starting point for requesting a proposal from a firm or thinking about launching the market research in-house. Design the study with the end in mind.
Step 2. Kickoff
Once you choose on a market research partner, they will host a 30-60 minute kickoff work session to explore those questions, walk you through the process, discuss the next steps, and answer any questions you might have.
An agenda is typically prepared for this meeting to help stay on task.
Step 3. Workplan
This is one of the first deliverables for your project.
It will outline key tasks, dates, and deliverables for both parties (you, the client, and the research firm). This document evolves and is updated throughout the study, so you know where everything stands.
Step 4. Design
This is likely the most critical component of startup research–and the key element of all our market research tools: garbage in, garbage out. Below is some survey writing 101 for you.
The design component involves hashing out the actual questions you want to include in the survey or interview guide.
This ties back to your objectives and what you are trying to learn from the research. It’s crucial to consider many perspectives when drafting your instrument for your startup.
- Screening/qualification criteria (if your product is targeted to females, you can disqualify males)
- Length of the survey to avoid dropoff or disengagement from the respondent
- Number of responses (minimum of n100, consider options for n400, n1000, n2000)
- Writing the questions in an unbiased manner
- Making the survey questions mutually exclusive and collectively exhaustive
- Types of questions (closed-ended, open-ended, ratings, etc.)
It is one area of the process where a market research expert can provide the best guidance.
If you do not design the survey well, it will ultimately reflect on your results, where you may misinterpret findings or wish you could have asked different/other questions.
Step 5. Launch
If you are conducting an online survey, you will need to find a survey platform to program your survey and a market research company with vetted/qualified respondents to receive responses.
There are online panel companies you can reach out to or full-service market research firms that can program the survey on your behalf in its software and field it to respondents. Very critical that you test the survey to ensure there are no typos, errors, routing mistakes, piping, etc.
We suggest running a soft launch to start the project by collecting about 3-5% of your total sample. Examine these results closely before moving to the full launch.
Step 6. Data collection
This is the process of fully fielding the research to your audience.
Many firms will offer live, 24/7 accessible data portals so you can check on the data and responses at any time.
These portals often tabulate the data into charts and graphs in real-time for you. Many allow you to export the data into Excel, PowerPoint, Word, or PDF.
Here is an example of a live client dashboard by Drive Research.
Step 7. Quality checks
This is another step in the process where a research expert can add value. Several checks are likely built into your survey to help with data quality (ReCaptcha, red herrings, etc).
However, there should also be data quality checks on the back-end around duplicate submissions for IP addresses, speedy completion times, etc.-- some of our most basic tips to quality check a data file in market research.
A quality market research company will have a checklist they’ll run through for you.
Data quality is a real issue in market research. Some respondents try to game the system to earn extra rewards or entries into a raffle but create bots, automated submissions, or try to take the survey more than once.
Several safeguards are put in place to avoid this.
Learn more about spotting poor survey respondents.
Step 8. Analysis
Once data collection is complete, you will want to dive in.
The analysis includes reviewing the tabulations and thinking through themes you’re seeing, reading open-ended comments to identify commonalities, and trying to understand the story the market research is telling for your startup.
With the analysis, try to cut and segment the data as much as possible. Take all your audience profiling questions and see how the likelihood of considering your concept differs by demographics, behaviors, attitudes, and geographies.
Step 9. Reporting
Once your analysis is complete, it’s time to draft the findings. These should be created as themes based on your insights. It is an excellent time to revisit your market research objectives and follow that roadmap for your report.
For example, if the market research you commissioned for your startup focused on the following:
- Is my concept appealing, will customers purchase it?
- What do customers like best about the concept?
- What do they like least about the concert?
- Who is my target customer?
- What source(s) of information will they use to learn about my concept?
You now have an outline for your report with headings centered around your key takeaways. Again, design your survey with the end in mind. If these are the answers you need for your startup, address them in your survey design.
Step 10. Recommendations
Now that you have the market research findings, it is time to consider the implications.
You have the what (your analysis), the so what (your results), and now you need to apply the now what (recommendations).
A trusted market research company can offer their expert recommendations to help answer questions such as:
- How can you apply market research to help your startup?
- Who should you target with your concept?
- What messages should you use?
- What marketing channels should you explore? What features of your concept do you need to improve before launch?
Step 11. Debrief
A market research firm will schedule a 30-60 minute debrief to walk you through the report and recommendations as a final step.
Even if you completed the startup research by yourself, it is still helpful to sit with another stakeholder or friend with some tie to your idea and get their thoughts.
Additional perspective can always be helpful, as it can bring other interpretations to your research.
What Is the Timeline for a Market Research Project?
There is often no concrete timeline for market research. Much of it depends on your scope of the research, how many respondents you want to reach, and the level of reporting (e.g., topline vs. a comprehensive report).
As a general rule of thumb, market research can be completed in as little as 3-days to a week and as long as 4-8 weeks).
If the scope is small enough (e.g., 10 questions to 100 respondents), you may be able to draft a survey, program it, and return responses within 24 hours with tabulations.
However, it’s important not to rush the survey design because if you have a limited budget, you only get one shot to reach out to respondents.
Because we encourage collaboration with startups to design the survey and ask the right questions after the kickoff, we often like to budget 1-2 weeks on the setup and design.
This is followed by 1-2 weeks for data collection to ensure the proper time for a soft launch, data quality checks, initial analysis, etc. A topline report can be completed within 1 week, with a comprehensive report usually taking 2 weeks.
How Much Does Startup Market Research Cost?
You won’t like this answer, but it depends.
Why? There are a lot of factors to consider. However, we can provide high-level guidance regarding what you would need to invest in market research if you are a startup with presumably limited funds.
That's why it's helpful to share your project budget. Doing so can save the back and forth of a third party creating a proposal, just for it to be thousands of dollars outside your budget.
Some more of my thoughts are below.
If you have a budget in the hundreds, it will be challenging
Market research is complex and takes years of expertise to master to do it correctly. Finding respondents for a study (that are high quality) can also be a challenge.
There are a lot of sites and panel companies out there that can provide you with an email list of respondents for a few hundred dollars.
They don’t tell you they won’t do your survey for free. Raffles can help, but they often want a reward per response (e.g., a $5 coffee gift card for their time).
What usually happens is startups buy these email lists because the price is attractive, send the invites to their survey through their platform, and receive no responses.
So, in the beginning, the price seemed cheap, but now you are stuck in a situation where you paid $250 for an email list to generate 1 response. That’s $250 per response.
Panel companies with vetted participants will also sell you samples of respondents for $0.50 or $1 per complete, but you have to be very careful with the quality of those responses.
Usually, if someone is willing to complete a survey for that low of a reward, they are taking hundreds of surveys a day, are sneaky good about knowing what will qualify them (thus lying on screeners), and will speed through your survey to end it as quickly as possible to move to the next one.
To do it right, you have to invest a little more.
Ballpark estimates and recommended budgets
A good ballpark investment for startup research is about $3,000. $3,000 is good, $8,000 is better. A budget of $10,000 to $15,000 is best.
With $3,000 in your budget, you will likely be able to commission a market research firm or consultant to help you...
- Design a short survey
- Have them program it on your behalf, launch it to respondents
- Obtain n100-400 respondents
- Have access to online reporting portals with the ability to export the results
The cost structure for market research goes up from there where $8,000 would include additional responses to your survey and likely some form of reporting and interpretation of the results with full consultation and management of the study.
The $10,000 to $15,000 is ideal for a single-component project.
With a consumer audience that will help you obtain n1000 in your sample to increase validity, allow the research team to prepare a comprehensive report, and experience a full-service project with the kickoff, debrief, and all of the bells and whistles.
If you begin adding components (e.g., I want to do a focus group and a survey) or you are looking to conduct a full feasibility study for a development project (includes market analysis, competitive assessment, and market survey), the cost would be beyond the $15,000 range.
Be willing to pay for the expertise and guidance
Although that amount may seem like a lot to get started for some, it’s better than launching a much larger investment into your startup idea and having it fail miserably.
That’s an investment of more than just money but also your time wasted over months or years. If you are going to do market research and are serious about your startup idea, do it right and hire an expert.
There are dangers to DIY market research
If you choose the do-it-yourself route (DIY), your results could be biased
Whether it's in how you phrase the questions to get the desired outcomes you want or the interpretation of the results where you see blue but the objective direction is red, you could make poor decisions without guidance from a market research firm.
Also, if you plan to use the results for funding or capital, the do-it-yourself market research tools will likely be an issue because a third party did not do it.
Learn more about the dangers of DIY market research.
Be aware of professional survey takers
There are professionals whose sole focus is market research day in and day out
These consultants are often trained in Voice of Customer (VOC) and customer experience (CX) and understand a project's nuances.
They have the foresight to see issues before they happen and prevent them. Market research can be tricky to design and tough to field. Consider hiring out.
What Should You Look For in a Market Research Partner?
This section is for you if you are considering hiring a professional to assist with your startup market research. Not sure what firm to hire that is the best fit for your needs?
Outside of price and some basic criteria, here are a few items to look out for.
Item 1: Experience working with startups
Working with startups is much different than working with massive Fortune 1000 conglomerate organizations. Your needs differ, you need more customization, and you need them to help guide you on best practices.
Some of the larger market research companies often lose sight of this and are so focused on execution they operate more as an order taker than a consultant.
Therefore, look for market research companies that specialize in small businesses or can share case studies of working with startups.
Item 2: Providing perspective
This is a bit of a unique one, but necessary. If you are looking at a company to assist, how did they start, were they an acquisition, have they been a corporation for over 50 years, etc.?
I think it makes more sense for your startup to work with another small business, startup, or relatively younger market research company.
They have been there, realize what you are going through, know what it takes, and the kind of perspective that can help you with your research design.
Item 3: Find a fast, agile, and efficient firm
Large market research companies are often dinosaurs.
They are stuck in their ways, refusing to be flexible or budge during the project.
A “nope, this is how we’re doing it. This is how we’ve always done it,” type of mentality.
Find a firm that is agile and willing to work with you to get you what you need to ensure every penny you spend on market research is worth it.
Item 4: Treats you like a priority
When you reach out with project requests and ask for a proposal, are you getting the sense you are at the bottom of their list?
Are they taking days, if not weeks, to respond to your emails and calls? Probably not a good sign of things to come.
I always say the best service you will get from someone is if they are either applying for a job or trying to sell you something. If it’s not an A+ experience, it’s all downhill.
Item 5: Overdelivers
This can come in many forms. Quick responses. Additional details. More suggestions. Guidance. Adding an additional cut on the reports.
Adding some insight to your findings. Whatever it is, try to seek a partner who gives you a little extra value throughout the project.
Startup Market Research Case Studies
At Drive Research, we have helped many startup brands create data-driven strategies based on the information collected from our studies.
Here are a few mini-examples of clients we have helped over the years.
- Case study #1. Drive Research worked with an app company to run focus groups and in-depth interviews to explore the appeal of a new adventure app that coordinated group treasure hunts. The participants provided feedback on likes/dislikes of the experience, navigation of the app, pain points causing dropout, and many other insights. The client could reduce his dropoff rates within the app that was increasing over the years and increase retention within the app to drive revenue. More on that story, here.
- Case study #2. Drive Research worked with a healthcare technology company that provided a patient portal to help manage IBD. The portal was developed to help coordinate care between gastroenterologists, primary care physicians, nutritionists, and the patient through a full 360-degree view of the patient. Our team conducted nearly 10 studies with this brand, leveraging the research in its marketing messaging to help grow the brand and acquire additional funding from Mount Sanai in NYC. More on that story, here.
- Case study #4. Drive Research contracted with a real estate development company to understand the potential success of a real estate analytics tool. The tool aimed to provide forward-looking metrics for brokers and potential real estate investors in different markets across the United States beyond what the competition offered. The research identified critical differentiators for the concept, optimal price point, and many other insights leveraged to launch the tool.
- Case study #5. Drive Research worked with a developer to manage a feasibility study on a potential senior living apartment building. The client wanted to understand if the investment would be successful, could the market sustain more apartments, what the rental rates should be, what amenities should be included, and what the property should lead within its marketing campaigns. The research was leveraged for funding, building strategy, and shared with the local economic development agencies to help with permitting. More on that story, here.
Our market research for those with startups has helped clients in the following industries:
- Property and real estate
- FinTech and FinServ
FAQs About Startup Research With Answers From Our Experts
The Drive Research team loves working with new businesses and startup organizations.
Based on their years of experience, I asked commonly asked questions they receive from these entrepreneurs. Here are their answers.
What is the best type of startup market research project for a startup?
In my opinion, one of the best types of market research for a startup company is in-depth interviews.
Regardless of a company's product, service, or target audience, conducting qualitative exploratory research (via interviews) will help inform business strategy and future direction. For start-ups, there are two primary audiences to consider for in-depth interviews.
- First, speaking with other businesses, organizations, or individuals who are deeply knowledgeable about a space you're looking to enter will be able to provide your business with valuable insight. Often, these individuals can also help save you from making costly mistakes based on their past experiences and industry knowledge.
- Secondly, interviews should also be conducted with potential customers. Individuals who are not invested in your company will be able to provide you with a valuable, unbiased perspective on what you plan to offer, and how you offer it. The feedback provided from either audience leads to a strong return on investment for this type of project for start-ups.
Oftentimes, the feedback you receive from even a single interview can make the entire project worthwhile.
Chris Coville, Director of Research
Should a startup conduct market research, and why or why not?
Before entering the market, a startup business should consider conducting market research.
Market research can answer critical business strategy questions like usage habits, perception of key competitors, satisfaction levels, measuring the appeal of a new concept/service, and more.
In addition to gathering information about competitors, market research can identify target markets, answer how to best reach target consumers, and test ads/messaging before entering the market.
Fine-tuning business strategies before entering the market can make your startup successful.
Emily Taylor, Research Manager
Does market research provide an ROI for startups?
It can, but it's too difficult to anticipate an ROI of the research. Research should be considered more of an insurance policy or risk mitigation plan.
Going into market research with the idea that research results will lead to an economic guarantee or revenue gain is not advised. It really should be considered more of an operational cost of doing business.
Typically the ROI of research isn't realized until after an organization observes the longer-term impact of a decision based on research results.
Here are a few examples...
- Did you decide to spend your advertising budget differently based on the research? If so, was your advertising successful?
- Did you pursue a new target audience or limit your target audience based on research findings? If so, was your targeting decision profitable?
- Did you rework your product or service offering after launch based on research? If so, did you see an increase in leads or sales as a result?
Professionally executed research will help you make better decisions and/or help make you feel better about your decisions.
Zach Adams, VP of Strategy
Final Thoughts on Startup Market Research
The best way I can summarize my thoughts on the value of conducting market research for a new brand, product, or service is with an analogy.
Picture yourself on stage in front of an auditorium of 1,000 people.
You walk up on stage, and the speaker tells you that you will receive a $1,000,000 reward if you can guess the most commonly mentioned favorite football team among the 1,000 attendees. And you have 1 minute to respond with an answer.
The anxiety kicks in. Your mind begins racing. You immediately start thinking through potential answers.
- The conference is in Upstate New York, so could it be the Giants or Jets? Or would it be Buffalo?
- But the speaker said football, so could it be college football, will people mention Syracuse?
- Or wait, if it’s football, could we be in a town where high school football is huge, and it’s a local school?
- But, the speaker said football, I hope she was asking about football and not “futbol,” as in soccer.
With only 60 seconds, you have to take all of those things into account and make an educated guess, or in this instance, maybe just an uneducated guess. How confident would you be in selecting the correct answer?
You blurt out the New York Giants 🙈🙈
Unfortunately, being in Syracuse, NY, about 5 hours from New York City, you learn the answer is the Buffalo Bills due to the audience’s location near Western New York.
You were close but not close enough, and you lost your chance to cash in.
At that moment, you think, wow, I wish I could go back in time and just send a text or quick poll to all 1,000 attendees and ask that question: What is your favorite football team?
Phrasing it that way, I could gather all of the responses and tabulate that data to give the speaker the exact answer and actually tell her that not only is the answer the Buffalo Bills, but it was chosen by 56% of the 1,000 people in this auditorium.
In that poll, I also asked about their favorite college football team, their favorite high school football team, and their favorite futbol/soccer team.
I also thought ahead and asked each attendee their age, gender, so if you want to know about the profile of a Buffalo Bills fan, I can provide that too. Basically, anything you want to ask me for $1,000,000 - I can give you facts and evidence.
Would you be more confident in your decision with that data or guessing in front of 1,000 people based on what you think you know? The answer is likely pretty clear.
Essentially that’s what market research for startups can provide.
Rather than basing a massive business and life decision to launch a new product, service, or business on internalized knowledge, you can go directly to your market and potential buyers and ask.
Instead of a sample size of 1 making decisions, market research helps you take a sample size of hundreds or thousands of potential customers to collect feedback to make data-driven decisions.
Do you think your startup idea or product is better than other options out there? Well, in commerce, better is the opinion of the buyer of the product, not the seller.
Contact Our Market Research Company
Are you a startup looking for market research assistance? The first step is to reach out to Drive Research with more information on your needs and some of the objectives you are trying to answer through a project.
Drive Research is a market research company based in New York. Our team will show you all how to conduct market research for a startup, and can help you choose the best option.
Would you like to learn about our market research services? Get in touch with us through the ways below.
- Message us on our website
- Email us at [email protected]
- Call us at 888-725-DATA
- Text us at 315-303-2040
George is the Owner & President of Drive Research. He has consulted for hundreds of regional, national, and global organizations over the past 15 years. He is a CX-certified VoC professional with a focus on innovation and new product management.
Learn more about George, here.