Conducting market research is a crucial part of laying a strong foundation for your startup. Through market research you validate what you will build, who you will build it for, and how you will bring your product to them. But how do you do market research? We put together this guide on conducting effective market research.
One way to conduct customer discovery research is through connecting directly with potential customers to better understand their pain points, workflows, and goals. Here are some best practices for conducting great primary research through interviews, focus groups, or surveys:
Ask open ended questions. Steer clear of yes or no questions that implicitly or explicitly try to direct them to an answer. Instead of asking “would you like this tool?” or “do you have this problem” ask something like “what are the biggest challenges you face when doing X?”
Give rank order questions. Instead of asking prospects to make judgement calls on whether they like or dislike something, ask them to rank order their preferences. Give them 5 features or priorities that are on your mind and ask them to rank these in order of their interests. Doing this helps to better understand how the prospect thinks at a deeper level rather than a surface like or dislike level.
Focus on actions instead of words. To be friendly, prospects may say things like “oh your product seems easy to use.” Instead of taking their word for it, ask them to play with your product and observe their actions. Are they actually breezing through? Or does it take them a long time to find the next step on each page? Actions speak louder than words.
Notice the body language. Instead of just listening to your prospect’s words, also look for nonverbal cues. Where were there long pauses? Did their tone of voice show frustration? Were there particular questions that got them excited? Where did they talk more quickly and intense versus less so?
Understand the full context. No product or company exists in isolation. Of course your questions should be relevant to your particular part of the workflow or ecosystem, but it is still crucial to understand the full context of your prospect’s professional life. What other tools do they use even to solve other problems? Would these tools be competing with yours for budget? What other people do they work with who may be decision makers but not users? What are your prospect’s instincts? What are their main priorities? What KPIs are they evaluated on as a professional?
Be careful about representation. Are you talking to a diverse enough group of people? Do your surveys, focus groups, and conversations only cover a portion of your prospects? Is your data actually comprehensive?
Beyond direct engagement with your prospects, you can also leverage data from existing resources to better understand their behavior and the broader ecosystem.
Understand the other players. Use tools like Tracxn, PitchBook, AngelList, or Crunchbase to see comprehensive lists of other players in your space. Look deeply into their websites, press features, product, customer reviews, social media, content, and more to better understand what they offer and what they are missing and how you can build something differentiated.
Research the market trends. How has the need for your product grown over time? How have technological changes, cultural shifts, regulatory developments, and other tailwinds or headwinds impacted your spend? How will you articulate the “why now” for prospects, hires, and investors?
Size the market opportunity. How many people can you realistically reach with your product? How much can they and will they pay? What are they paying for substitute products now? From this, you can gauge the actual market opportunity you are going after.
Understand the go to market channels. Beyond the product itself, consider how you will reach your prospects. Which social platforms do they spend time on? What content do they consume? What style of communication do they prefer?
We hope this guide is useful to you in conducting your foundational market research as your build and grow your biotech startup! To read the full guide on taking your startup from 0 to 1, download the eBook here.