PAFI May 22 Research and Customer Development: Robertson

Research & Customer Development

@clairesayshiMay 22nd, 2014

Two types of research

• Market research

• Validation, part of customer development

Overview

Market Research

• Market research– Why is it important?– What are the goals?

• What is a “good market”?• Understanding competition

– Defining your competitive landscape

– Utilising competitor analysis

• Market research toolbox

Validation

• Why validate?• Identifying assumptions – what?• How: tactics for validation• Win some, lose some

– Validation vs gut: the danger of stacking the odds (Google Search example)

– My best ever validation success story

• Survey tips 101• Validation toolbox

Market Research

Why does market research matter?

• By definition, startups operate under conditions of extreme uncertainty

• Market research is a cheap way to learn• View it as an educational tool for yourself and your team,

not only for the purpose of educating investors, partners, customers.

• It’s the rational side of the coin - it is all very well to have passion, but if you don’t have the numbers to back it up your odds of success plummet.

Goals of research

• Clearly identify and quantify your customer• Understand your SUSCEPTIBLE market first, addressable market

second– What are your customers’ specific characteristics in terms of age,

profession(s), location, gender, etc.– How will you get in front of these users

• Clarity on characteristics of the market– Closed vs open– How is stuff sold in this market now? Agents, salespeople, supply chain

characteristics.

• Pricing (value and model)

Good, Bad… Ugly

Good Markets

• Reasonable to large size• Geographic & linguistic access• Perhaps regulated, but low risk

(idea not likely affected by reg change, low complicance burden)

• Customer is the decision maker• Within your breath of experience

Bad Markets

• Tiny size• Gatekeepers – education, government• Geographic or linguistic barrier• Highly regulated• Customer is not the decision maker

(kids products)• Highly specialised, but not your area

of domain expertise• Market in which you have no personal

network

Competitors

• Often hear “there are no competitors”. Wrong. Competitors are:– whatever people CURRENTLY use to solve the problem your

business is aiming to solve– Any company fighting for the same dollars from the same customer

• Competitors = free research!– UI– Pricing– Demand– New pain points (especially those your competitors cannot solve

easily! Social media is your friend.)

Favourite tools and resources

• Industry research:– Reportlinker.com– Forrester (some free, some paid)

• Competitor Analysis:– Alexa.com– Compete.com – Keywordspy.com– Google Keyword Tool (AdWords>Tools>Keyword Planner)

• Market sizing & trends:– See industry research, plus– Facebook Advertising target segment calculator (create an ad, set your target)– Google Keyword Tool again– Google Trends

• Friends with university library & academic research database access• Blogs of market leaders in your industry

Validation & Customer Development

Role of Validation

Why validate?

What to validate?

• Demand for product & from whom• Pricing• Marketing assumptions:

– Lead sources (agronomist example)

• Financial assumptions:– Conversion rate– Average transaction value/product mix

• Operational assumptions:– Key partnership opportunities– Supplier terms

How: Validation tactics

• Landing pages– Strikingly, Launchrock

• Digital advertising campaigns – beware, clicks do not equal $!– Facebook, LinkedIn, Google AdWords

• Social Media - again, Likes do not equal $!• A/B testing

– Visual Website Optimiser– Optimizely

• Customer interviews– Evernote with audio, – Video

• Surveys– Qualaroo– Survey Monkey

Gut vs Validation

• Google Commerce Search– We manipulated the forecast output until it gave the

answer we wanted– …and then we looked like idiots in front of our board

• Free Shipping– We tested it repeatedly via promotion – 40% uplift– Yielded 35% MoM revenue growth for 3 months post-

implementation, without any other promotional support

Effective surveying tips

• Free text is GOLDEN (although a b@#&* to analyse)• Be clear about length of survey up-front (“2 minute”, “3 question” etc.)• Test timing of your survey request

– mid-experience– Immediately after event, x-time after the event

• Test placement options: – In-app: Qualaroo or similar– Via email using any browser based tool

• Understand limitations of your sample:– AYTM awesome, but demographic a little biased

• Baseline from my experience: – No incentive: response rate around 10% is normal– Targeted incentive: up to 35%

Other validation resources

• Map your idea, identify assumptions & customer:– Lean Canvas

• Get answers to your questions quickly:– AYTM– Your own social media and email lists– Forums & open blogs (Hacker News)

• Find the right price point:– Priceintelligently.com

• Ideas on hypotheses and tests:– Patrick Mackenzie of Kalzumeus.com– Quicksprout.com blog

Thanks!

@clairesayshi