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This business coaching lesson discusses conducting customer research.

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Featured Coaching Excerpt - Notes & Transcript, Part 1
  • Definition Magician: Market Research - research into the size, location, and makeup of a product market.
  • Notable Quotable: "If you come from a place of truly wanting to serve your buyer, then being a market expert - not just a product expert - means being more knowledgeable than any of your competitors." - The Ultimate Sales Machine by Chet Holmes
  • Lesson Nugget: Use market research to determine whether your idea will solve a need for the customer.
  • Notable Quotable: "In a sentence, there's always a smaller number of "best buyers" than there are all buyers. That means that marketing to them is cheaper than marketing to all buyers. A direct-mail effort to 100 "best buyers" is obviously less expensive to market than a direct-mail effort to an entire audience of 10,00 "all buyers." - The Ultimate Sales Machine by Chet Holmes

[MUSIC PLAYING]

-Dan McKeena, what is up?

-What's up, man? How's it going, sir?

-Well, I'm doing pretty fantastic. I just wanted to say that you're looking extra patriotic today.

-Well, thank you. I do have some blue on, no red, little bit of white, but pretty close, I guess. Two out of three.

-Two out of three.

-Two out of three.

-Two out of three ain't bad.

-Two out of three ain't bad.

-Today, we're talking about consumer market research, and how to conduct it, the four steps to surveying the market here. And so I wanted to really pick your brain on this, because this is one of the huge topics as we get into identifying what parts of the market should we be targeting, and do we need this for pitching investors, things like that. But before we get into it, what it is market research? Can you give us a breakdown and a definition of what market research is?

-I'm going to give you the official. I'm going to give you the official definition here. "Market research is research into this size, location, and makeup of a product market." That's from Merriam Webster's dictionary. That's the official version.

-OK. So talk about other people that have identified what market research is. And so there's actually an author, Chet Holmes, bestselling author. He's the author of "The Ultimate Sales Machine." This is what he says, that "If you come from a place of truly wanting to serve your buyer, then being a market expert, not just a product expert, means being more knowledgeable than any of your competitors." So what does this mean, Dan?

-Well, first of all, entrepreneurship is just solving a problem. You're just solving the problem that people have, or you're fulfilling a need in a way that people are going to pay you. So market research is just figuring out a way to do that, and a way that works. You're finding the target market out there that's going to pay you for your idea. You're solving their need, and they're going to give you money for it.

-Sure. OK. So it's pretty important.

-It's kind of a big deal. Yeah.

-OK. So why is market research important? When are we going to use this market research in our path of becoming an entrepreneur, and starting our product, or starting our business?

-So whenever you are you have an idea, and you think is a good idea, I should run with this, this is going to help you decide if it really is a good idea. It's going to help you find that need in the market, probably distill that idea down to something that's real, as opposed to maybe a high level, doesn't really work, maybe down to a lower level. OK. This is what's really going to work. So if you are trying to do something product wise or service wise, this is what's going to really show you if this is a good idea or not.

-OK. So it's going to help you really identify, should I be doing this, or maybe should I rethink my strategy.

-Yeah. Yeah. And not only that, but this is what you're going to use when you start pitching that idea. So using that research that not only proved your idea, that's how you're going to prove it to other people.

-OK. So walk me through a couple different scenarios, specific scenarios, that we would actually be using this market research.

-So if I was trying to get a partner on board-- let's say I have this idea. And the idea is for wallets. I've got this new brand of wallet. It's a better wallet than the wallet that you have.

-I need a wallet.

-And sort of me knowing you, how am I going to get a partner on board to help work with me? Or, how am I going to pitch this idea to somebody that has some money that can give us that money, so we can start building these wallets. I need to have some market research in those venture capitalist meetings, in those partner meetings.

Even just trying to sell the wallet to begin with, I need to have some market research that shows this is a good idea. This is why my wallet is better than your wallet. And this is why you would buy this.

-Chet Holmes, he goes on to say with another notable quotable here, he goes on to say that, "In a sentence, there's always a smaller number of 'best buyers' than there are 'all buyers.' That means that marketing to them is actually cheaper than marketing to 'all buyers.' A direct mail effort to 100 best buyers is obviously less expensive to market than a direct mail effort to an entire audience of 10,000 'all buyers.' " So that's a lot of words there. Can you break that down for me?

-Well, this is huge, because maybe you do have an idea that works. But you still need to find the people that are going to pay you for that idea. So if you are running in lawn mowing business, you probably want to be in neighborhoods where people not only have lawns, but also have the extra money to pay somebody else to do their lawns for them.

So it's about narrowing down and finding your customers. He's talking about finding your 100 best buyers instead of 10,000 maybe buyers, because you're going to spend a lot of money trying to market to those 10,000 buyers to find the people that are actually going to work. If you figure out who those 100 people are, that are your best buyers, that are most likely to buy your stuff, it's a lot easier. It's going to save you a lot of time. It's going to same you a lot of money when you're trying to market yourself.

Featured Coaching Excerpt - Notes & Transcript, Part 2
  • Recommended Reading: Losing My Virginity: How I Survived, Had Fun, and Made a Fortune Doing Business My Way - Losing My Virginity by Richard Branson (entrepreneur, founder of Virgin Group, Virgin Mobile,Virgin Records, Virgin Airlines)
  • Notable Quotable: "[While starting Virgin Records] Nik an I spent a morning counting people walking up and down Oxford Street compared with the people walking along Kensington High Street. Eventually we decided that the cheaper end of Oxford Street would be the best site. We knew that we couldn't rely on people knowing about the Virgin Records shop and making a special trip to buy a record, so we had to be able to attract passers-by into the shop on impulse. At the exact point where we counted the most people walking along the street, we started looking for an empty property. We saw a shoe shop with a stairway leading up to what looked like an empty first floor, so we went upstairs to see what it was like." - Losing My Virginity by Richard Branson (entrepreneur, founder of Virgin Group, Virgin Mobile,Virgin Records, Virgin Airlines)
  • 4 Steps To Surveying The Market: 1. Design Your Survey 2. Administer Your Survey 3. Analyze Your Results 4. Say It On a Slide

[MUSIC PLAYING]

-What are some examples of like, what market research, what does that tangibly look like out in the real world?

-Well, I'm going to give you an ample example, I'm going to give you here.

INTERVIEWER: An ample example.

-An ample example. This is from Richard Branson's autobiography Losing My Virginity. He is the entrepreneur. He started Virgin Group. They've got the record label, they've got the airline, they've got all the different Virgin brands. This is the guy that started all this, right?

He says, while starting Virgin Records, Nick and I spent a morning counting people walking up and down Oxford Street, compared with the people walking along Kensington High Street. Eventually, we decided that the cheaper end of Oxford Street would be the best site. We knew we couldn't rely on people knowing about the Virgin Records Shop and making a special trip to buy a record, so we had to be able to attract passers-by into the shop on impulse. At the exact point where we counted the most people walking along the street, we started looking for an empty property. We saw a shoe shop with a stairway leading up to what looked like an empty first floor, so we went upstairs to see what it was like.

So first of all, this is from his book Losing my Virginity. Any entrepreneur out there should definitely go read this book. It has really good stuff in it, and it's going to really excite you to say you can make your ideas happen. But what he's talking about here is real deal market research.

Him and his buddy got out on the street. They were trying to set up their first record shop, because they had to set a record shop. Their first one, before the empire, this is when they first got started, and they went and found on the street where are there a lot of people. Because we want to be where there's a lot of people probably, because there's a lot of people, there's probably more buyers. So that's where we want to be.

So they just walked up and down the street. Found somewhere where, OK, there's a lot of people that walk around here, and then found space to rent, as far as where they put their record shop in.

-So are you telling me that they just physically they went out with like a notepad and just like were making tally marks on OK, for the last hour, 15 people have walked by. It's very low technology going on right here.

-They physically got out there on their own two feet and did thing, right? So nowadays, you can do things online, you can reach around the world that you couldn't do maybe back then, but you can still do it this way too. If you're going to have a retail shop, you can get out and find out how many people are actually here, and are these people the kind of people that would buy from you.

-So Thrivers, as you're getting out there, you can make surveys, you can get out there and just be tallying and taking notes, specifically on how many people are coming by, what traffic am I getting. You can get out there on the interwebs, actually out in cyberspace, and be sending out these emails of these surveys and things like that. And we're going to get into the four steps on how to conduct this market research, OK? So let's get into the four steps here, Dan.

-Yeah, the four steps here are step one, we're going to design that survey. Step two, administer the survey. Now we're going out and getting some results. Three, we're going to analyze those results, see what the results are telling us. And four, we're going to say it on a slide, because if we can't communicate that idea to somebody else, it doesn't really mean a whole lot.

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