5 Market Research Strategies Every Small Business Owner Needs to Know from The Mom Test by Rob Fitzpatrick
Last week I met with a client who plans to open a spa in her LA neighborhood, and she told me she was confident it would work because she had asked her friends and family if they would like a spa in the neighborhood, and they said yes. That was all the evidence she needed.
While difficult, it’s my job as a business coach to make people think about the hard truth. I asked, “Are you surprised that everyone said they would like to go to a spa in their neighborhood? Because I’m not surprised at all. The idea of a spa always sounds nice. But thinking something sounds nice, and actually spending money for it are two entirely different things. Plus, the people you interviewed care about you, so they wanted to be supportive. Unfortunately, encouragement from friends and family isn’t evidence that your business idea is going to work.”
I felt guilty seeing her face drop as she realized her mistake. But I also knew that I had saved her from moving ahead with a very expensive business model without evidence that it would work. Luckily, I had recently read The Mom Test by Rob Fitzpatrick, and I had lots of advice to give her on effective market research.
If you’re a small business owner (or considering becoming one), The Mom Test by Rob Fitzpatrick is a must read. Here are my top 5 takeaways from this powerful little book.
5 Market Research Strategies Every Small Business Owner Needs to Know
1. Don’t discuss your business idea
Unfortunately, the common “wisdom” that you should ask people if they like your business idea— it isn’t wise at all. When you explain your business idea to someone, odds are high they will say they like it. Most people want to make you feel good, and they don’t want to step on your dreams. And even if you delve further with the interview with more questions, once you’ve told someone your business concept, they will focus their feedback on supporting your idea, even if what you’re selling isn’t all that important to them.
And while their desire to be supportive comes from a good place, getting inaccurate feedback on the viability of your business idea can be disastrous for an entrepreneur. You don’t want false positives that will lead you to launch a new business or new product that no one is willing to pay for. The goal of market research is accurate information, not the warm fuzzy feeling you get when pay say your idea is great.
2. Discover the problems your potential customers are facing
Market research isn’t about convincing someone they need to buy your product or service. That’s sales, and it comes later on.
Your goal for market research should be to find out if people have the problem your business will be addressing and if that problem is so problematic, they would be willing to spend money to solve it. To accomplish this, the questions that you ask should be exploratory and drive the interviewee to share about their experiences.
For example, if you were planning to open a plant shop in your neighborhood, you might ask the interviewee where they currently buy their plants and what they like and don’t like about the experience. If your assumption is that people will pay more for plants if they can get expert care recommendations—but no one you interview talks about wanting expert care recommendations—your assumption is probably wrong.
And you must resist the urge to nudge people toward the problem you’re solving. Don’t say, “But wouldn't it be nice if someone explained how to care for the plant when you bought it?”
The person is likely to agree with you and say it would be nice. But if they didn’t tell you they wanted expert care advice without prompting, odds are small that they care enough to pay extra to get it.
3. Avoid fishing for compliments
If the person you’re interviewing compliments you, then you know you’ve done a bad job of keeping the interview focused on them. Compliments happen when you describe your business idea or tell the interviewee how you’re going to solve their problem.
As great as it will feel to hear “I love that !” or “That would be great to have!” remember that people are predisposed to be supportive.
When you hear a compliment, you’ve made a mistake. In your interview notes, write down what you said that triggered the compliment and mark it for review. Then after the interview, reflect on where you went wrong, so you can avoid fishing for affirmations in your next interview.
4. Don’t ask how much someone would pay
If you ask someone, “Would you pay $X for this product?” and they say yes… you don’t have proof they’ll actually buy your product. First of all, they want to make you happy, and it costs them nothing to say yes – it’s not an actual obligation to buy. But more importantly, people are overly optimistic about what they will do in the future. What seems like a good idea now, may not seem like such a good idea when they have to turn over their money.
Instead of asking how much someone will pay for your product, you should find out how much effort they expend or how much money they currently spend to solve the problem your business addresses. If they don’t currently spend time or money to address the problem, it’s probably not something they care very much about, and they aren’t likely to buy from you in the future.
5. Always be prepared for market research interviews
You never know when you’ll meet someone who would be a great interviewee. Whether you’re at a conference, a dinner party, or playing pickleball – you might bump into someone who could give you great feedback.
To be prepared for that moment, you should have three key questions locked and ready to go. Interviews don’t need to be formal and they don’t have to take long. And while it might feel rude to do market research at a dinner party, if you avoid talking about your business and focus on asking them about their experiences, the “interviewee” may not even realize that you’re doing market research. You’ll just appear to be interested in them, and that makes you a great dinner guest!
Small Business Book Review: The Mom Test
The Mom Test by Rob Fitzpatrick is a great little book, and at just 122 pages it’s definitely worth the read. It is so important that entrepreneurs understand that compliments about your business idea are not evidence that your business will be a success. Fitzpatrick gives very clear, straightforward advice on how to conduct your market research, but he doesn’t stop there. He also gives advice on how to follow up with interviewees for sales discussions once you’ve launched your product or business.
I give The Mom Test a 4 out of 5 stars. It’s a very functional book, and a great starter for any small business owner starting their market research journey.
