One of the very most important activities in any software business is market research. This is true whether you have a clean-sheet startup company or a multi-billion dollar industry giant, as well as if you produce traditional licensed product, SaaS, Open Source, mobile software, etc. Building products which meet marketplace needs and that the target audience will really want to buy is fundamental to the business. If you don’t get this right, everything else is really a detail and success is rather unlikely.
Many things go into ultimately fulfilling these needs, but it all starts with market research. It seems the type of activity that anyone believes they can do, really. Go talk to a few current or potential customers, ask them what they want, go back and build it. Rinse and repeat. Right?
Well, not really. It’s true that anyone can do it–poorly. This is one of the areas that looks simple on the surface, but in my experience the ability to conduct this activity skillfully is one of the most scarce attributes in the technology business. So what does it take? How do you conduct market research so that your company will have a good chance to produce competitive or even market-leading products? Here’s a few things to think about:
Software Market Research Key Factors For Success
- Start market research even before you start building production code. Especially in startups driven by technologists, the tendency is to start with an idea driven by technical capability or need–which can be great. But it’s really important to conduct at least some initial validation in your target market before you go to far–this can really help reduce the possibility of a “false start”.
- Feel free to use existing products as a benchmark in this early research, unless you’re truly building something revolutionary. In the cases of revolutionary technology discussed prior to prototypes, comparisons with existing products can be difficult for potential users to understand.
- Early on, define your target market as tightly as possible. This will help you conduct research with the RIGHT people–wasting a minimum of time and increasing your odds of early market success.
- Get to know the market size, price sensitivity, technological competence, etc. and other attributes of your target market early on. This will help frame your early research discussions with prospects.
- Within the target market you have defined, strive to speak with a diversity of customers types within that market–defined by various geographic locations, company sizes, typical market adoption stages, etc.
- There is a tendency for most folks to focus on big customers. They mean more and their feedback should be weighted accordingly; but you in most cases you still need understand the full market diversity to maximize your overall return.
- This may be the most important point of all. You absolutely MUST eliminate your own biases–good market research is a search for the truth. It’s human nature (and a big danger) to use research activities to validate the ideas you already think are great. The ability to separate personal feelings and beliefs from marketplace needs is a key skill of great product planners/managers.
- Great market research isn’t just a function of adding up the “whats”; what is usually most important to understand the “whys”. Customers often cannot rationalize future technological possibilities with what they need today or their true long-term pain points, so they will often just ask for features/improvements relative to current products. In fact, customers often don’t even realize, or at least can’t elaborate their long-term pain points, as they’re often too busy just trying to keep their heads above water–which leads to short term thinking. This does vary greatly by their psychographic market adoption profile( early adopter, late adopter, etc.), however. So it’s REALLY important to know and understand who you’re talking to. Because of this the big payoff is in actually understanding their business and biggest problems, then using this insight in combination with technology to bring to the customer a great leap forward. If you understand the “whys” you’ll be far ahead of the of the majority of researchers who never get past the “whats”.
- Who should conduct the research can be a controversial topic in some companies. Professional Product Management should take the lead in most cases (if you have them), but it can be very helpful to include the software developers as well. Including the developers in early research can help get their buy-in on the results (which is a contentious activity in many software companies), but they can also add real value to the research by asking questions from a different viewpoint than the marketing folks.
- In some places there is controversy about the particular techniques used, whether to use quantitative methods such as surveys, formal qualitative methods such as focus groups, or informal meetings with prospects and customers. This is a longer discussion and the “right” answer depends on many factors such as budget, market size, technological complexity and much more. In most cases I lean toward informal customer meetings as my primary method in a software business. But the key thing to remember is whether quantitative or qualitative, formal or informal, always be OBJECTIVE.
- Lastly , if at all possible don’t set a “hard” end date for the research. Especially when using informal methods, the path to “truth” is sometimes long and includes several forks in the road. It’s important to continue until you’re comfortable that you’ve got results you can bet on.
That’s what I think it takes to optimize your market research activities in a software company. Many have done this well–and others not so well. Post your own story, questions or comments in the comment section below so we can continue this discussion.
If you liked this post please share it with you colleagues using the “share” buttons below: