Opinions expressed by Entrepreneur contributors are their own.
Proper customer research is vital to the success of your business. One of the two most frequent causes of startup failure is launching without conducting proper customer research. It is undeniable that proper customer development research requires time and money.
Of course, there are plenty of other ways to research the market. One can analyze information on the Internet, study articles or speak with friends or other entrepreneurs. However, these may not be enough. Regardless, the lack of proper qualitative research can lead to business mistakes.
Negative impacts on your marketing strategy
Underestimate or overestimate your audience. It’s almost impossible to gauge the demand for your product without talking to people interested in buying it. For example, when Refocus was preparing its course for the Philippine market, we assumed that our audience was reskillers or people who wanted to change occupations completely.
In other countries, we targeted up-skillers or those who wanted to improve their skills, but since the Philippines is facing an enormous lack of digital specialists, we didn’t think this would apply to its residents. However, when we conducted customer development, we were surprised to learn that many Filipinos already work in the Data Analytics field yet still want to enroll in our course to become more qualified and consequently valuable and well-paid specialists. As soon as we discovered this, we came up with pitches and other creative materials to target them — and now we have them among our students.
Create ineffective target ads. In general, there are two possible targeting extremes a business can fall into:
- Trying to narrow the settings of ads as much as possible, specifying every little detail, and aiming to address only those who need the product
- Trying to appeal to a broader audience since many potential customers don’t go through the funnel
Because of customer development, you can create profiles of the general representatives in each segment and target people similar to them. Moreover, it is crucial in creating advertising materials as it allows us to understand our client’s values and pains, which we appeal to in our materials.
During qualitative studies, we appeal to the clients‘ Jobs-To-Be-Done and understand what problem the product is aimed to solve for them and what their fears are in reaching it. For example, people tell us that they value the opportunity to work as a freelancer — and we focus not only on their goal but also on explaining why it’s reachable for anyone who graduates from our course.
Problems on the product level
Products don’t align with clients’ values. For example, in the Philippines, traditional values are predominant: locals are religious and family-centered. We knew this from the beginning at Refocus but probably didn’t pay enough attention. One time, we conducted a webinar where the speaker dressed informally. The speaker was the perfect mentor and shared helpful information, but people kept leaving the website for some reason. It was only when we spoke to the students afterward that we found out that they thought someone dressed unprofessionally was not credible enough to teach them anything. Ever since then, we have asked the speakers to dress more formally.
The product will be unsuitable for your target audience. This mistake can have various dimensions, but in the case of educational courses, the most likely of them are the following:
- The program will be uncomfortable to acquire.
Even when the product is ready and seems to suit the audience, it does not have to be the end of qualitative studies. After we conducted customer development with our first students, we learned two opposite things: reskillers who were starting from scratch found Module 1 too difficult. At the same time, up-skillers got bored with the basics. Therefore, we changed the program by adding an Introductory Module where beginners learn more about data analytics and the field in general. This way, reskillers can start with the basics while up-skillers can skip and proceed to the more advanced lessons.
Moreover, customer development with up-skillers showed that they are usually embarrassed to admit that they forgot something from the beginning, even if they did. So this approach allows them to study something new for “revision” without showing they are having difficulties. Thus, we could kill two birds with one stone, making the course more educational and comfortable to study.
- The payment system will be determined incorrectly.
It’s impossible to determine a product price that everyone can afford just by googling the average salary in a particular country, especially when your product is expensive, like an 8-month course that helps you secure a new job without experience. So we talked to our clients, and to make the course affordable, we updated our payment scheme: we now offer no-interest installment plans where students can choose a longer or shorter payment term. The Sales Department saw this effectiveness as they described various cases when potential students were afraid of enrolling in the course because of its price. However, they changed their minds when they were informed about the payment scheme options.
The product won’t fit your customers’ lifestyles. This is especially the case when you’re entering foreign markets where cultures differ from what you are used to. For example, in Mindanao, one of the island groups in the Philippines, most residents are Muslims who pray several times throughout the day. Their prayer time changes, but it’s easy to determine when they pray in general. Because of this, we consider their praying time when scheduling our webinars or live sessions. The pretty obvious thing, right? But If we did not do this, we would have lost a considerable chunk of our target audience.
Spare no time and money on researching your audience properly. Otherwise, you will have to pay twice as much.