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Understand your target customer: Know how to conduct market research and apply what you learn

Truly understanding your target customer is key to successfully achieving product–market fit. In order to gain the most relevant customer insights, you need to adapt your research approach to fit your product lifecycle. Below we outline four types of customer research that can help you at all stages of your product lifecycle, whether you are looking to identify your target customer, validate your value proposition, get product feedback or scale your customer base.

Four research approaches to help you understand your customer

Initial customer interviews to identify who your target market is and the market problem(s) you solve for them. Brand audits to determine whether your brand story and value proposition are being effectively communicated.
Continuous customer insights through primary research (focus groups, interviews, surveys) to inform product development and evaluate growth opportunities. Win-loss analysis to understand how your product is positioned in the market, the effectiveness of your sales process and how your product stands in comparison to your competitors.

Initial customer interviews (customer discovery)

In the early days, it is important to go out and speak directly with your potential customers. Too often, early-stage founders neglect this step when developing their value propositions and business models. As a consequence, they miss the opportunity to make small pivots that could eliminate obstacles down the line.

Speaking with your potential customers early on will also help you create a more accurate buyer persona and journey map for your target market. Producing these tools will help your team validate key assumptions on strategy, target customer, product and marketing communications.

To learn more about conducting initial customer interviews, we recommend our Customer Development Immersive course. It was designed to help startups identify their target customers, create a problem-interview script and develop a system for organizing and analyzing interview data.

Brand audits

In order to craft an effective marketing message, you first need to find out if your brand strategy resonates with your target customer.

The first step is to conduct an internal brand audit. Once you have audited your own brand, then conduct an external brand audit on three or four of your top competitors, exploring key factors such as their company values, functional benefits, key messaging and value propositions. You can use this sample template to develop your brand audits.

The insights you uncover will provide you with new points of product differentiation, as you verify your brand’s position against your competitors’. The insights will also help you understand how effectively your brand story and value proposition are being communicated to your target audience.

Continuous customer insights

The founder of LinkedIn, Reid Hoffman, once said, “If you are not embarrassed by the first version of your product, you’ve launched too late.”

Timing is crucial when building a successful business, and regardless of how much you validate and research your product or service, it will never be perfect. Therefore, the best approach is to give your target market a wireframe of what you’re offering—a minimum viable product—and continue to make frequent incremental iterations based on customer feedback.

Once your product has launched, you can use primary research (including focus groups, interviews and surveys) to gain the customer insights necessary to evaluate factors such as product appeal, features, pricing and distribution. This will help you uncover existing customer challenges and understand the changes you may need to make or generate concepts that could attract new markets.

Win-loss analysis

A win-loss analysis provides data-backed insights to help you understand why you have won or lost deals and adjust your processes to increase your win rate. It can give you a strong understanding of your strengths and weaknesses, which will help you better address customer needs and improve your product or service’s position in comparison to your competitors’.

The best source of win-loss data is not your CRM database—it’s interviews or surveys with your target customers. These interviews are unbiased and offer a full story, which is especially important when it comes to understanding deals you have lost.

You can begin your win-loss analysis in the early stages of your startup. As you become more established, you may find your analysis becomes easier, as you have a larger sample size to work with and a stronger win-loss program in place. Remember that your win-loss analysis should be an ongoing program, not a one-off project. It should be a collaborative effort, with buy-in from various teams, such as sales, marketing and product.

Apply what your startup learns

The market feedback your startup gathers through these methods will inform your choices and decisions about target markets, the specific functionalities of your product and how you talk about your product with your target customer (such as through marketing channels and messaging).

Doing market research on your target customer is an invaluable tool that should be continually employed, no matter the stage of your company. And don’t forget: The job is not done once you have collected your data. The more important step is acting on it.

 


By Pui Yi Ng and Bronwyn McCarter