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Using Market Research: How To Analyze Survey Data Test and Refine Your Business Idea

shoppingBefore spending thousands of dollars on developing a product and committing to months of exhaustive customer acquisition strategies it is worthwhile hedging your bets and learning how how to analyze survey data , use basic market research to test and refine your idea. A useful strategy to implement at the idea conception stage is concept testing.

Many businesses are now familiar with the Minimal Viable Product as popularized by the Lean Startup movement. Relying on this type of validated learning to make informed decisions is a key aspect of concept testing in market research. The objective of the concept test is for you to arrive at a crossroads of “Go” or “No Go”. If the learnings from your concept testing support your assumptions you can “Go” forward with product development. You can feel a little safer with the knowledge that you have minimised the risk of producing a product that nobody needs. If the learnings are not what you assumed you are faced with a potential “No Go” on your original product idea. Though you may take this feedback that you gathered during concept testing to refine your original idea and seek further validation.

Concept Boards 

It is common for large corporations to carry out concept testing when releasing a new product line or experimenting with product variations. The concept testing process typically begins with creating concept boards. A good concept board in the traditional market research setting is a visual board or poster that explains the new product to consumers. Giving them enough information so that they can have a meaningful reaction when asked if they will or will not buy. This same process can also be used to test and refine your business ideas. You may choose to build a simple landing page or test a small Google Adwords campaign that outlines your value proposition. This is a great way for you to test your own digital concept board.

Concept Questionnaires

In a market research setting the concept board is followed up by using a concept questionnaire. Questionnaires can be done by having respondents gathered in a central location to assess the concept board, possibly undertake some sensory testing and then complete a questionnaire. It is also typical to use a mail campaign where respondents are sent the physical product or concept board and then asked to complete a questionnaire after an initial assessment of the concept. You might be looking to keep your business idea’s testing or refinement costs to a minimum. Therefore it could be just as effective for you to use the landing page or AdWords methods. Then follow this up with a quick online survey to complete your concept testing. A simple questionnaire could be designed and sent to a sample of potential customers using email or data collection software programs like SurveyMonkey.

Measuring Purchase Intent

Usually a key question that is used to evaluate whether a new concept is a winner is called a purchase intent question.  It could look something like this:

Which of the below phrases best describes how likely you would be to buy the product for yourself?

I would definitely buy it
I would probably buy it
I am not sure whether I would buy it or not
I would probably not buy it
I would definitely not buy it

Large companies typically work off common benchmarks that include getting a top box score, which is also referred to as a DWB (“Definitely Would Buy”) of 25%. Whilst this is what large companies may benchmark you may have a much more lenient point of view. Your perceived benchmark to go forward would be dependent on a bunch of factors such as whether you are just starting out, the size of your target market, your price point and net profit margins. It may be a case that you simply need to measure the purchase intent of a very specific sample and you only need a much smaller top box score to give you the validation required to proceed with your idea.

“How can I use concept testing on my new business idea?”Businessman Holding Paper by pakorn at FreeDigitalPhotos.net

1. Create your concept board  
Whether you are testing a physical concept board, a landing page or a small ad campaign it is critical to focus on the quality of your concept’s description. Be aware of the need to clearly describe your concept’s value proposition in a matter of seconds. In other words what problem is your concept solving and how? Measure the click through rate on a Call To Action (“CTA”) button such as “Buy Now”, “Subscribe” or “Sign Up”.

2. Collect your data
The cheapest and fastest way to collect data would be to send an email to a sample of people that included your digital concept board and ask them whether they would pay money for your product or service.  You could also design a basic survey questionnaire and collect responses via a tool like Survey Monkey for little to no cost depending on your survey and sample size.

3. How to analyze survey data
Use a tool like DataCracker to create tables and charts that will provide statistical insights into things like purchase intent and other concept feedback. Use these results to share insights and findings visually with your team or potential investors.

What have been your experiences with concept testing? I’d love to hear your insights on this fascinating topic!

Image courtesy of pakorn at FreeDigitalPhotos.net

About Luke Ryan

Luke Ryan does marketing for DataCracker. He writes on the blog and works on community and coverage. He loves to answer your questions about all things DataCracker.