Week 4: Raw Market Research (Meeting Notes)

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Week 4 brought us some yummy raspberry-almond cake as well as nifty hacks for market research. Like most CAKE sessions, this isn’t your conventional form of market research. We like to add an element of “get shit done” and mix it with a few crafty business hacks.

Market research is necessary, but a lot of the methods for market research that are common knowledge are decades old. They’re from a time when things were slower and acceptably more expensive.  The idea of launching a business for under $5,000 was ludacris.  The Internet didn’t exist, therefore we couldn’t communicate and work as efficiently.

Back then, you launched something that you invested loads of time and capital into. Time and capital that couldn’t be taken back. Due to this risk, it made sense to do an investigation of your market. All you had to make sure of was that there would be enough people willing to buy what you were selling.

What is the best test of something?
If you want to see how far someone can jump, what do you do? Do you ask them how far they can jump? No, you have them jump for you. The same rule applies when you’re going to be selling something. The best test is to actually sell it!

Then it’s the old chicken and the egg problem.  How can you sell what you don’t have, because you haven’t made it, because it’s untested?

There are a few ways…

Follow along with the handout that was given out this week or check out these few examples:

Serve Up Your Words

Timothy Ferris, when he was writing the 4-Hour Work Week used these methods to choose the title of his book. He used a couple of methods to make sure he was on target. First he would take out Google ads using different titles and copy and would examine what book title and description got the most clicks. To be honest, the “4-Hour Work Week” was one of his last choices in book titles, but it is what stuck with people the most. Then with name in hand, he tested out book covers by printing off variations and walking into a Barnes and Noble and slipping them over existing books and then would sit back and count which cover people picked up first. This valuable data helped his achieve #1 status on the New York Times best seller list and all he had to invest was a few bucks and an afternoon of his time.

Sell Someone Else’s

Zappos, known for being “powered by service” sold products they didn’t own yet when they were first starting out. They would walk into a local shoe store and take pics of the shoes and then post them online. When people purchased, they actually went into the store and paid full price for the shoe and then turned around and sold it for a markup. Their world-class customer service helped sustain their business through out the history of their company.

Graham used this method when opening Float On. First he wanted to make sure he could sell the concept of floating. He paired up with a local float tank operator and began sharing the idea of floating with people at parties. He’d sell these people time in the float tank and have then use a special coupon code to save $5 (this would make it traceable). When he started fully booking the independent tank owner’s place he realized there was a market for this in Portland.

First Make (N)one

Let’s say you wanted to sell t-shirts, but didn’t know which designs would fly with your customers. Start by making a simple one-off run of various shirts and set up shop at Saturday market. Make note of the designs people gravitated towards and when they were ready to buy, explain that you are sold out, but will be happy to take their name and number and contact them when you’re back in stock. Even though you never had stock to begin with, you now have an idea of what to order and an audience waiting to buy.

All these ideas are vast improvements over asking people what they want, which doesn’t yield accurate data because people will generally tell you what they think you want to hear. Unless you survey a significant portion and calculate your statistics correctly there is a possibility of sampling errors, and sampling bias.

If you can get potential customers to a sale, then you can start gathering information like

  • Specific marketing phrases that worked
  • Images that were popular among fans
  • Features people were looking for

Our great encouragement to everyone is to not think this is too complicated. Wake up by 10am on a Sunday, and without any intense technical knowledge, you can start testing whatever business idea you have by 2pm in the afternoon, at the latest.

Here are some things to keep in mind while you are testing:

  1. Don’t assume that because it doesn’t take much time, that it isn’t valuable.
  2. Don’t assume that because it does take a lot of time, it isn’t valuable.
  3. Start small and easy, and if that works, slowly grow out from there.

It will take time at the beginning, because you won’t be efficient at moving this fast. Work on going faster,  on thinking smaller, on testing closer and closer to selling.

Be a part of CAKE next week (Feb. 1st) as we make our official launch, complete with a guest speaker and possibly a Livestream feed. The topic will be “Covering Your Legal Ass.”

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