Regardless of the industry you are marketing to, it pays to understand your target market. Larger companies perform market research on a consistent basis using either internal resources, market research firms or both. Marketing the wrong solution to the wrong audience spells disaster for sales.
So When is a Good Time to use Market Research?
When Sales are Flat or in Decline
Even with the best intentions, we have seen industry veterans make assumptions about their target market only to find out the hard way they were off base. Logic does not necessarily equal reality. What worked one or two years ago is not working today. Something changed and you can't put your finger on it.
If you take the time to step back and research your target market, you may be able to identify areas where a course correction can be made. Even if you have a good idea of why the sales you need for growth aren't there, performing market research can validate your assumptions. Plus, you will probably learn something along the way, good or bad, that you didn't know before.
Entering New Markets
An existing product or solution that was a hit in one country may not do so well in another. Many of our clients from Canada and the U.K. have been surprised on how differently their offerings were perceived by the U.S. market. There were some simple things like changing the spelling of "centre" to "center" and other minor differences.
The major differences have been around how the insurance industry operates in different countries. For example, large solution providers of core systems understand this very well and have adapted their systems to work across international markets.
Technology matters as well. I don't know of many insurers that are interested in upgrading a core application such as underwriting or claims to a mainframe platform or legacy mid-range platform. We worked with a Japanese consulting firm last year and learned quite a bit ourselves about how their industry functions. Their insurance core systems still live on the mainframe and quite happily so. Would those core systems do well here?
Even if you are a hands-down expert in your target market segment, receiving an unbiased view of your target market will help gain confidence with your investors. You could do your own market research and you probably did when creating your value proposition. By having an independent 3rd party research your offering, the conversation is different. In our experience, the insurer is likely to be more direct with a 3rd party firm rather than the founder of a start-up who is extremely passionate about his company.
Anyone who has raised capital will tell you that setting expectations with your investors is key to survival. If you are making assumptions about what the sales cycle is for your solution - don't. Take the time to research and understand what a realistic sales cycle is for your offerings. Although some investors may not agree with your findings, you may be better off identifying those who do.
How Do I Get Started?
As you start your market research, stick to the key areas that are important to your business. Of course the most important area to understand is, whether or not your product or solution will address a critical need or pain point today? Or if your product or solution a "nice to have" or "necessary to have."
You may find that your solution is incorrectly perceived as a "nice to have" and steps can be taken to reposition it correctly. Another area to focus on is understanding how insurers within your target market research, evaluate, select and implement solutions.
Taking the time to perform market research to gather this information will help you better understand how your target market perceives your company, products and solutions.
Click on the link below to learn more about the market research process we use to help our clients validate their target markets.