Market research pays off for professional services firms. In fact, one of our original research studies found that firms that conduct systematic research on target client groups are both more profitable and grow much faster. Who doesn’t want that?
When I share this finding, the next question is almost always around what types of market research should be used. In previous posts we’ve discussed what type of topics should be covered and who should do the research. In this post I’ll cover the various types of market research available to you.
Types of Market Research
1. Secondary research
This is the type of research that involves searching out information that is already available. Someone else has conducted a study, and you are simply using their results. For example, you are considering offering a new service to dental practices and you want to know how many there are in your region. You might check with trade associations or state licensing boards to compile various estimates of the market size. Sometimes secondary research is publicly available and free. Other times it must be purchased.
Secondary research differs from other types of market research where either you or someone you hire collects original data. This is called primary research.
Secondary research is often used for estimating the size and growth (or shrinkage) of markets. It rarely provides sufficient insight to help you tailor your service or gain a competitive advantage for your firm. For those insights you will typically have to do primary research.
2. Survey research
Perhaps the most common type of primary research, surveys have become a fixture of the modern online experience. Survey Monkey anyone? The trick is no longer collecting the data. It’s knowing the right questions to ask and how to interpret the results.
Often, these online surveys involve closed-ended questions, such as multiple choice or rating scales. There is little opportunity to probe or ask follow-up questions.
Surveys work well for getting a little information from a lot of people. They seldom yield subtle insights, however, because the range of answers is pre-determined by the possible responses you allow. But they can tell you what proportion of respondents feel a certain way or share a specific characteristic.
In the professional services, surveys are widely used for client satisfaction studies. If you want to get more in-depth insights, though, you need to consider other types of market research. Think interviews.
3. Focus groups
Get a group of your target customers together in one place and ask them a series of questions. Voila! You have a focus group. Widely used in consumer products research, focus groups have the advantage of being both face to face (to observe body language, show prototype products or view sample advertising) and flexible enough to be adjusted on the fly by a skilled moderator. They can also be less expensive than individual interviews, as you are working with multiple people at the same time.
But focus groups have several limitations that make them impractical for most professional service applications. First, it can be very difficult to get a room full of executives to show up, let alone open up about their business in front of their peers. Also, since professional services typically have nothing to show, why bother? And a limitation of any focus group, of course, is that group dynamics can easily cloud the results — in the end you may not even get truthful answers to your questions.
4. Face-to-face interviews
Professional services firms are typically better served by interviewing representative members of your audience individually. Face-to-face interviews give you the flexibility to schedule busy executives (often current or potential clients). You can also tailor your interview questions to probe for answers and adapt to situational responses. This approach is perhaps the most effective source of data for professional services firms.
Face-to-face interviews, however, do come with a couple of important limitations. First, they are the most expensive interviews to conduct. A skilled interviewer must travel to the client, who could be located anywhere. Further, the interviewee may be reluctant to give up the extra time these interviews typically take.
5. Telephone interviews
Telephone (or increasingly video chat) interviews are often a better alternative for most firms. They offer almost the same set of benefits as individual face-to-face interviews but at a much lower cost. It is much easier for busy executive to take a phone call then to sit down for a meeting.
The main advantage lost in telephone interviews is the interviewer’s ability to read body language. But with the increased use of video (such as Skype) even that distinction is fading. It’s no wonder that phone interviews tend to be the best choice for many firms. We use them for many of our clients’ research projects.
Which types of market research should your firm be using?
It obviously depends on the questions you need to answer.
- Secondary research helps you judge overall markets and identify trends.
- Phone interviews allow you to zero in on individuals. You can gain an in-depth understanding of needs, attitudes, plans and reactions.
- Surveys help you bridge the gap between the two. For instance, suppose you have identified a service you can provide to clients who fit a certain profile. What percentage of the market fits that profile?
Research allows you to get practical answers to these types of questions. So it’s no wonder that firms that do regular market research often have a true competitive advantage.