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GuidesCustomer researchHow to conduct customer research without breaking the bank

How to conduct customer research without breaking the bank

Last updated

6 June 2023

Author

Dovetail Editorial Team

Reviewed by

Jean Kaluza

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Without customers, your business wouldn’t exist. Everything in a business revolves around them (or should do), so customer research is an essential aspect of your business's success.

Customer research helps you to:

  • Identify potential clients

  • Understand consumer behavior

  • Make better decisions related to product creation, pricing, and marketing

Customer research can be expensive and time consuming. However, online resources to help you are increasingly available, making customer research more accessible and less expensive.

This article will cover a few ways your company can use customer research to its advantage without going over budget.

Setting objectives for your customer research

Research objectives help to keep you focused on why you’re carrying out customer research. Let’s look at a three-step process for setting customer-research objectives.

Defining the purpose of your research

Customer research aims to investigate and gather data on your customers to gain more knowledge about their needs. The exact purpose of your research will depend on your intended audience and research questions.

Generally, customer research is used to:

  • Generate new knowledge and insights about customers

  • Test existing business marketing strategies

  • Identify new market trends and patterns

  • Gather information for making business decisions

  • Evaluate the effectiveness of business policies and strategies

  • Develop new products and features

  • Identify new market opportunities and areas for growth

Identifying research questions

Research questions are the primary questions your research seeks to answer. They are the driving force in the research process and are necessary for accurate data collection.

In customer research, the questions should pinpoint what you want from your customers. These questions should be:

  • Focused on specific issues or problems that tie back to your central objectives

  • Researchable using secondary information sources for data comparison

  • Feasible for discovering and exploring in the set timeframe given for research

  • Complex enough to answer more broadly by creating enough room for discussion

  • Relevant to your business objectives and goals

Determining target audience

A target audience helps you focus your research efforts and minimize the chances of failure. It is defined as a group of customers a business wants to reach through research efforts.

The target audience should accurately represent your customers by including those more likely to purchase your products or services. For example, your target audience may be working women aged 25–34, earning between $50,000–$60,000 annually, living in the city, and passionate about healthy living.

The data used to define a consumer target audience could include (but isn’t limited to):

  • Age

  • Gender 

  • Educational background

  • Social class

  • Interests

  • Motivations

  • Goals

  • History with the product (where applicable)

  • Demographics

  • Buying history 

  • Consumption habits

Identifying low-cost customer research methods

There are many ways to conduct customer research and collect data. Pick a method based on your business type or mix several different approaches, depending on your particular goals. 

Here are some low-cost research methods you can choose from.

Online surveys

Customer research surveys, presented to the respondents through online forms, can contain close-ended or open-ended questions. Understanding how to combine question types is crucial to obtaining the required data.

To achieve more accurate results that are easier to analyze and reflect your clients' views, write simple, concise questions with no ambiguous language.

Surveys can get expensive, especially when paying for a specific targeted audience. Try cheaper alternatives like free survey tools such as Google Forms and leveraging niche-based sites like Reddit to post your surveys.

Social media monitoring

Social media has become so ingrained in our daily lives that people openly express their ideas and views without a second thought. Social media is a gold mine for conducting customer research because of the volume of information shared there.

You can identify themes in which your clients are interested, then evaluate their posts. For example, you can track mentions of specific competitor brands, or your own.

Social media contains a large amount of unfiltered content. Since it is unprompted, what people share tends to accurately represent their actual views. Social media is inherently free, so the value comes from which analysis and evaluation techniques you use to generate informed insights.

Website analytics

A business must deliver a positive online user experience to engage its customers. Conducting research through website analysis is a great way to determine the areas that negatively affect the user experience and keep customers from interacting with your brand. 

Website analysis involves evaluating how well your website works and making improvements to drive more revenue and leads.

With website analytics, you can:

  • Find new opportunities for improving your website’s conversion rate

  • Discover ways to improve your brand's rating in search results

  • Uncover your competitor's strategies which you can then apply to your business

Google Analytics is a free tool you can use to capture your website and app analytics. Its features and tools may be enough to get the insights you need.

User testing

User testing involves trying out your products on real users as part of the development process. During the testing phase, you can see how customers interact with your products which provides you with valuable feedback.

User testing shows you where your product succeeds and where improvements are needed. These insights allow you to iterate your products by helping you identify roadblocks and problems before development gets conceptualized.

In-person, live user testing can be resource intensive and expensive, not to mention time consuming. To curb these obstacles, tools like UsabilityHub, Userfeel, and Maze offer affordable virtual ways to build user testing into your product’s process.

Focus groups

Focus groups enable you to bring together carefully selected people to test your product, provide feedback, watch a demo or answer targeted questions. Ask the focus group questions about your products and services while showing them examples, and use their feedback to improve your offerings.

To conduct focus groups more affordably and within time constraints, recruiting friends and family of your internal team can be a great way to quickly gather insights without spending ample budget on incentives.

Interviews

Interviews provide an avenue for face-to-face meetings (in person or virtual). This allows for more natural conversations while you watch their body language. Your interview participants should be within your targeted demographic, or an existing or prior customer. However, these insightful exercises can be costly due to incentives, and take time to prepare for and deliver.

An alternative could be sitting in with your customer service team. You may even incorporate short interview-like questions into a customer service script to regularly capture insights. This helps customer service create a loop between product and feedback that is otherwise missed in typical product road-mapping and decision-making.

Keep in mind, however, your data will be slanted toward the customers reaching out for support, which may be more skewed toward negative sentiment.

Customer feedback forms

Customer feedback forms are a method of gathering well-structured customer feedback that will give you a better understanding of the overall customer experience and how to improve your product.

When conducting customer research, the feedback forms should contain simple, unbiased questions that combine open- and close-ended formats. Google Forms and forms embedded within exit or account-closing flows can be a more affordable way to capture the data you need without hindering your budget or the user’s natural flow.

Choosing the right method for your business

Building great products and services is only possible by knowing what customers want. Take time to understand who they are so you can gain actionable insights to inform your product development and marketing campaigns.

With so many customer research options available, select one that addresses your business objectives.

Here are some ways of choosing the right customer research method for your business:

Weigh up the pros and cons of each method

Evaluating the pros and cons of customer research methods can help you see a scenario from different angles and make confident choices about the best solution for your business.

Quantify your options by writing down the benefits of a specific method in the pros column and the downsides in the cons column. Scoring the totals of each column will help you determine if the method is worthwhile.

Consider the audience and research questions

The goal of customer research is to determine and address business problems and have a positive impact on your audience. Ensure your research is where your customers are by tapping into where they’re likely to naturally give feedback.

Assess available resources

Your research questions and the type of customer research you want to do will determine the resources you need. 

Customer research resources are divided into four categories:

  • Primary: Created by you

  • Secondary: Created by another business or entrepreneur

  • Quantitative: Generating data that is “countable”, e.g. number-based

  • Qualitative: Generating non-countable data, e.g. customer emotions

Identify limitations and trade-offs

Each research method has limitations. When selecting an appropriate method for your research, many practical concerns can influence your decision, including the time and money needed for the research.

Most bootstrapped businesses choose the cheapest and fastest method first, while enterprises and more mature companies use more refined, intensive methods to uncover powerful insights.

Conducting your research

Customer research will help you collect information about your consumers by asking them specific questions and analyzing their feedback.

Here is an overview of how to conduct the research process:

1. Design your research plan

List who will be involved in your research project and everything you plan to learn.

This helps turn your questions into the methodology and a step-by-step strategy that gets you the specificity needed for the project.

2. Recruit participants

To recruit properly, you need a firm idea of your product or service's ideal buyer or user. If you don’t yet have existing buyers or users, find a competitor and see if you can recruit some of their customers.

Develop a hypothesis and draw up validating questions around them to ensure they align with your company. If you have an existing user base, recruit a range of customers to get a balanced view of the market:

  • Those who have purchased your products

  • Those who have purchased your competitors' products

  • Those who haven't purchased anything

3. Collect data

Choose a data-collection method best suited to your specific research. Consider a method that will gather data that directly answers your research questions.

If you want to learn what is happening, quantitative methods like web analytics, polls on social media, or surveys are great.

If you’re trying to define your audience, learn their motivations, or assess why something is happening, qualitative methods like interviews and user tests are what you need.

4. Analyze data

Data analysis can reduce huge chunks of data into little fragments that make sense. It helps you find themes and patterns in the collected data for easier linking and identification.

Hands-on group discussion of ideas and thematic tagging exercises are fast, effective ways to analyze in a short timeframe.

5. Draw insights

Great insight should be grounded in real data, with no opinion or bias affecting data collection. When seeking insights from your research, understand the difference between fact and opinion.

Keeping insights actionable is important, especially if your team hopes to receive the same funding and support for future research projects. The best way to ensure research stays within budget is to have the mindset that the research should pay for itself.

Communicating your findings

Communicating your research findings is a critical part of the research process. Regardless of the research outcome, you need to deliver the results to your teams.

Here are some steps to follow when conveying your research findings:

Present your findings

Structure your report coherently and logically. This will help you:

  • Organize the information

  • Highlight the key points

  • Easily take your audience through the analysis

Your consumer research report should include findings, summaries, and recommendations on significant customer insights.

Share insights with stakeholders

When sharing insights with stakeholders, start with a business problem or research question of interest to them. It all comes down to understanding your audience, so consider sharing the most important information first to avoid losing your stakeholders’ interest.

If you don’t have an intriguing research question or business problem, share emerging trends with stakeholders. Trends are a great way to align strategies to your market.

Communicate implications for business decisions

Information transparency in a business creates trust, which is vital when changes occur.

After conducting customer research, communicate your resolutions to your teams and explain your decisions to your workforce and customers. Address how the solutions will help the business and speak directly about the changes your teams will experience.

Budgeting for your research

Every customer research project requires a budget. This allows you to plan how to apply for funding and what to spend it on. A good budget serves as an overview of your project and helps you lay out your project.

Here are some steps for budgeting for your research:

1. Create a research budget

The budget you develop should accurately assess the necessary items to conduct the project, along with their cost. Your research budget must contain direct and indirect costs for it to be a good indicator of the feasibility of your research.

2. Identify and minimize costs

In a research budget, there are two types of costs:

  • Direct costs: Solely used to execute customer research, such as tools, materials, research staff members, and travel finance

  • Indirect costs: Cater to expenses like the time and salary cost of the research team members

3. Prioritize research needs

How you prioritize your research needs depends on your consumer research objectives, goals, and scope. This informs how resources are allocated in a study, both financial and non-financial, and helps reduce research waste.

Expensive pitfalls to avoid

Customer research is a fairly straightforward process, but there are some key things to be aware of to get accurate findings.

Common mistakes in customer research

Here are some common mistakes that are made in customer research which can reduce your finding's accuracy and usefulness:

  • Choosing a research method before understanding your research goals

  • Putting the research methodology ahead of your business goals

  • Not identifying your target audience ahead of time

  • Asking respondents questions that do not match your methodology

  • Deciding on a specific type of analysis without a method in place

These mishaps can devastate your research budget and resources during the study and in the future.

Customer research may seem expensive and time consuming, but affordable tools are available now more than ever.

FAQs

What is customer research?

Customer research is gathering information about your customers to learn more about them. You can identify customer needs, behaviors, attitudes, and motivations with customer research.

Why is customer research important?

Customer research allows businesses to plan for market expansion and develop new marketing strategies. It helps a business adjust its products to improve customer loyalty.

How can I conduct customer research on a budget?

You can use free industry research data from online sources. If you have a customer service team, you can create short-form surveys to implement into their existing procedures.

What are the best low-cost customer research methods?

Many excellent options exist for obtaining consumer data on minimal funding, including data collection via social media and observation.

How do I choose the right method for my business?

Choosing the right method depends on the type of customer research you want to conduct. If you’re trying to determine what is going on, tools like analysis, web or app analytic tools, and closed-ended surveys can help you answer those types of questions. If you want to learn why certain trends are happening, qualitative methods like interviews are more appropriate.

What are the key steps in conducting customer research?

The customer research process involves the following steps: problem definition, method development, research design formulation, data collection, data preparation, and report presentation.

How can I communicate my findings effectively?

When delivering your findings, engage your audience using simple and clear language, examples, analogies, and visual aids.

How can I budget for my research?

Your research budget should contain core components like travel, tooling, staff, and equipment costs. Include direct and indirect costs.

What are common pitfalls to avoid in customer research?

Some common consumer-research pitfalls include: not setting clear objectives, asking too much information, poorly written questions, skewed target sample, and using the wrong tools.

How can I ensure the reliability and validity of my research results?

The reliability and validity of your research results will depend on how strong your research design is, the methods and samples you choose, and whether you conduct the research consistently and carefully.

Should you be using a customer insights hub?

Do you want to discover previous customer research faster?

Do you share your customer research findings with others?

Do you analyze customer research data?

Start for free today, add your research, and get to key insights faster

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