What’s the minimum viable version of market research?
It’s to know more than nothing.
Let’s assume you are interested in specializing in a market vertical. You have some evidence that the vertical is the right size, and it’s likely that companies in this vertical hire companies like yours because you’ve found some competition that’s also focused on this vertical.
Your ultimate goal is to connect and build trust with the right people within companies within this new vertical you’re going to specialize in.
To do that you’ll eventually need to be able to surprise them with the depth of your insight into their world and the boldness of your expert point of view on their problems.
But at first, you just need to get inside their heads a bit, enough to be able to prove that you understand what they struggle with.
To achieve this kind of insight, you may not need to speak to a large number of people in the vertical.
The following is from a book by Douglas Hubbard called How to Measure Anything: Finding the Value of “Intangibles” in Business:
There is a 93.75% chance that the median of a population is between the smallest and largest values in any random sample of five from that population.
This is called The Rule of Five.
It doesn’t guarantee that only 5 conversations will yield the insight you need, but it does remind you that you don’t need a ton of data in order to know more than nothing.
Very small sample sizes can often be very useful.
If I didn’t know how much Fortune 500 companies spend on custom software development, I would not need to sample all 500 of them. 5 randomly-selected data points would do, because it would get me much closer to a useful understanding of how much they spend on custom software development.
Remember, dividing any positive number by zero equals infinity. There is a sense in which any additional data is infinitely valuable to you, especially if you know nothing at all.
The minimum viable version of market research is to know more than nothing about the market you’re looking into. 5 high-quality conversations could be all you need to reach that first milestone of insight into your market.
- This rule of 5 thing is more relevant for quantitative data (stuff that can be measured with numbers) rather than qualitative data (people’s attitudes and feelings and beliefs). Market research often touches on both the quantitative and the qualitative aspects of a market.
- Even if you are seeking qualitative insight, this idea that knowing something is better than knowing nothing can be very powerful. If market research is overwhelming you, break it down into a goal of 5. Talk to 5 people. Ask for 5 introductions. That kind of thing. Momentum begets more momentum, and starting small is often the key to building momentum.
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