You started with a pain point, or a passion, or a hunch about a problem. Now you need to go out and learn as much as you can about whether the problem really exists, the extent of the problem, if people might pay for a solution, and who feels the problem most.
This section will introduce you to a number of research and investigation methods for building a solid understanding of the pain points, customer problems, and market opportunity. Evaluate your environment and capabilities to choose tools that will help you better understand the problem you are tackling before jumping into building a minimum viable product (MVP).
Quantitative research means using statistical techniques to analyze numerical data. For service providers, it generally means conducting surveys consisting of questions with a limited set of answers, and inputting those responses as numerical values to create a dataset. The analysis of usage data and patterns is also considered quantitative research.
Demonstrates the market opportunity
Paints a broad picture of a population.
Validates insights from qualitative research with a broader population.
Types of data
Demographics data: information about the individual and her household. Note that for a firm providing business-to-business (B2B) solutions, this will be “firmographics”, such as industry, company size, stage, financing, etc.
Psychographic & behavioral: Attitudes, opinions, values, product usage data.
Users vs Buyers: For B2B, distinguish between the economic buyer and other stakeholders involved as their needs are distinct.
Availability and use of alternatives :Products, penetration, pricing for alternative offerings and target customer usage trends.
Technology lifecycle adoption: Current stage of your product market in the adoption cycle. For example, will you be targeting innovators and add segments over time?
Qualitative research uses open-ended questions, conversation, and observation to glean customer insights and understand aspirations, frustrations, rationales, and preferences.
Methods can include:
In-person interviews or structured 1-1 conversations, “intercepts” with passersby or targeted potential users
Focus groups - interactive, facilitated small group discussions about participants feelings, opinions, attitudes, or beliefs
In-home visits - interviews with a participant held within their household (or place of business)
Ethnographic research - observing human behavior in as natural a surrounding as possible, such as watching a customer make a purchase or shadowing an agent as they go about their day
Qualitative research can include the following techniques to gather the data:
Present participants with examples of different transactions (e.g., school fees, bills), and ask how they would transfer (e.g., mobile money, cash) money to the intended recipients.
Present participants with concepts or product ideas that can be sacrificed or discarded if they don’t like or understand them. Ask participants their impressions and opinions.
Present participants with images of common expenses, and ask how they would allocate a hypothetical amount among the expenses.
Talk with both extreme and mainstream users of a product or service to understand the needs of fringe users that might be appealing or early adopters.
Ask people to show you their phone and walk you through how they send messages, use apps, play games, send money, pay bills, etc.
Stop people on the street or in a market to ask them questions. Great for testing smaller hypotheses, or understand context.
2.3 Customer research tips
- Publicly available data may be limited and fragmented, making it tough to collect a representative sample, and thus impossible to extrapolate results to a larger population.
- Data on existing behaviors is limited, so needs and preferences will be difficult to assess with just secondary research Infrastructure challenges usually make it difficult and expensive to administer surveys at a large scale.
- End-customers typically have limited awareness of products and services, and often negative experience with formal financial services.
- It’s important to build a culture of customer empathy, putting customer experience at the center.
- Pay attention to norms, whether religious, cultural, gender, etc. Avoid judgement and unhealthy power dynamics, and be aware of privacy and security risks around your presence or conversation topics.
- Make sure someone on your team speaks the local languages. Use visual aids whenever possible.
- Respect people’s time and consider incentives, particularly if you’re asking them to forgo work and daily income.
- Your team needs to get really good at listening closely to what customers say, repeating statements back to ensure understanding, and asking additional probing questions.
- You want to focus on understanding why customers find certain benefits valuable as this will help you better understand how customers think and what they care about.
- During customer interviews, different customers will use different words to describe the same idea, and responses will vary widely in how high-level or specific they are. Be prepared.
A persona is a hypothetical archetype based on real people that represents your target customers, which can help to ensure everyone in the company is aligned with the same target customer.
The key is to select specific characteristics of a number of people you’ve encountered into one holistic portrait.
Good personas should fit on a single page & include:
Name, photo, job, demographic data, and a quote that conveys what they care about
Needs, goals, motivations, attitudes, and behaviors
Frustrations and pain points with current solutions
Understanding and expertise in the relevant domain
Product usage context (i.e. smartphone in an off-grid village)
Technology adoption life cycle segment (innovators)
1. For B2C businesses:
Persona creation tipsLike any tool, personas can be misused or misunderstood, especially if they lack complete information or are based on pure speculation. Here are tips to create strong personas:
- Focus on the most valuable information to inform design decisions.
- View this persona as a first draft that will get revised over time. It's okay if it's not perfect.
- Refer to the persona as you make design decisions so the team has the person top of mind.
- Keep talking to customers to refine persona over time.
An empathy map is a collaborative tool teams can use to gain a deeper insight into their customers. Much like a user persona, an empathy map makes customers more concrete and relatable. The map can represent a group of users, such as a customer segment.
It is a good idea to complete an empathy map after the user research phase, before jumping into developing your value prop and identifying product requirements. It is a useful tool for distilling and organizing qualitative data from interviews, focus groups, etc.
The value that a customer derives from a product or service often extends beyond their direct engagement with a product, so it’s important to understand where you can engage them and influence choices.
Customer journey maps are a tool that captures an individual journey through a specific product or service experience. You can generate a map for each persona you developed for your target customers. This tool is best developed as a group to capture and synthesize knowledge, especially from those with experience in customer-facing interactions.
The customer journey mapping process
Understand context: determine which journey you want to describe with the journey map
Define the stages in the journey (i.e. awareness, selection, payment, upgrade)
Detail the touchpoints with your brand, product, and staff along the journey. Describe what the customer does at each stage
Fill in qualitative customer data (e.g., thoughts, feelings, attitudes) at each touchpoint
Understand your moments of truth, or highs/lows of experience that illuminate insights and opportunities
2.7 Other Resources
Seven steps of data analysis. A walk-through of how to approach data analysis.
Top Ten Tips for completing data analysis. A collection of tips and tricks for completing data analysis.
How to use Pivot Tables for data analysis. A very helpful tool for quickly examining the effects different variables have on each other
CGAP Customer Segmentation Toolkit and Workbook
Cluster Analysis and Segmentation – INSEAD Business School.
Latent Class Analysis – MarketResearch.org.
Market Segmentation: Conceptual and Methodological Foundations – Michel Wedel and Wagner Kamakura
Market Segmentation: How to Do It and How to Profit From It – Malcolm McDonald and Ian Dunbar
Rediscovering Market Segmentation – Harvard Business Review.
Segmentation and Positioning for Strategic Marketing Decisions – James H. Myers
Mystery Shopping Infographic - CGAP
Power of Micro-segmentation - CGAP
- Segmenting the “Bottom of the Pyramid” in Mexico - CGAP