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What Is Customer Research and Why Is It Important for Startups?

At the heart of your business is your customer, and to grow and scale you’re going to need to get to know them really, really well. Businesses get to know their customers better by conducting customer research.


What Is Customer Research and Why Is It Important for Startups

Here we cover everything you need to know about customer research and the methods to conduct it, and how it all ties together with customer segmentation and buyer personas.


What is customer research?

Customer research is the practice of identifying the preferences, attitudes, motivations, and buying behavior of the targeted buyer. Using a variety of consumer research methods to gather this information, shared traits among the different customer groups are identified and categorized into customer segments and buyer personas, which are then used to create targeted marketing campaigns.


Customer research is the key to improving your product and successfully marketing to customers who want to do business with you. Interviews, surveys, and other customer research methods are some of your best friends when it comes to helping your company consistently increase its revenue year on year.


What is customer segment

What is a customer segment?

A customer segment is a group of individuals who share specific traits relevant to marketing, such as age, location, gender, spending habits, and interests. The purpose of a customer segment is to provide a better understanding of how different groups of customers make purchasing decisions, and to allow marketing efforts to be more targeted and better tailored to those distinct groups.


Different customer segments may require different messaging, different communication channels, or even different pricing options. Additionally, customer segments can help a startup identify the most profitable customers, establish better customer relationships, and improve customer service.


Without identifying customer segments through research, your startup may not fully recognize the specific demands of your customers, resulting in missed opportunities and failing to gain a competitive advantage in your market.


What is a buyer persona?

A buyer or customer persona is a research-based profile constructed by analyzing real customers. A buyer persona is more than just a detailed description of your target customer; it’s built from the words of actual customers and provides in depth insight into who they are, what they value, and what their motivations are.


If you want to know what prospective customers are actually thinking as they weigh out their options on how to address whatever problem your startup aims to solve, you are going to need to create a buyer persona.


Buyer personas allow brands to better understand customer segments, and recognize the key traits within them, ensuring activities involved in acquiring and serving your customers are tailored to the targeted buyer’s needs. Unless your target market is extremely limited in scope, it’s very common to have a number of buyer personas within each customer segment.


consumer research methods

How to Conduct Customer Research

Customer research can take many forms, from notes your team takes on a daily basis (such as sales and customer support calls) to more planned and structured methods of data collection.


4 Customer Research Methods

Identifying the best research methods for your business may take some trial and error, but the rewards are worth it. Wherever possible, your customers should be grouped into customer segments to help you achieve the goals of your data collection.


1. Interviews

Interviewing customers who are going through different stages of their journey with your product can be time-consuming. Even though interviews may prove to be a significant challenge, they can also be one of the most eye-opening and valuable customer research methods your startup can undertake.


Interviews offer a high level of insight into the mind of the customer with very specific details on their needs, wants, and motivations as they relate to your product. This information is invaluable for any startup, but it isn’t always easy to obtain. The data collected from interviews can be used across all aspects of your marketing strategy for a 12-month period. After this time, you should begin the process again to account for changes in your business and changes to your customer base.


If you don’t have the resources to carry out interviews (or your customers won’t oblige), there are other ways to gather some solid data.


2. Surveys

Surveys might be the most commonly used customer research method, and for good reason too. Surveys don’t necessarily offer the same level of insight as interviews, but they are much easier to get customers to participate in and provide feedback due to their simple nature.

They are a quick and easy way for customers to provide feedback and feel their needs are valued by a company.


Surveys are conducted in a number of ways with varying degrees of effectiveness, but generally speaking, the response rate for surveys is much higher than interviews. Having a larger sample size makes it easier for a startup to recognize similar characteristics and patterns among consumers.


Some of the most common survey methods include retention email, snail mail, over the phone, face-to-face, in apps or website, and even through text messages on mobile devices.


Surveys can be self-conducted (the person responding will read and answer questions unattended) or they can be conducted by a person who records their answers.


  1. New customer survey

  2. Established customer survey

  3. Past/canceled customer survey

  4. Thank-you page survey

  5. On-page pop-up surveys

  6. On-site polls

  7. User testing

  8. Net Promoter Score


3. Analytics

Using analytics as a form of customer research is very different than interviews and surveys. Rather than focusing on what the customer says they want or need, analytics focuses on what the customer actually does. This is a form of observational research where the purpose is to measure the actual behavior rather than customer-reported behavior. It’s great to know what a customer wants, but sometimes they don’t even know what they really want or why, which is why it’s so important to track their behavior and make changes that get actual results.


  1. Google (e.g. bounce rate, time on page, traffic)

  2. Heat maps

  3. Click tracking

  4. Scroll mapping

  5. User recorded sessions


4. Review mining

Review mining is an often overlooked customer research method, but also one of the most valuable methods, especially in SaaS, when it comes to cost and value. Review mining is the process of researching reviews of competitors to gather qualitative data to improve your own product.


Unlike interviews and surveys, review mining doesn’t require that you reach out to your customers to get feedback. Instead, all the feedback is already published and readily available for you to analyze, making it extremely easy to acquire valuable data to help your startup gain a competitive advantage. In fact, it might just be the most effective way to not make the same mistakes your direct competitors have made, and identify specific features that make similar products sell.


  1. Amazon

  2. Review-based websites (e.g. G2 Crowd and Trust Radius)

  3. Forums and comments (Reddit, Facebook, LinkedIn, Product Hunt, blogs)


This is by no means an exhaustive list of the ways you can capture your voice of customer data, but it’s a good start if you’re not sure where to begin.


Why is consumer research important

Why Customer Research Is Important

Conducting in-depth research on your prospects and customers will help to give you a clear snapshot of who your customers really are. This can often be an eye-opener. Some companies sink their precious marketing budget into targeting their ideal customers when their actual audience is quite different – so all the money spent on marketing has little effect.


Say, for example, you own a second-hand shop. All your marketing efforts target the 30-40 age group who you assume is your ideal audience. They are shopping with an eco-friendly, sustainable mindset. You can’t understand why your targeted marketing is having very little impact on your sales.


After surveying your actual customers, you find the majority of them are thrifty 50-somethings looking for bargains – a completely different audience from the one you’ve been trying to attract.


Here are five good reasons to conduct customer research for your startup:


1. Builds accurate buyer personas

Now that you understand what a buyer persona is (see above), it’s important to recognize why they are so valuable and what they actually look like.


An example of a buyer persona might look something like this: Wendy, the 45-year-old single mom with 2 kids who earns a modest income and enjoys tennis. 


But what does this actually mean? The reason it is so useful is because it is based on actual research from customer data, rather than being dreamed up in a meeting room by marketers who think this is their target audience.


When you carry out regular customer research, you’ll have a much more accurate idea of the demographics that matter to your business. Building buyer personas based around this factual data have a far better chance of impacting your growth marketing than using educated guesswork.


2. Reveals the true voice of your customer

The voice of your business should mirror the voice of your customer (VOC), and your product should satisfy their needs. How better to attract your ideal audience than by using the language they use, reflecting back the pains they feel, and being there to help them find a solution to their woes. And by solution, I mean your product.


Capturing the exact words and messages of your customers by speaking directly with them is a goldmine for your marketing strategy.


A recent CoSchedule study revealed that:


  1. Successful marketers are 242% more likely to conduct audience research at least once every quarter

  2. 56% of the study’s most elite marketers conduct research at least once a month


3. Creates effective content strategies

Content is one of the reigning champions of marketing for the top of the funnel. But if you’re basing your content creation on what you feel like writing, what competitor sites are doing, or what an influencer website said was hot to write about right now – your content marketing might be in need of some help.


Your customers are exactly that – yours. They found you and subscribed for a reason, so why not find out what that reason was and ask them what they’d like to see more of?


Simple pop-up web surveys or a casual email asking readers what they’d like to read more of on your site can provide you with ample content ideas to fill up your quarterly calendar.


4. Improves conversion rates

Every great conversion expert knows that the best performing copy and design is linked directly to the customer experience.


Copywriters, designers, and optimizers all look to customer data in their process – from beginning to end. Long after the main project has finished, A/B testing still relies on customer data to pinpoint the weak areas and make improvements.


Design trends and best practices may change, but the one thing that remains constant is your customer.


5. Grows your startup

Audience research is crucial to your business growth. Keeping in touch with your customer base is one of the best ways to find out what you’re doing right, and how to pinpoint what customers see as flaws in your product or service. Customer satisfaction can be measured with the Net Promoter Score (NPS) system, which directly correlates with your business growth.


In conclusion, don’t underestimate the impact that regular customer research can have on your business, whether you’re at start-up or enterprise level. The data you collect can impact the way you build your product, market your services, and message your audience, all of which are directly tied to healthy and sustainable business growth.


 
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