Throughout the business world, we measure and focus on many different things. There are entire industries built around understanding convictions, attitudes, and estimation.
Market research firms collectively spend $44 billion internationally trying to determine whether or not people are ready for a new additional crispy potato chip, or whether or not people look upon electric cars with affection or fear.
While I don’t think that all of this work is wasteful, I believe that much of it is — for just one reason. It’s not measuring the genuine, important thing. It’s not measuring behavior.
Without a doubt, it’s measuring a predisposition to do something, and that’s useful, but wouldn’t it be so much better to just look at the real thing? Anyway, we care about people buying a new additional crispy potato chips and driving electric cars, not how they feel about them.
Measure sales-related behaviors
If we want to be practical and get genuine outcomes, we should measure sales-related behaviors. Also, we look at what people are currently doing, not what they’re thinking. And we should focus our decisions on this hard behavioral data.
In the case of potato chips, we should look at:
- What snack-foods people are buying
- What an average grocery basket looks like
- Where people are shopping
We shouldn’t look at:
- Interviews/quotes from consumers (in which they describe what they like and why they like it)
- Sentiment/survey data on how people “feel” about different things
- Market research on common beliefs and attitudes related to our fie
Now you may think I’m being overly dogmatic. I don’t blame you for that. I would have thought the same thing if I had read this a decade ago, long before I studied neuroscience and did a deep dive into human cognition.
However, the research I’ve done, and the business experience I’ve had in the intervening decade, has convinced me that self-report and subjective assessments need to be tossed out of the business decision making process.
What’s more, attitudes and beliefs are the end-product, the distilled essence, of research strategies that are used wildly all through the business world. Every company that you see on the Fortune 500 list is paying firms billions of dollars for this data that is, at best, interesting and, at worst, misleading.
Rather of looking at this self-reported information, we should strive to put a version of the product or service we want into the world. That way we can see whether or not people will actually use it. Thinking about creating an extra crispy potato chips?
Create a small group of the product and rent a bunch of food carts at community fairs and farmers markets. See how well they sell. Give out samples and then ask people if they want a full pack for $1.50. That’s a real test.
Find a way to your future customers interests
Are you creating a social network for dog owners? First create a Facebook group and invite all of the dog owners that you are familiar with. Maybe you think that your new network’s secret sauce will be exclusive content from well-known specialists in the dog world.
Reach out to 10-15 of your favorite dog specialists. Get one of them to agree to posting a video exclusively for your group. Pay them if you need to. See how the group reacts to it. Do they love it? Are they asking if they can share it with friends? If not, maybe you need to rethink the key value offer in your application.
There’s always an approach to test the behavior you want your future users/customers to do. However, it often takes a bit of creativity and a lot of work.
In 2015, companies spent $44 billion internationally on market research. Last year also, venture capitalists deployed $128.6 billion internationally on thousands of startups actively trying to determine, through testing consumer behavior. That way they will whether or not people would really use a certain product or service.
This implies that more than 1/3rd of the amount of money that went into worldwide venture capital funding, was used by mid-and-large size companies to determine, through surveys, interviewing, etc., regardless of whether individuals are going to use some new product or service they were pondering.
It would have been a much better use of money to use those assets to devise and run actual tests for every one of these new concepts. They should’ve taken that $44 billion and seed-funded groups of people willing to create prototypes of the product or service they were pondering. While the majority of these projects would have ended up being failures, the companies submitting by this strategy would at least have had a real measure of whether their new ideas had any real legs. People will say anything. However, what they’ll do, oh that’s a different story.