Before you commit to life as a freelancer, it’s important to check that your business idea is as brilliant as you think it is. Obviously you believe you have the skills and experience required. Your friends and family have probably given it the thumbs up as well and told you to go for it.
That’s a great start, but the truth lies in what potential customers think and whether you can out-do your competitors. This is where market research comes in.
Customer vs competitor market research
Customer research is about understanding what your customers really need and would be prepared to pay a freelancer to do. These insights can help you to create a more compelling product or service offering. They’ll also help you to understand things like who would typically make the decision to buy from you, what they might spend, when they’re most likely to need what you offer and so on.
Competitor research helps you to define your place in the market and where you’re more likely to outdo the opposition. It can also reveal ways to add to your offering and identify opportunities to stand out from the crowd in a way that customers will value.
Direct and indirect market research
There are two broad ways to conduct market research. Direct research is where you work directly with customers and competitors (undercover) to find the answers you need. This type of research typically involves asking questions at interviews, focus groups and conducting surveys.
Indirect research uses information collected and provided by others. This might include consumer reports, government statistics, industry publications, academic papers, social media group pages and larger competitors’ annual reports.
Deciding which type of research to use usually depends on the questions you’re trying to answer.
Five steps for conducting market research
Good market research starts with clarifying exactly what you want to know more about, and ends with listing the actions you’ll take in response to the findings. Everyone does it a little differently, but here are the main steps of a typical market research programme.
1- Decide what you need to know more about
The first step is to identify what you don’t know, and to test your assumptions about customers’ needs and the market you plan to compete in.
Start with an initial definition of your target customer group. If they’re businesses, think about their size, location, seasonal activity and industry types. In the case of non-business customers, write down their typical characteristics, such as age, life-stage, interests, challenges, income and location. Describe how you think your freelance idea will meet their needs.
Now define your competitors. They’re the other freelancers and businesses serving your target group of customers. What do you have to find out or confirm about these competitors to ensure you’ll be more appealing to your market?
Sorting the things you want to find out more about into categories and investigating them separately can help to keep research activities manageable. It also pays to work out which categories you should research first, because those results might affect how you conduct research into other topics. For example, if you start by testing your assumptions about who your customers are likely to be, it will help to ensure you interview or survey the right people about other topics.
2 – Choose the best way to research each topic
Having identified what you need to find out, and grouped topics into categories, and created a priority order, it’s time to plan a research strategy for each topic.
Most topics can start with some type of indirect research. The internet is a great place to find what might be available. For example, to identify potential customers, check your competitors’ websites and social media pages for customer testimonials and Google ratings, portfolios of work, and blogs or case studies about previous projects. Having identified potential customers, you can start researching them to test assumptions and build your understanding of who they are and what they need.
Some topics may require direct research, either from the outset or to refine and expand on indirect research already conducted.
3 – Find people for direct research activities
Once you’ve defined your customer characteristics, you can recruit research subjects that match your criteria. Here are some of the ways to do this.
The grapevine: The easiest way to find people for direct research – such as interviews, focus groups and surveys – is to ask people to recommend others who fit your customer profile.
Advertise on social media: Most social media channels, like Facebook and LinkedIn, can display an advertisement or post to a specific audience. This makes it easy to promote your research activity to people who match your customer profile.
Use a market research company: If your budget allows, you can pay market researchers to recruit the right people and conduct research for you.
However you recruit people for your research, it’s important to double-check they match your customer profile. This can be done with screening questions before the research takes place.
Offering some form of compensation or reward for their time and honest responses can help to increase the number of participants. It can range from shouting them coffee while you meet, to something like a grocery voucher or a discount once you’re up and running.
4 – Carry out the research
It’s important to protect people’s identity and information at all times. Let them know how their responses will be collected, stored, used and disposed of.
The next essential step is to prevent any bias finding its way into the questions and analysis of the responses. For this reason it’s a good idea to have an independent person conduct things like interviews, focus groups and survey analysis. You can be present or even actively involved, but the third party needs to be there to check that your questions remain free of bias.
5 – Identify insights and act on them
At this point it is essential to keep an open mind and a willingness to accept where you were ‘mistaken’. If a challenging or disappointing picture emerges, focus on finding a solution rather than coming up with reasons to invalidate the results. Now is the time to find out if things aren’t quite what you expected, rather than after you’ve invested time and money in a certain direction. That’s why using market research is so important in order to validate your idea.
With each of your initial questions and assumptions answered or tested, it’s time to create a list of resulting actions. Conducting a SWOT analysis can help ensure your focus on action steps is broad and unbiased. Try to identify:
- Strengths that have emerged and actions required to make the most of them
- Weaknesses and the improvement actions required to remove them
- Opportunities that have arisen and what you can do to secure them
- Threats and risks that you hadn’t seen and what steps you’ll take to manage them
With your market research completed and fresh insights recorded, you’re ready for the next step in becoming a freelancer – finalising a detailed definition of what you offer and your target audience.
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Your Guide to becoming a freelancer chapters
- Chapter 1- Market research and validating your freelance idea
- Chapter 2 – Defining your freelance service and target audience
- Chapter 3 – How to price your freelance services
- Chapter 4 – How to write a freelance business plan
- Chapter 5 – Building your business portfolio
- Chapter 6 – Online presence and marketing
- Chapter 7 – How to manage your time as a freelancer
- Chapter 8 – Managing your finances as a freelancer
- Chapter 9 – How to choose the best insurance for freelancing
- See our guide to email marketing for your small business
- Should I buy an email marketing list?
- See our guide to registering a business name
- See our guide to creating a website
- See our guide to setting up a blog for your small business
- Create a logo, register a domain name and build a website with our Marketing Toolkit
- Registering as a sole trader in New Zealand
- Registering a company in New Zealand
- Getting a business number in New Zealand
- Setting up a business and getting the basics right