A friend of mine is research director for a Wall Street firm that has been investing in restaurant chains in Europe, particularly in the United Kingdom. One night, he explained how he did his research.
“I walk into a restaurant at dinner time, eat a little bit, and count the number of people in the restaurant. I got to another restaurant, eat a little bit, and count the number of people in the restaurant.”
I suspect there are ultimately a few more layers and some due diligence in the decision making. But if a Wall Street firm can find value in this simple approach, it says that market research does not require a small CPA, consulting, or reselling firm to hire the Gallup organization to get valuable information.
There’s a good example in this field. In the 1990s, I moderated a series of presentations at CPA shows managed by Russell Flagg. These were titled, “Tax Software Shoot Outs,” and were held on the exhibit hall floors in order to build traffic. They were simple affairs. Each of the then-more-numerous tax software companies was invited to make 20-minute presentations to an audience whose members could seat themselves in chairs on the show floor.
One fact stood out: The number of people listening to each speaker correlated exactly with what was believed to be the strength of the vendors’ installed bases. Intuit and Lacerte (then an independent company) drew the biggest crowds. The smallest vendors drew the smallest crowds.
One of the latter was the former SCS/Compute, a company that marketed two tax preparation products, Tax Machine, and LMS Tax. Not only did this vendor routinely draw small crowds, most customers were in their 50s and 60s. It was a company with a small, aging client base. Our parent Thomson Corp., which later killed the products, later acquired SCS/Compute. A part of me always thought Thomson could have saved some money if someone had attended those sessions. Thomson later purchased Creative Solutions which, you guess it, had far larger crowds at the shootouts than SCS/Compute.
The lesson is not that research is simple, but that meaningful research is within the grasp of organizations with limited resources. Of course, small organizations are told they should be doing a lot of things, marketing, selling, installing, supporting clients, which they have trouble fitting on their crowded plates. Most small business owners probably get their fill of “You-ought-to-be-doing-this” lectures. But good business people find the time.
Market research can be as simple as counting the number of contractors in the Yellow Pages when you want to serve the construction industry. Maybe it’s driving down the street and counting the number of restaurants and their proximity to your office, along with the number of cars in the lot at mealtime. Or calling them up and asking them about their operations.
Of course, once you have information, then you have to have the ability to do something with it and the discipline to execute. Research may be the easy part.
