May 17, 2018
Small is still beautiful, but now a little less difficult: helping SMEs undertake market research
In 1990, I wrote an article for the Journal of the Market Research Society entitled Small is beautiful but difficult: towards cost effective research for small businesses (JMRS Vol.32 No.1 January 1990). The paper caught everyone’s imagination at the time and won the MRS Silver Medal for the best article that year in the Journal. A number of years later, in 1997, the article was selected for inclusion in the 50th Anniversary Milestones in Market Research edition of the JMRS. Its selection for this commemorative edition further highlighted market researchers’ recognition of the importance of the SME sector – defined as businesses who employ up to 250 employees.
Providing the SME sector with market research support has always been a challenge
The 1990 article was born out of a frustration I felt – having been a recent Chairman of The Market Research Society and prominent in the education and training being provided by the market research industry at the time – about the limited access SMEs had to market research. This sector is in the engine room of the British economy and consumer research, without question, helps business start-ups assess the potential of their business ideas. Before start-ups invest large sums of money in getting a business off the ground, they would clearly benefit from consumer research techniques that could identify their market potential. But down the years, very few SMEs have been able to benefit from what the market research industry has to offer.
Helping to reduce the SME start-up failure rate is a key goal
One of the main contributions market research can make is to reduce the high level of failure amongst business start-ups. Improving the survival rate of small businesses is a key role for market research. Research suggests that around 90% of new UK businesses survive for about one year, 74% for two years, but only 63% for three years or more. This means that in the UK typically over 20,000 businesses die in their first year. So, for many small businesses it is a roller-coaster ride: lots of excitement, but also much anxiety. It is estimated that the average SME owner invests around £17,000 of their own personal savings in a business start-up with – as we have seen – only 6 in 10 surviving beyond year three.
The SME sector is now of even greater importance to the British economy
Today the SME sector has become even more important than ever. There are now over five million SMEs in the UK compared to, amazingly, only 6,000 businesses who employ more than 250 employees. This means that 99% of businesses in the UK are SMEs and that 59% of all people in employment work in SMEs. In addition to the massive SME sector, we are now seeing a rise in the number of freelance and contract workers working in what has been dubbed the GIG Economy. Currently in the UK, there are over one million individuals working in the UK GIG Economy. Moreover, and importantly, it seems that working in the SME and GIG sectors is becoming attractive to younger people. We learn from recent research that 47% of millennials think that SMEs are the ideal size of business for which to work.
Getting time and cash-poor SMEs to engage in market research
Alas, many of the challenges in supporting SMEs I addressed in my 1990 article remain on the agenda today. Part of this challenge is convincing smaller businesses that the idea of getting consultative advice and using market research insights would be beneficial for their scale of business. For many, this type of consultancy is outside their frame of reference. They see the process of commissioning consultants and using market research experts as things the ‘big boys’ do. It is for the large corporates not SMEs. And we can see why this is. We need to remember that 72% of all of the UK SMEs employ no more than nine people, with 90% of the UK SMEs having a turnover of less than £1 million. Many see market research as a drain on their precious resources and a time sink. They tend not to step back and fully appreciate the need for good quality market research, at the outset of their venture, to assess the potential of their idea.
Access to market research is getting easier for SMEs but acquiring the skillset to apply new techniques remains a challenge
There is a lot of good news these days when it comes to SMEs accessing market research. Encouragingly today there is a wide range of consumer information small businesses can draw on to help them identify the size of markets and the mood of customers. In addition, the cost of many market research techniques is falling. There are low cost ways of doing small scale surveys and collecting qualitative research evidence using low-cost online technologies. Today market research is much more affordable for small businesses than in the past. But the less good news is that there remains the challenge I addressed in my original article – namely providing SMEs with the confidence and skillset they need to successfully apply these techniques to their own businesses. It is one thing to be able to conduct a low-cost survey, it is another to know how to interpret the findings and make the right decisions, and then take the appropriate action. So, the frustration is that small business owners, who have to focus on a wide range of different business challenges in setting up and running their business, often fail to get their head around how to apply consumer research finding to their decision-making. So, market research remains something that still tends to remain on the back burner or implemented in a half-hearted, often ineffective, way.
DVL Smith’s Excellence Tools
In response to the challenge of showing how today’s market research techniques can be successfully applied to improve the quality of the critical decisions SMEs must make, we have created our Start-up Success Blueprint: Seven Excellence Tools for Small Businesses Programme. This provides SMEs with a simple toolkit they can follow in using market research to grow their business. The programme provides a guide on how to be in the right place at the right time with the right product priced in a way that will allow the small business to build and grow. Specifically, our programme has the following Seven Tools:
The Differentiator Tool: How to start with a compelling irresistible offer
This is about helping SMEs stand out from the crowd and differentiate their offer from the competition. We show how customer feedback can be used to create a product/service that provides transformational value.
The Positioner Tool: How to play where you will win
Clearly SMEs need to pick a space in the market where they will excel. So, we provide a range of techniques to understand what is happening in the marketplace and what competitors are doing and help businesses decide on the positioning where they are most likely to win.
The Message Tool: How to showcase your brand
The brand is at the heart of what a business is all about. It is important for a small business to showcase its strengths and win with a compelling brand message. Specifically, we show how feedback from customers can be used to give a brand message the wow factor.
The Optimiser Tool: How to make the right product, pricing and promotion decisions
We look at how simple consumer research techniques can be applied to make sure that a business’s processes are lean, they are not undercharging, and that they always test out promotional ideas before they are introduced.
The Experience Tool: How to deliver outstanding customer experience
We demonstrate how to create a great customer experience. Specifically, we show how SMEs can identify and monitor their performance at each customer touchpoint. We also explain how they can learn from what others in the marketplace are doing.
The Renewal Tool: How to keep pace with change
This tool is all about constantly adapting to the changes that are taking place in the marketplace. It is about helping businesses constantly change and improve by following the principle of success leaves clues – applying best practice
The Performance Tool: How to cultivate high performance habits
Success in setting up and growing a small business is about cultivating high performance habits – focusing on the right things in the right way at the right time. In this Tool, we recommend that small business owners use customers as their North Star in deciding where they should focus their efforts and energies to drive their business forward.
We have translated DVL Smith’s extensive experience of undertaking research for large corporations, and our knowledge of what are the critical drivers of business success, and converted this into an easy to follow, step-by-step, low cost guide for SMEs. We show SMEs how to make their businesses more customer-centric and thereby push up their chances of survival and success. Our blueprint will transform any small business and take them to the next level.