How to Use Focus Groups to Test New Products or Services
When you develop a new product or service, it’s difficult to know whether customers will like it or how well it will sell.
Large corporations typically hire
research companies to test an offering before it goes to market with a sample of potential customers. These focus groups give honest feedback regarding what they like and dislike about a product or service, which can then be incorporated into its design or implementation. Although expensive (thousands of dollars), the process can save a company big bucks because it gets the offering right the first time.
Your small business may lack the marketing budget to hire a traditional market researcher, but you can use the same principles to develop your own focus group — and get feedback on your products or services before you offer them to customers. Here’s how.
- Select a group of participants. Enlist someone you know well to help you with this. Participants shouldn’t know you or be overly familiar with your business. The most important part of the process is to select an objective group of six to 10 people. An inexpensive way to gather a focus group is to post an ad in a free local newspaper or on a website like Craigslist. Offer a nominal amount of money ($20 or less) for participation. Send each person who responds a brief questionnaire to identify his or her age and interests. With your helper, select participants who most closely match the profile of your customer base. (Note: Doing this alone can allow bias to creep in without you even realizing it.)
- Choose a moderator. From this point on, you will be hands-off in the focus group process: A group moderator should present your product or service, ask questions, and collect data. This moderator should be someone who is not connected with your business and can operate independently. Choose an acquaintance who has business acumen and relates well to people. Focus group members need to feel comfortable enough to share their opinions.
- Collect the data. Decide ahead of time what it is that you want to know about your product or service. Do you want feedback on your price point? Do you want to know whether people find your offering useful? Design a series of questions that solicit this type of information. You can either videotape the group sessions or hand out written questionnaires to each participant. The benefit of taping the session is that you can hear voice inflection and see body language, which will give you further clues about how potential customers may react.
- Incorporate the feedback. Once you’ve collected feedback, what do you do with it? You may get wildly different opinions in your focus group, and you don’t have to make changes to accommodate every one of them. However, if, for example, six of your 10 participants say that they wouldn’t buy your product at its proposed price, you should consider changing your pricing strategy. Likewise, if most group members mention that your product was difficult to use, you may want to consider altering its design to make it user-friendly.
Setting up a focus group to assess your products and services can help your small business develop new offerings and predict revenues more accurately. It can also help you avoid costly product launch mistakes.
Angie Mohr is a Chartered Accountant, Certified Management Accountant and management consultant. She has worked with individuals, celebrities and businesses of all sizes in helping to create wealth and financial success. Angie is also the author of the “Numbers 101 for Small Business” series of books that cover every stage of a company’s life, from startup to exit. The Numbers 101 books have been translated into several languages and are sold worldwide.