How to Collect Primary Data for Research in Business

Daunting, but doable

Few businesses can succeed without a competitive advantage, and having better information is one of the most effective ways to get ahead of the rest. There is a wealth of freely available information, and many sources can sell data on manufactured products or consumer preferences, but there's no substitute for going straight to the source. By asking suppliers, buying from the competition, surveying customers and issuing coupons, a small business owner can accumulate vast amounts of unique and usable data.

Things You'll Need

• A system for tracking your data.

Instructions

1. The first step to gathering information about your business is to determine what kind of information you need. All businesses have customers, and most have competition, so getting information on both is essential. Many businesses also make use of suppliers, and some rely on a labor market, but a large number of small, service-oriented businesses have essentially no supplies other than their employees, and many have only a single employer. To decide where to start gathering information, look for "pain points": if you're always a step behind other people in your business, start by researching your competitors; if you have all the business you can handle, but can't get enough raw materials in the door to keep up with your orders, focus on suppliers.

2. Start doing business with your competitors, to find out what they do differently. This is a common technique in the retail and restaurant businesses: business owners want to know how their customer service and visitor experience compares, and the best way to do that is to be a customer. It's also a useful way to reframe thinking about your own business: you'll have an easier time thinking like a customer if you've been one. Key things to watch out for: what are they doing differently that you could be doing differently? Are they providing more or less value for the money? Is there anything unusual they do that converts people into customers, or convinces customers to spend more?

3. Experiment with suppliers. If your business relies on an outside party for raw materials, it's a good idea to look at how other providers operate. This will give you some perspective on whether or not you're getting a good deal or good service, and it's also a way to find out if your competitors are doing anything new. For every major product you buy, call up at least one competitor to your current supplier, tell them what kind of deal you're getting now, and ask what they could do for you.

4. Give selective discounts to find out what your customers could really pay. This trick is popular at grocery stores and airlines. Airlines know that an empty seat costs about as much as a full seat, but that a flight might be worth $1,000 to one customer and just $50 to another. They'd rather have both customers, but they don't want to charge the same $50 rate. The answer for them is discounts on purchases made in advance and steep markups for purchases made when seats are in short supply. They also offer much cheaper seats at the last minute, but only to customers willing to risk not getting a flight at all.

   In other businesses, discounts might include a first-time customer discount, or a long-time customer discount; you might find that you get twice as much business if you charge 20 percent less, for example, or that you only lose 10 percent of your customers when you charge 50 percent more.

5. Surveying customers is also a method for finding out what they think you could do differently. Many retail establishments give customers survey cards; in some service businesses, it's easier just to ask.

Tips & Warnings

• Gathering business data is a long-term project, not a one-time task. Always make a note of new information you might find useful. If you have a competitive advantage already, try to find information that enhances it. If you're the leader in quality, you don't need to try to become the low-cost producer, too.

• Remember that your information isn't perfect. Customers may not want to be rude, and competitors may withhold useful information. Don't overreact to new information. If your company is unique, you don't want to give up a niche to become more average.

References

• Data-Driven Business Models