Startups · Web services

How to do market research for a service for other startups?

Duc Duong

May 23rd, 2016

I plan to create a service that will be used by other startups. Do you recommend some strategy to to market research for that?
A great idea is 1% of the work. Execution is the other 99%. In this course, we’ll teach you how to conduct market analysis, create an MVP and pivot (if needed), launch your business, survey customers, iterate your product/service based on feedback, and gain traction quickly.

Nadir Ait-Laoussine

May 24th, 2016

There's no better market research than actually selling the service (especially given your second articulation of the problem space). It tells you a lot more about willingness to pay for services.

While all startups are different, a common theme is that they move fast, and don't rest on decision too long. Additionally they tend to be at very different stages of funding and financial viability, making validation that much harder.

If what you're after is market sizing of the opportunity, then assuming you have a fully packaged offer that you think you can go out there and sell, then go out there and sell it.

Neil HereWeAre Want To find-close Business Online without competition Before They Google Search? We solve this problem 1(508)-481-8567

May 24th, 2016

Without knowing what you plan as a service, its a bit difficult to advise you on what to do but there is absolutely research to be done first.

As someone who does consult to startups and established businesses as well, I've seen first hand what can lead to failure for a startup and even a new direction for an established business.Consider the summary points below as a possible area to concentrate on and do research in BEFORE you jump in full steam ahead:

Why do so many startups not make it and shut down?

A)  Unfortunately, The startup forgets from the day of their idea that there is quite a difference between what you see as a great idea and a "needed something or other" that folks or businesses would actually spend money for. This unfounded "belief" in a market for their products is why a startup cannot sell and frankly why they do not succeed in the first place.

B)  Many startups don't have the inbuilt team sales person who loves to and can actually find real markets and, for the reasons of the target audiences, not the startups pitch, know how to acquire paying customers. Instead, if it doesn't do this, the startup goes around pitching to everyone as a "we have this, it does this, isn't that great,buy it" and usually the answer is No.

Its not a product Pitch that sells nor can it connect with what may actually be someone who, for their reason's not yours actually need the product or solution but, unfortunately, many startups think that’s what works.

C)  Nothing in their pre-business launch exploratory other than checking with friends and colleagues most of whom have no buying power is present or was done that actually deeply and honestly analyzed 

--who were the natural target markets
--what really are the markets issues that if solved were truly natural prospects for their "product"
--revealed an understanding of the issues each natural target audience faced and its resulting adverse "cost"
--understood if their idea had a real market and one that was on a large enough scale and if properly approached would say "Hey that’s me! I need that product, service, software, solution to solve my x issues so I can gain a better ROI, faster production, competitive edge, leaner operating, etc. I need to call these guys now"

D)  They said in justifying their reason for starting up that
 
--"there are x gazillion global prospects who because of their industry they were in and or the way they do business  could use the solution."
--"If we get just 3%, we are golden" and the dove right in with development, maybe even production for that "giant" market opportunity to get their 3% share

E)  They forgot to dig deeper, reveal what actual portion of that giant number they actually might logically fit into and then how exactly to ID the people to contact, how to approach them, what to say that could get powerful receptivity and how to define/implement a great acquiring paying customers approach to get those real opportunities as customers.

That's why they cannot gain traction and why so many startups fail.

So please consider theses as essential steps for research, validating the market and knowing that folks and enough of them  will spend money for your offering, not assuming that they will. REgards, Neil Licht


David Austin Relentless problem solver and innovator.

May 24th, 2016

Admittedly my wording "hard to do" was incorrect, and should have been reworded "hard to relay all the resulting nuances of the discovery process to the founder". As is evident in the rest of that message ... what I meant is that understanding the customer is so core to what will most likely be a number of pivots and key decisions during the initial stages of a startup that founders should be, at least for a startup, *very* intimately involved in that process. Very intimately, and if not so, if all they get from the market research is a report, they will miss out on key findings ... a ton of nuances ... too many to be listed in a report. That has been my experience ... what I've set out to do in a startup often looks nothing like what I ended up doing, and the process of getting to that better place was only possible by doing for example, customer interviews, myself. Of course, your experience may differ. As I said there are some things that can be parted out to 3rd parties such as AB testing ... demographic studies, market trend analysis, and other market research can also be parted out. You are also absolutely correct that most startups simply don't know how to do it ... or even what it would look like. So I see the market researching service being more of a consultant for those parts that I believe they must have intimate involvement. That said, it is clear now that I completely misunderstood what Danny was hoping to do based on the vagueness of his original request ... and "market research" doesn't really seem to fit what he's talking about at all now. So this is just academic, really.

David Austin Relentless problem solver and innovator.

May 24th, 2016

I was going to say marketplace type apps (like Uber or Airbnb).  Then I saw you just said you were using it for that.  Startups designed to create a new marketplace for goods and services are one of the more common types of startups so I think there is a fairly good market for it.  What does the competition look like?  Startups pay you?  Or do you make a % of the transactions?  You might want to provide both options.  Is the API dedicated to your financial institution ... is it a big enough player that anyone can integrate it into their services?

Just my take, it looks like a fairly large market within the startup sector, but I haven't really looked at who your competition would be or what their offerings are.

David Austin Relentless problem solver and innovator.

May 23rd, 2016

Very hard to do as a 3rd person.  It requires customer interviews ... getting to really know the customer ... and that's what they should be doing.  If they don't then they're not going to succeed.  It's probably the most critical part of a new startup ... knowing and understanding the customer, figuring out the correct pricing, and pivoting to meet the customer's needs.

What I do see as a very valuable market research service that you can provide however is an A/B testing service.  They tell you what the different things they would like to have tested, and you create the A/B tests.  I think there are similar services out there but by no means is it a crowded field.  If you can provide a simple turn-key solution ... especially targeted for business non-techie users to integrate with then you'll have a winner.  Most technical founders will roll that themselves ... but even then, they might have their hands so busy building an MVP that they'd gladly outsource it to you. 

Good Luck!  Please keep me personally posted if you do this as I like to keep abreast of startup-startups (startups designed to assist startups).

Duc Duong

May 24th, 2016

Hello, thank you everyone for your opinions and advices. 

I'm targeting a very small market so it's important to evaluate it correctly before jumping in. The service I plan to build is a simple/easy API for other startups to PAY their users (opposite from Stripe that helps you to charge users). The service also handles encryption and storage of sensitive data so other startups don't have to worry about all the hassle of PCI Compliant if they go that route. 

I know there's some demand for it (we need it for our business), but not sure if it's big enough to make it a standalone service.

Duc Duong

May 24th, 2016

Hi Neil, we needed it, built it, and used it for years. We are a market place where some users make money through the site, we use it to send the money to them automatically, to their bank account.

Neil HereWeAre Want To find-close Business Online without competition Before They Google Search? We solve this problem 1(508)-481-8567

May 24th, 2016

I googled "affiliates payment software", something very similar and looking sa lot like what you need to do. 15 established services/software add ons came back on the 1st page alone with another 5 pages offered to look at.  

You may not be alone in your offering at all and in fact competing with a few well established offerings. Regards, Neil

Duc Duong

May 24th, 2016

Neil, I searched the same thing but 99% of the results are affiliate tracking software, only one similar is Payoneer, but they are totally different solution. And I don't know why "affiliate"?

Our service is a middleware between startups and the bank. Money will go from startups' bank account directly to their users' bank accounts. It's the most cost effective way because ACH fee is zero for most banks.

Duc Duong

May 23rd, 2016

David, thanks for your response. I actually built that service for a startup and I thought to myself, even with my expertise, it took months to build. Not many startups have all the fund/expertise/hardware to do that job. I can create a shared service for many of them, which is much easier to integrate and cost effective so they can focus on their main idea.

The challenge is I know there's a market for that, but not sure how big that market is and if it's worth investing in it.