I’d like to share a quick and easy method I use, when I undertake market research for an online business idea.
It’s easy to get excited about a new idea or product you think will be the next big thing, but a bit of research up front is essential to avoid spending a lot of time and effort for little or no reward.
So what are the logical steps to undertake market research for an online business idea? Below is a quick method that I follow to break the task of market research into logical steps.
9 Steps To Market Research
- Describe the product or service
- What is the problem the product/service will solve?
- Who is the audience?
- What are they doing now?
- Who are my competition?
- What is my unique selling point?
- Do the numbers stack up?
- Is the idea scaleable?
- Stop, Go or Refine?
This list is not by any stretch an exhaustive dive into market research. However, it does enable me to collate a lot of information quickly, so that I can make a decision whether my idea/product or service is likely to be viable.
Step nine is all about deciding whether to abort the idea, refine it, or proceed full steam ahead. You see, sometimes, just through working through this exercise you may end up abandoning your original concept, or even discovering something that will better serve the needs of your target audience. That’s not necessarily a bad thing! I’d much rather do the research up front and decide NOT to proceed with an idea, than waste countless hours on a project that will never fly.
Applying The Technique
I thought it would be interesting to walk you through a case study example to show you how the 9 steps to market research can be applied in a practical sense. Using the nine steps outlined above, I have applied this to a market research example for reviewing books.
Case Study Example | Affiliate Marketing of eBooks through Reviews
1. Describe the product or service
What is the idea, and what is the end-to-end process of fulfilling the customers needs?
What is the idea? To offer eBook reviews to authors on the own author website and monetize those reviews through affiliate links to Amazon.
End-to-end process. I already read and review a LOT of eBooks. Over the years I have reviewed a number of books on Amazon, which has resulted in me receiving numerous offers from authors for a free copy of their latest eBook in exchange for a review. However, Amazon considers it completely unethical to accept any form of payment or gift in exchange for a review, and receiving a free book falls under that category.
So to be absolutely clear on this; I only ever review eBooks on topics that interest me, that I have purchased myself and have read.
My end-to-end process is simple.
- Purchase and read book
- Review book on Amazon
- Write a blog post about the book including the review and additional background information and include affiliate links to the book on Amazon
- Share through the social networks
2. What is the problem the product/service will solve?
How does the product/service or activity make the world a better place?
It’s a two fold benefit. Firstly, the book reviews can help inform potential buyers of that book whether it’s worth reading and gives them an overview of the book contents.
Secondly, it fits into the pay-it-forward mantra; by completing a completely unbiased review about a book that I have enjoyed. If I absolutely hate the book, I simply won’t review it… after all, a writer out there has spent valuable time to create it; just because I don’t like their ‘masterpiece’ doesn’t give me the right (IMHO) to damage their brand in any way.
Independent reviews are like little nuggets of gold for writers, and it’s a good feeling to be doing my part within the online writing community.
3. Who is the audience?
Whose my ideal customer and how big is my market?
My perfect customer trusts Amazon, loves their kindle (or e-reader) and has a voracious appetite for eBooks!
Given that I read a lot of age & gender specific self-improvement books, as well as rom-coms, I could also take that one step further and say that the ideal customer is … em 40 something, female, wants to be fitter, thinner, look fabulous in a bikini (or at least pull off a good one piece look) and is a hopeless romantic.
Whatever product or service you are researching, it’s worth taking the time to write a detailed description of who your ideal customer is and get a picture of him or her in your mind. It will definitely help you as you develop out your idea.
4. What are they doing now?
What insights can I learn through keyword research about the customers and their buying patterns.
I already know that there is a huge demand for independent book reviews, through the sheer number of emails I get on a daily basis from authors offering me their books to read. Often times those requests are politely declined, particularly if the topic is not of interest to me and my website visitors.
So how do I know whether a book will hold appeal for the readership base? This is where the use of keyword research comes in. I use a tool called Jaaxy for all my keyword research; it’s easy to use and I can quickly determine if an eBook is a topic people want to learn more about. It also helps me figure out what search terms people are typing when they are in ‘book buying’ mode – so I can write the reviews on the blog to incorporate relevant long tail keywords.
For example: say I’m going to do a review on Steve Scott’s eBook My Blog Traffic Sucks. After a cut-and-paste of the extended book title from Amazon into Jaaxy, I was able to produce the following results;
As you can see, Jaaxy has suggested a great ‘long tail’ keyword being [steps to increase your blog traffic] which gets a load of traffic and has a low QSR (the number of competing websites ranked in google for this exact search phrase). This tells me that people are searching for this type of information. I will definitely use this exact keyword phrase when writing the blog post review.
By repeating this process each time I review a book, I can make sure I’m using search phrases that the potential readers are looking for. This is just one method I use, when investigate the buying patterns of the customers.
On Amazon.com alone, there are 1,064,000 eBook downloads every day.
5. Who are my competition?
Who else is in this sandpit and can we all play nicely?
Absolutely! With so many books being produced every day, there’s little wonder that book reviewers are in high demand. The lion’s share of reviews are on well-established sites like Amazon and Goodreads, but there’s certainly room for independent blog writers to focus on eBooks within a particular niche.
6. What is my unique selling point?
How will I stand out from the crowd?
The way I would approach this is to only publish reviews on the blog that are targeting the specific niche or topic. There’s no point using a scatter gun approach. Trying to be all things to all people never works – so I’d aim for a very narrow book review niche and own that space.
I would also clearly state that I do not receive any compensation for any of the reviews (apart from affiliate links to the eBook itself on Amazon), to ensure that the readers understand that they are reading an unbiased unpaid review from an independent blogger.
7. Do the numbers stack up?
Crunching the numbers is essential to know whether an idea is even viable.
I would like to generate a passive income stream of $80 per day from affiliate sales through eBook reviews.
As mentioned, a quick online search revealed that on Amazon.com alone, there are an average of 1,064,000 eBooks purchased and downloaded each day. The actual revenue generated from those downloads varies from report to report, but it is somewhere in the vicinity of $5,755,000. That equates to an average price per eBook of $5.40.
Amazon pays 4% commission on eBook sales. On a $5.40 eBook, this amounts to 21c.
This is where some assumptions come in;
- Let’s assume that every book review (post) I write generates 20 page views per day.
- Of those 20 page views, 10% convert (eg.: viewer clicks affiliate link and buys the eBook on Amazon).
- That would result in 2 sales x 21c commission = 42c commission per post day.
- To get the blog generating anywhere near the desired $80 revenue per day I would need to write 190 book reviews.
- If I published 3 book reviews every week, it would take me at around 63 weeks (14-15 months) to build the blog revenue stream up to the $80 per day mark (and that’s assuming I do everything right).
8. Is the idea scaleable?
What happens if my product or service takes off? Will I be able to efficiently keep up with customer demand?
For the book review idea, this doesn’t really matter too much, as I would be in the business of writing content. However, the success and growth of the revenue stream depends on the ability to complete and publish 3 book reviews every week.
Conversely, if I was in the business of hand painted wall art, scale-ability would definitely be a problem. Not only would there be the production of the actual product, but also the whole supply chain would need to be considered end to end, from manufacture, to storage and then shipping the final product to the customer.
8. Stop, Go or Refine?
Now that the research is complete, should I proceed?
On the face of it, the eBook review blog idea hardly seems worth the effort. Or is it?
- Unable to accept payment in any form from the author, so the only way I could monetize my eBook reviews would be from the affiliate links themselves.
- It would take 14-15 months of serious reading, and writing & publishing reviews before I’d get anywhere near my revenue target of $80 per day.
- It would be hard to achieve this goal any quicker because I’m limited by the amount of books I can read & review in a week. (3 books is already a stretched target).
- I would be reliant on Amazon maintaining current terms and rates of affiliate commission (they have been known to change their commission rate payouts with little notice in the past).
However, there are a few positive spin-offs from proceeding:
- Once a review is published on the site – it will always be there working for me – especially if I have done the SEO keyword research properly.
- By the time I have published 190 reviews on the website, I’ll have a huge amount of traffic on the website – potentially 3,800 visitors each and every day.
- I could promote higher value products to the website visitors.
- If one of the website visitors clicks on an affiliate link to view an eBook on Amazon and then goes on to purchase other products (within a 24-hour period of clicking that link), I would also receive commissions from those purchases.
Conclusion: Is this a Stop, Go or Refine? Whilst I still like the idea in theory, there is a huge amount of work required before any real reward is seen. In this instance, I would be inclined to say this idea is a REFINE. I plan to head back to the drawing board on this one and see if there’s another approach which could achieve a better outcome. I also plan to explore more profitable niche opportunities with Amazon.
As you can see, this quick and easy nine step process can be used to research any business idea you have, whether it’s selling a physical product (eg. clothing or goods from a physical location), a time based service (eg. legal advice or technical support), or content (eg. developing eBooks or developing content for blogs/websites).
For any business idea, I urge you to take the time to do your homework up front – as you see from the case study example I’ve used here, you could end up doing a huge amount of work for very little initial reward; at least if you know this before you start will save a lot of angst and frustration further down the track.
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If you found this article interesting, I’d love to hear from you.
What is your process for completing market research? If you’ve got some additions to this process, please drop me a comment below or contact me at Wealthy Affiliate via the profile here.