Thinking of investing in a new company? You’re not alone. Increasingly individuals and companies alike are capitalizing on the opportunity to invest and own shares in new startups and early-growth firms. A solid investment can be highly lucrative, of course, but nothing’s guaranteed. To help you on that journey, we’ve prepared this handy guide on how you can use surveys to perform investment research and collect data on the trends to look out for—straight from consumers.
You might not necessarily consider investment research to be a subset of market research, but it is—and a crucially important one. For a company to realize success and perform well, it is critical that it is aware of market needs and trends and is responsive to those needs. Before making your investment decision, do your due diligence and measure the pulse of the market. If you understand the market deeply, you’ll be in a solid position to be able to determine whether your target investment company is meeting market needs, and therefore has potential. Let’s take a look at the different kinds of market research surveys that can help determine the direction, trends, demands of markets of interest, and, ultimately, how to perform investment research.
What audience is the company you’re scrutinizing seeking to serve—and more critically, what does that market look like and want? These two questions are absolutely fundamental to valuable target market surveys. In particular, consider administering target market surveys if you’re thinking of investing in a new business that has not yet launched or demonstrated its market potential. Conducting target market surveys will help you answer questions such as:
Once you have analyzed the answers to questions like these, you’ll be in a much stronger position to be able to judge the feasibility of your target investment company and project its likelihood of success.
If you’re feeling stumped about where to start with target market surveys, we have a handy market research getting started guide. If you’re looking for inspiration about how target market surveys can help support investment go-or-no-go decisions, read our recent customer story relating to success surrounding consumer research for investors. Our customer, Raymond James, discusses how surveys are used to track tech markets.
If you’re thinking about investing, you’ll want to be able to judge the likely future annual review of the target market as well as the number of units likely to be sold. Including market sizing questions in a survey of the target market will help you to gauge the strength and popularity of a company’s products and services as well as to estimate the size of different segments. For example, one simple market sizing question you might use is:
To what extent does this product meet your needs?
Gathering data like this will give you a sense of whether your target investment company’s product offerings are likely to land (and with whom), or if they’re way off the mark.
Another type of survey that will help you evaluate market potential is a product survey, which is designed to capture consumer feedback on specific products or services, and even provide brand research. The types of questions that you should ask in product surveys depends on what your target market is offering. However, for the most accurate feedback, make sure you administer this survey to an audience that matches your company’s consumers in terms of demographic characteristics like age, gender and location.
Ideally, for the most comprehensive picture possible, you’ll want to determine whether consumer feedback on products and services is positive in a wide range of areas. A carefully crafted product feedback survey will help you to answer questions like:
If looking to invest, it's also vital to include questions in your market research surveys that will enable you to perform segmentation of the market. There’s two main reasons for this.
First, combined with your market sizing data and answers to your product feedback questions, market segmentation questions enable you to determine whether the target investment company is going after the right segments. For instance, if you’re thinking about investing in a new tech company that offers music video streaming to both Generation Z and Millennial consumers you’ll get the most powerful insight if you determine the relative size of each segment, the habits, preferences and needs of each and evaluate the appeal of the product among both segments. If it turns out that appeal is lacking among the larger Millennial segment, you might think again about whether the company has got its strategy right.
Second, market segmentation questions can help you to derive and project revenue models by helping you to identify the contribution that each consumer segment is likely to make to overall sales. Combined with additional secondary data about things like segment growth and spending power, you can even estimate revenues and profits a few years into the future. This is critical insight that will provide maximum confidence in your investment decision.
When trying to evaluate the likely success of a company and its product and service offerings, you’ll also need to consider the target company relative to its broader industry. After all, even a promising company with appealing product offerings and a willing consumer segment, if runs the risk of falling flat they fail to stand out from the competition. That’s where competitor analysis surveys come in. Competitor analysis surveys are used to learn where competitors are succeeding and failing both crucial pieces of insight. If your target company is operating in a saturated market with some strong competitors, they’ll need to be adopting some pretty innovative marketing strategies in order to be able to make strides. However, if competitors are underperforming or otherwise failing to meet customer needs, you might be better convinced of your target firms’ chances of realizing gains.
Competitors are, of course, unlikely to be willing to spill the beans about where they’re successes and failures lie. No matter: this type of data can be gleaned from their customers and prospective customers instead. Once you’ve identified the appropriate target audience, you can ask them questions such as:
Gleaning data like this from customers can help fuel investment decisions by helping you to understand the competitive potential of the target firms. However, this is only part of the puzzle. For the most comprehensive picture of how well your target investment company’s rivals are performing, you’ll need to capture some proprietary data. Let’s look at how.
Collecting proprietary data is absolutely invaluable in investment research. This means accessing customer and other data about your target company that is not accessible to people with competing interests. This is a common strategy among investors who recognize that in order to make the best possible investment decisions and predict future performance, it will be necessary to look at historical data. This includes survey level data on firms’ current financial health, their past performance and their planned strategies. You can also supplement survey data by gathering data from the company’s balance sheet and historical financial statements, as well as from its website, which will likely contain company news and other relevant reports. Careful analysis of past performance data will tell you things like how the firm spends its cash, how efficient its executives are in generating profits and how positive the firm’s future outlook is. We have prepared a detailed white paper on exactly how to obtain proprietary data through surveys to inform smart investment decisions, but read on to look at some of the other sources of information you might need to support thorough investment research.
Consumer sentiment data can be used to determine opportunities in different markets. Sentiment data is data that gives you a sense of how positive customers’ attitudes are towards a product, service, brand or company. Sentiments can be classified into three types:
Express some degree of satisfaction, happiness or other positive attitude towards the brand
Indicate some dissatisfaction or degree of discomfort
Express neither positive nor negative sentiments.
Ideally, your investment decisions should be focused towards companies that have a strong degree of positive sentiment expressed towards them. The smartest investments are in strong firms with attractive valuations, positive sentiment and a deep connection with themes that are trending and viewed positively among the target audience. If consumer sentiment is, on the whole, negative, this could be an indication that the firm might not be able to perform to its full potential. So, how can you gather consumer sentiment data? Broadly, there are two potential strategies, and you might consider using both in combination for a rounder picture:
Primary data can be gleaned through a customer survey approach that gathers qualitative research. For instance, you might ask customers to tell you, in their own words, what they already know about a company, or to describe their perceptions of the company’s brand image. Then, using sentiment analysis, you can discern what the proportion of positive to negative and neutral sentiment is among the market. You can then infer from this information what the overall prospects of the company are among the target audience.
In the age of big data, information gleaned from surveys can be supplemented with sentiment analysis of data found online. New technologies and open source software can be applied to quickly help you to gauge the sentiment in documents and text like online reviews, new articles, and research reports.
Data collected from customer research surveys can help identify how customers feel about their experiences with different companies. It's a good idea to administer customer experience surveys that focus on your target investment company, as well as its competitors. If customers are telling you that they generally have a positive experience with the company you’re interested in, and a less positive experience with its rivals, this can give you some insight into the prospective value of your target firm and help you make your investment decision.
A final piece of the investment decision making puzzle can be gleaned from customer satisfaction surveys. Customer satisfaction is the lifeblood of successful companies. That’s because satisfied customers are regular, loyal customers, who are willing to spend more and to take chances on new product and service offerings. Furthermore, happy customers will tell other, prospective customers about their satisfaction—and that drives sales and profits. So, make sure you gather customer satisfaction data to help determine whether a company that’s currently in your investment sights is successfully satisfying their customer base. That means delivering a survey that asks customers to indicate the degree to which they are satisfied with things like:
So, now you know the importance of being an informed investor. Regardless of the type of company you’re thinking about investing in, and whether or not you decide to take the leap or walk away, it's vital that you do enough research to feel confident about your decision. In this guide, we’ve shown you how to learn about the different characteristics of the markets that their target companies are seeking to serve, as well as how to find the data to support your decision.
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