Reverse Market Research

How to Use Data to Find Your Most Profitable Market Segments

If you prefer reading, here is a summary of the video.

Traditional Market Research vs. Modern Needs

Generally speaking, if you’ve been in the online world for more than 10 minutes, you’ll realize that many traditional methods of doing market research are from a prior era.

These methods often involved extensive research to find your customer avatar and start your campaign, sometimes including surveys.

While these methods are valuable, they originate from a time when advertising costs were very high.

Historical Context

Back in the day, when I was involved in branding work, extensive research was necessary.

By the time TV ads aired and products were placed on retail shelves, companies were out of pocket by a few million dollars.

Failure wasn’t an option, necessitating thorough upfront research to ensure a higher chance of success.

What we had to do as a result was to do a lot of research upfront, so that we made sure that success was somewhat higher than it otherwise would have been.

However, in today’s online world, you can run ads for as little as five or ten dollars. Speed of execution can often trump hours of research.

The Balance: Research vs. Speed

This isn’t to say that research is unnecessary. I do quite a bit myself. Here’s an example:

This is a copy I recently wrote for the IPO lead generation space. It includes almost fifty-five pages of research, covering articles, journal entries, competitor analysis, product matrices, and more.

This comprehensive research was necessary because I was unfamiliar with the product.

Shortcut Methods: Quick Campaigns

While in-depth research can be valuable, there are quicker methods.

For less familiar products, I do extensive research, but you can also opt for a shorter analysis and quickly start a campaign by going wide.

You can start a campaign with a budget of ten to thirty dollars a day.

The data that comes out of it allows us to learn who we thought was going to be our customer and who actually is our customer.

Testing Assumptions Quickly

You do only enough research to get a good understanding of what could work in the market or what are the different concepts and ideas that could work in the market.

Instead of spending weeks on research, you can validate your assumptions quickly:

Launch small budget campaigns.
Analyze the resulting data.

This approach helps you understand if your perceived customer base aligns with reality, rapidly validating or disproving your hypotheses.

Avoiding Common Pitfalls

It’s important to note that while research is essential, over-reliance on copying competitors without understanding the market can lead to failure.

Many marketers mistakenly assume that mimicking competitors will yield success, only to see their campaigns bomb because they lacked insight into the emotional drivers of the market.

Practical Application: Reverse Market Research Technique

So you need to do some research, but nowhere near as much as what people think it does.

Do enough research to get started.
Drive your traffic.
Get a bunch of data (which looks a little bit like this pivot table).
Adjust your ads and your funnel based on the learned data.
Rerun the ad to learn a bit more if you got it right the second time around.

Real-World Data

Here’s a snapshot of what a pivot table might look like:

There is another video linked somewhere in this message where I show you how to create and use pivot tables. This helps validate who your real customers are.

Iterative Process

Typically, by the second or third iteration, your campaigns should at least break even or become profitable on the front end.

Within a week to a week and a half, you’ll have a clear idea of your real market or you’ll identify errors in your initial assumptions.

Conclusion

The reverse market research technique involves doing just enough research to start the campaign, gathering data, analyzing it, and iterating.

Within two iterations—having spent maybe a week max—you have a very good idea who your real market is. You’ve validated who the real market is, or been proven wrong in most cases where you thought your market was going to be.

And that’s a good thing because now you can go back and redo your ads, redo your funnel, redo your targeting, and restart the campaign.

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