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Ethnographic Research for Startups: How to Truly Understand Your Customer

Ethnographic Research for Startups: How to Truly Understand Your Customer

Leading a startup makes for busy days: creating a standout product, finding a way to manufacture it, market it, hire a team and keep sales coming in. Of course, you did your research before you created your company. But how well do you really know your customers? If you are not yet using a method called ethnographic research, you may be missing a trick.

In this article, we explore what ethnographic research is and how it fits into the startup scene.

Sounds fancy, but at the early days of your startup it can actually save your most precious resource and help you to dig deeper into your customer’s and user’s mind.

Also, we take a closer look at how it can help you target hard-to-reach consumer groups, both in B2B and B2C environments.

What is ethnography?

Ethnography is a type of qualitative research that has its origins in the science of anthropology. According to the Merriam-Webster dictionary it is “the study and systematic recording of human cultures”. Conducting ethnographic research requires researchers to immerse themselves in the community or organization they want to describe.

It is a way of gaining an understanding of that group from an insider’s point of view.

Within academia, the aim of the approach is to learn from the subjects rather than lead them with set questions. Within the field of marketing, the approach is similar. It is often focused on observing consumers in their own home.

The goal is to understand your customers in a more holistic manner. This is crucial for startups, which often are not only creating a product but also creating the market for that product.

Understanding your whole customer: personas rather than demographics

Many startups in the business-to-business arena make the mistake of simply considering their customers’ business persona. They search for networking and sales opportunities only on platforms like LinkedIn or during business-related events. These are a great place to start.

However, they are only one aspect of your potential customer’s life. What are your clients doing during their lunch breaks? What are they talking about by the coffee machine? Which social media platforms do they use not only at work but outside of their actual job’s remit?

Ethnographic research can help you build a more complete picture of who you are targeting. This can lead to new approaches you would not have considered otherwise.

By using ethnography as part of your research, you can develop customer personas rather than having to rely on statistical data only. This is useful for B2B as well as B2C products and services. Instead of just grouping customers by classifications like age group, income brackets or post codes, personas are based on behavior patterns.

Customers under the umbrella of one persona exhibit similar behaviors when it comes to making purchasing decisions or using technologies and other products. Regardless of their age, gender, or education, they share attitudes and motivations.

How is the research conducted?

Traditionally, ethnographers have spent months or years living inside a culture they wanted to describe. In the process, they recorded their findings and published studies, also known as ethnographies.

Modern startups — and marketers in general — rarely have this amount of time to study their target customers. However, observation is still one of the leading techniques within ethnographic research. What has changed is the amount of time with the subject. Rather than spending years observing, researchers now spend a few hours or days.

Interviews are often part of the research. One key difference is that much ethnographic research is done within the subject’s environment rather than in a research facility. The location can be the research subject’s office or their home, depending on the product or service.

Within the context of a startup, ethnographic research does not have to be overly complicated or forbiddingly expensive. Just like you are starting to build your business slowly and gradually, your research can grow with you. Iterate as you go and build your persona and insights while you learn more.

Beginning with casual, open-ended interviews in a setting where your subjects are ‘at home’ is one way. This could be someone’s office, actual home or even a coffee shop. Alternatively, if you would like to watch a group of potential customers interact with and discuss your product, a neutral setting like a coffee shop might work. Arranging a handful of these sessions will already yield valuable insights, and patterns will start to emerge. Pay attention to non-verbal observations as well, such as emotions and expressions.

Conducting research digitally

Ethnographic research can be done digitally, too. This creates opportunities to observe behavior or have a conversation with even less intervention than an interview or a group setting would offer. More importantly within a startup context, this also makes the research more cost-effective.

In digital settings, participants tend to feel more at ease because the feeling of being watched is gone. In general, they worry less about exhibiting behaviors or expressing thoughts they think an interviewer is expecting. As a consequence, results become more valid.

Using digital channels as research tools is becoming a natural choice for marketers as it is something most of their customers are using already. Choose channels and methods that come natural for your target audience: WhatsApp, Telegram, Facebook groups, Slack groups, discussion forums, chats etc.

This means customers can participate in a study whilst simply going about their daily lives. This, in turn, enables researchers to truly see their subjects use the product or service on their own terms — which is the overall goal of ethnographic research. Not only can researchers learn how participants behave, but they can also understand the possible meaning attached to the product.

How does ethnographic research differ from other methods?

Ethnographic research allows researchers to see what customers actually do as opposed to what they say they do. Participants in market research, such as surveys or focus groups, rarely lie intentionally. However, they may have a tendency to tell the person conducting the research what they think that person wants to hear.

Granted, even with research methods adjusted for 21st century marketing, ethnographic research takes more time than some more traditional methods like surveys. Time means money, which has put some marketers off.

Ethnographic research helps you gain superior insights. So, rather than asking whether your startup can afford to do this research, it is time to ask whether you can afford to lose out on those insights.

One of the benefits of qualitative research methods like ethnography is that there is no need for large numbers of subjects. The focus is on generating more detailed knowledge rather than having a large, representative sample. By continuously conducting a few interviews or observing a number of customers, a startup can learn more about their potential and their current users. This will help improve both their marketing and their product.

Most startups, especially those operating within technology, have access to large amounts of quantitative information relating to their products and their potential customers. However, ‘Big Data’ on its own only tells half of the story. Ethnographic research complements this and helps “uncover the meaning behind Big Data visualization and analysis”.

What can you expect to learn?

In short, customer behaviors and motivations are some of the main things your startup can expect to learn from qualitative research. Observation is often the best way to find out why someone could be using or is using a product or service in a certain way. It shows the needs customers have and how they fulfil them.

This can be especially useful in the very early stages of startup development. In those early days, when the product is still being developed, it can be hard to ask concrete questions that result in clear metrics.

Understanding why your customer would want to use your product, when and how they will fit it into their life can be invaluable. It may stop you from spending too much time developing the wrong thing.

The same is true in a business-to-business environment. On paper, you may be selling to a company. But in reality, you as an entrepreneur are sitting across from another person. Whilst your counterpart is negotiating with you in a professional capacity, they are still a human being with their own individual motivations, fears, and drivers.

Ethnographic research gives startups a much deeper insight than quantitative research can. You will be able to distinguish between another company’s needs and wants. Being able to identify those needs will help you decide what you should really focus on. This may mean pivoting and making changes to your product and service.

Pivoting is a normal part of the startup lifecycle. However, the sooner you can do this, and the better informed your decisions and changes are, the better it will be for your business. Early, well-informed pivoting avoids wasting time and effort. It also protects your company from a financial standpoint.

How will this improve your sales and marketing?

Understanding your customers’ behaviors, lifestyle, and — most importantly, needs will take your sales and marketing process to the next level.

Address purchase barriers. Ethnographic research not only allows you to observe what motivates your customers to make a purchase. You also start to understand any perceived or real risks which might stop that purchase. Based on that knowledge, you can directly address those. This could mean making changes to the product or service you are offering. Alternatively, your sales and marketing messages can help disseminate perceived risks.

Preconceptions can also prevent sales. Observing potential customers use your product will provide information about any preconceived ideas held that customers might not yet have realized. In that respect, observation has the potential to generate stronger results than interview-based research.

Identify beliefs and motivations. Commercial buyers as well as private consumers are driven by deeply held beliefs and motivations. Tapping into those and connecting them to your brand allows you to approach your clients on a more meaningful level.

Underestimating beliefs and motivations would mean giving away one of your most effective sales and marketing tools. They are also very personal to many people, so may not be something a person would openly disclose during a survey.

Ethnographic research is more likely to allow you to successfully identify these beliefs and motivations. The results can be surprising. You might find that your customers’ individual reasons for purchasing your product can differ significantly.

However, with motivations identified, you can tailor your sales and marketing strategy to suit.

Choose atypical places for advertising and marketing. Thinking outside the box is the basis for many startup ideas. However, when it comes to startup sales and marketing, many entrepreneurs revert to what they consider to be tried and tested — or what most of their competitors do.

Consider a platform like Google adverts. Trying to outspend your competitors there, might use up your marketing budget quicker than you think without yielding the returns you are hoping for. By listening to your target audience and observing their behaviors you can identify new avenues and approaches for your marketing.

Most startups are focusing on digital marketing channels. However, ethnographic research might show you that your users are more likely to trust analog marketing channels. Choosing these, especially if they are not currently used by your competitors, might give you an edge in your industry.

No matter which channels work best for you, qualitative research will help you choose them with confidence.

Improve customer retention. Marketing and selling to new customers generally takes longer and costs more than motivating happy customers to make a return purchase. As a startup, you might currently be focused on winning your first customers. However, creating a sales and marketing strategy focused on customer retention from the beginning will help your business grow faster.

Your market research efforts also need to include existing customers. Understanding how they use your product or service will help you improve it for the next generation of customers.

Businesses and private buyers want to reaffirm their purchase decisions. Quantitative research identifies how you can best address this need. What would make your product better for those who already own it? What would convince them to use it more often or buy an upgrade?

Customers might not be able to answer those questions outright. But observing how they use the product is likely to give you the answers you and your team need.

Increase recommendations. Word of mouth is one of the most efficient ways to grow your customer base and your business. Most users are aware of being surrounded by marketing messages whenever they are online. As a consequence, they have learned to tune out those messages to a large degree.

Personal recommendations have the ability to cut through the noise. This is especially important for startups as they often have limited marketing budgets. If every new customer you win were to recommend your product to at least one colleague or friend, you would expand your customer base quickly.

Whether you are operating in a business to business or business to consumer environment, recommendations can make a huge difference to your success and continued growth.

What motivates customers to recommend your startup, its products, and services to others can vary widely. Some buyers enjoy the kudos of having been the first to discover a new product and not require an additional incentive. Others may be motivated by a referral program giving them access to exclusive benefits or even a monetary reward.

How ethnographic research informs startup marketing in practice

Having considered the theory behind ethnographic research and startup marketing in some depth, it is time to look at its application. Here are examples from my professional startup life.

The last startup I was involved with developed a unique approach to offering home cleaning services. Initially, the company targeted house moms but also busy professionals. We believed they would not want to spend their spare time cleaning their homes. We also wanted to market ourselves to busy moms. Whilst that was largely correct, we were missing out by not considering our potential customers’ lifestyle more widely.

Example 1: A Wider Look At Lifestyle

Once we used ethnographic research methods to look beyond people’s working lives, we discovered that we needed to look at their lifestyle in a different way. Defining our target customers as ‘busy’ was not enough. Instead, we learned that our target market was largely made up of customers with these characteristics:

  • They were cash-rich, but time-poor — also because they chose to fill their time with activities they enjoyed rather than chores.
  • They had an appreciation for some of the finer things in life and wanted to make time for those.

Based on that, we started attending wine tasting events and exhibitions as well as boat exhibitions. Granted, home cleaning was not the focus of these events. However, the people attending these events were exactly the right people for our service.

We found that consumers attending wine events were just as interested in having a beautiful, clean home, but also appreciated they only had a limited amount of time in their day. They valued their time more than the amount of money required for a home cleaning.

Similarly, boating enthusiasts have already committed to an activity that is time-consuming. It is also an activity that requires a financial commitment. Once again, people attending these shows were keen to free up more of their time for their passion. Getting professional help with home cleaning was one way to achieve that.

Enquiries and sales from those events outperformed even baby expos, where home cleaning services generally exhibit. Thinking and selling outside of our usual area made a difference to the startup’s success and growth.

Example 2: A Time and A Place

Within the context of the home cleaning services business, we wanted to reach busy career moms. Anyone who has tried marketing to that same audience will appreciate how hard they can be to reach. We noticed that it was almost impossible to engage with these moms through basic social media or Google advertising.

Initially, this was perplexing: after all, our audience was well within the demographic that uses Facebook. They were also internet-savvy and therefore would be exposed to Google adverts. However, the money spent on advertising did not match our expectations for a return on investment.

This changed dramatically when we started tracking our audience’s daily routines. This helped us see the opportunities much more clearly. In the case of career moms, we identified these possibilities:

  • Early morning: mom wakes up, gets her family ready, then drives into the city. This proved to be a good time to place radio adverts and consider billboards.
  • Throughout the day: our moms had no time for social media or anything similar until lunchtime. However, Facebook adverts during lunchtime turned out to be successful.
  • Afternoon: on the drive home, just like in the morning, radio adverts and billboards were effective.
  • Back home: once again, moms would have no time for social media after work. Instead, they were busy taking their kids to activities like soccer or ice hockey training. As a consequence, we developed a collaboration with the sports team and a referral campaign.
  • Late afternoon / evening: somewhat surprisingly, we were successful with direct door to door sales during this time. This may seem like an old-fashioned marketing tool, but if used respectfully and in a targeted manner, it can be surprisingly successful.

Not all marketing methods will work for all businesses. Ethnographic research will open your eyes to opportunities you may not have considered previously.

Summing it all up

Ethnographic research is a qualitative research method that remains untapped by many startups. Especially in the technology startup field, founders rely strongly on quantitative research which results in easier-to-present statistics.

However, especially early-stage startups stand to benefit from adding ethnographic methods to their research tools. Ethnography is based on observing existing or prospective customers to learn how they use a product or service. These techniques provide rich context information and help identify beliefs and motivations that qualitative research does not usually cover.

As ethnographic research can be completed effectively with relatively few customers, it is affordable for startup founders. Conducting it with the help of digital platforms will increase cost-effectiveness even further.

Ethnography is unlikely to replace all of your existing research. However, both in B2B and B2C environments, it allows you to access customer intelligence you would otherwise have missed out on.