Estimating Sales from Samples: How 2 Get Maximum Benefit from Surveys
Surveys are a tremendous tool for entrepreneurs. In fact, you can use surveys to estimate your venture’s potential sales. But this depends on you asking the right questions in the right ways. In How 2 Get Maximum Benefit from Surveys, Professor Alisa Jno-Charles ’05 MBA’11 shared her suggestions for writing an effective survey and leveraging the results.
Here are some general best practices:
- Surveys should consist of closed-ended questions, with answers such as “yes” or “no.”
- The answers should match the question format. For example, if you are asking about the extent to which a respondent agrees with a statement, you should provide them a range of answers from strongly agree to strongly disagree.
- Avoid asking leading questions. When writing survey questions, strive to be as objective as possible.
For additional tips, be sure to watch Professor Jno-Charles’ Brainshark video on Surveys and Survey Errors.
You can estimate your sales potential using surveys. Estimated sales are driven by four components: the likelihood that customers will buy your product, the frequency that they will buy your product, the quantity that they will buy, and the price at which they would buy your product. One way to get these numbers is via survey questions.
Once you have your survey results, here are some key points to keep in mind:
- Regarding the likelihood that customers will buy your product, you have to weight your survey results since customers tend to overstate their interest.
- Only 80% of respondents who answer that they will definitely buy your product will actually buy it.
- Only 30% of respondents who answer that they will “probably” buy your product will actually buy it.
- Those who said that they were ambivalent or not likely to buy your product can be removed from consideration.
- Regarding frequency, assume that survey respondents will buy your product only 50% as frequently as they say they will.
- Pick the most common response for quantity of purchase as the most likely.
- Finally, pick the most common response for price as the most likely.
Multiplying the number of your customers, the frequency, the number of units, and the price will yield an estimate for sales. Going back to the best practices that Professor Jno-Charles first shared, the accuracy of this calculation depends on the quality of your survey, notably the representativeness of the survey sample and your survey design.
For a walkthrough of the calculations, check out Professor Jno-Charles’ Brainshark video on Market Sizing.
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