We received a call the other day from a marketing executive at a company that wanted to explore conducting market research and how to measure its value. To gather intelligence they have relied primarily on second-hand information from conversations their sales, service and implementation teams have with prospects and customers, and direct input while at tradeshows. They know that it’s important to conduct research on a continual basis to keep up with market trends and to maintain a competitive edge. However, they don’t have the internal expertise and until now they didn’t prioritize any funds for this initiative. Because they’re in the growing cyber security market, to date research had seemed more like a vitamin than an aspirin. But, now competitors are more fierce and numerous, and there is a slower rate of adoption of their newest offering and a decline in the win rate. So, now they have a headache.
All organizations can benefit from conducting research. When framed and fielded properly it can help identify potential new markets ad customers, and answer critical questions such as who is going to use your product/service, how they buy, their supplier criteria and preferences, and so on. Research can also help you better understand your existing customers, what they value, and their degree of loyalty and risk of defection. Research is critical for segmentation, persona development, and mapping the buying journey.
If done effectively, research results should enable you to:
• develop growth and sales targets,
• test and validate market readiness for a product,
• develop effective go to market strategies
• examine and solve business problems, such as why a product isn’t gaining market traction, and
• identify new opportunities as you uncover changing market trends and needs.
How effective your research will be depends greatly on how well the research was conducted. And just as importantly, whether or not you act on the findings and recommendations.
How you measure the value of market, customer, and competitive intelligence has a lot to do with why you are doing research in the first place. Research for the sake of research isn’t usually a good practice in the business world. But research with a purpose, is a whole other matter. Research with a purpose should be directly linked to a quantifiable business problem. The value of the research is determined by how quickly and how effectively the research problem is addressed.
The key to making your research measurable begins by understanding the question being asked and what “degree of change” the answer will provide. For example, if the purpose of the research it to identify a viable growth opportunity, the starting point in determining how the research will be measured is to clarify how much additional growth the organization needs and by when? Or if the purpose of the research is to help grow the share of wallet of existing customers, then the key to determining the value of the research is to understand how many additional products, on average, your organization wants existing customers to purchase. It may turn out in either of these cases, that a new growth area, or growing share of wallet, is not viable at the moment. In this instance, the research has kept your organization from potentially wasting a tremendous amount of time and money – another way to quantify the research’s value. Sometimes, the purpose of the research is to enable your organization to remain market relevant. Measuring the value of this research may be hard but it is doable by understanding the value of maintaining your current market share or category growth. Companies with declining relevance see a decline in share of preference and ultimately sales and market share.
The point of any solid research is to improve your decisions, the speed at which your organization can make these decisions, and to reduce the risk of your decisions. If you accept the argument that risk matters and affects decisions, then managing risk becomes another potentially good way to measure the value of your research. As far back as 1654, Blaise Pascal and Pierre de Fermat established the foundations of probabilities and their usefulness not just in explaining the past but also in predicting the future. Research can help you estimate probabilities, which is the first step in quantifying risk. How you conduct research is also important. Jacob Bernoulli, proved that a random sampling of items from a population has the same characteristics, on average, as the population. Creating the survey instrument is an extremely important step, but fielding is where the rubber meets the road. The “who” (the population sample) and “how” (the methodology) of the research will greatly impact the findings and whether the results can be used to manage risk. And of course, the results need to be properly analyzed and synthesized in order to translate data into meaningful and actionable insights. This is why it is so important to leverage research expertise for instrument development, fielding, and analysis rather than trying to “wing it.”
The consequences of not performing effective research, or “winging” research and using those results to make decisions can have a detrimental impact on your organization. Effective research on the other hand, can give your organization a competitive advantage including an increase in market share, share of wallet, etc. Research is not by any means an easy task; we’ve had years of experience in this area and have developed proven practices that result in effective, measurable research. If you are considering fielding a survey, feel free to Contact Us, we are happy to help you discover how to conduct research that will help you gain valuable insights and enable you to make better business decisions.