Many organizations are opting for listening as a way to gain insights rather than trying to secure dollars for research. There are some very important differences, so you need both. We hate to break it to you, while listening is good it is NOT research. Sentiment analysis, content analysis, and Twitter search are not the same as doing research. Social media listening, although an important tool, won’t give you the insights into customer behavior you need to innovate and gain competitive advantage.
Marketers you need to remember that one of your primary jobs is to provide the rest of the company with customer insight and market intelligence. This takes research. Research in its most basic form is to inquire, to examine. There is rigor to research. It begins with a question that helps you formulate your approach or methodology. While listening may be employed as part of your research (focus groups, IDIs), research enables you to discover or test facts or theories.
Do you want deeper insights into buyer, influencer and end-user behavior? Then invest in research. Yes, gaining corner office buy-in can be tough, especially when measuring research ROI can be difficult. The best way to secure buy-in is to tie your market and customer research to an organizational priority and relevant quantifiable business objectives. This might include research to define new products and establish a product adoption rate, to identify ways to improve customer service tied to increase share of wallet, to reduce costs to serve or to reduce costs to acquire by improving referrals rates, and so on.
When done well, good research helps you make informed decisions and avoid costly mistakes. For example, developing a new product or service and bringing it to market is generally one of the largest investments an organization makes. Research conducted by Booz Allen Hamilton and others suggests that for every 7 new product ideas, about 4 enter development, 1.5 are launched, and only 1 succeeds One of the biggest reasons products fail is the companies bringing these products to market didn’t do their homework. Solid upfront homework boosts new product success rates by 43.2%. Yet in a survey of companies by Cooper and Kleinschmidt, only 7% of company funds and 16% of the work effort goes into this step. Other big investments include major changes to tech support or customer service processes. Mistakes in these areas are costly and can result in major set-backs. Research is a good way to gather insight before making extensive investment only to find out later the decisions weren’t the right ones.
Research enables you to
- Ask the questions you want to ask
- Begin with and tests a hypothesis. It requires a representative sample for results to be valid and reliable
- Predict what might happen in the future
Excellent questions for market research include
- What’s the customers’ problem/need?
- Would they consider your products or service as a good solution? Why or why not?
- Do they have enough money to purchase your product or service? Would they use these funds to make such a purchase?
- Do they have access to your product or service?
- What’s their buying criteria, supplier preferences, and buying process and where is the decision making power?
- What information do they need to make a decision?
The list goes on. It’s common to have more questions than you have time or money to answer. So how do you know which studies to initiate? Here are four steps to help you determine what and when to invest in research and that will pave the way to easier and faster budget approval.
Focus on Why First
- Start with the End in Mind: Good research begins with objectives tied to business decisions. Your leadership team needs to understand WHY you want to conduct the research. We have found being able to complete three statements helps
- “As a result of this research we will know…”
- “By knowing this information we will be able to make the following business decision(s)…”
- “This value of this business decision to our company is… “
Don’t start research until you can complete these statements and it’s clear how the research results will facilitate an important business decision.
Let’s look at an example, using a technology company, to illustrate this idea. Motion Computing produced advanced mobile-enabled technologies to adapt productivity solutions to the way people work, so they don’t have to compromise their work styles to accommodate a machine. As a company dedicated to driving innovation based on the market and customer’s needs, direct market input was vital to the company’s understanding of feature sets and functionality priorities. There are always tradeoffs when making feature and functionality decisions. Each decision has product adoption implications. The wrong mix and the product fails. The point? Only conduct research that will help your organization acquire “need to know” information that answers specific questions.
- Stay within Scope: Because it can be hard to secure buy-in for research, it’s not uncommon for marketers to try and pack everything they want to learn into what may be the only study they will deploy all year. So when a research opportunity presents itself, it is understandable that you want to ask a lot questions. While it may seem more cost-effective to try and conduct one very large study that answers a host of questions, this approach can actually reduce the effectiveness of your research while increasing costs.
Work with Tektronix, Inc., a worldwide leader in the test, measurement and monitoring industry, illustrates the value of scope. The company relied on two key customer metrics as part of their continuous improvement and growth efforts: share of wallet and advocacy. The focus of the study was to better understand current and potential Share of Wallet among their customers, create a baseline advocacy score, and benchmark this score against its competitors. It would have been easy for the scope of this study to over expand. But greater success comes with smaller studies targeting specific issues. If the research pays off, Management will be more receptive to additional research efforts.
- Make the Research Count. Good market research should boost the bottom line. Voice of Customer (VoC) is a popular research initiative for many organizations today. VoC is a research technique designed to help companies better understand customers’ wants and needs and prioritize these in terms of importance and satisfaction in order to enhance the customer experience. From the start, be clear how you will quantify the value of customer experience. Can it be done? Definitely! A study by Peter Kriss in the Harvard Business Review found “not only it is possible to quantify the impact of customer experience — but the effects are huge”. Research by Forrester shows that a better customer experience drives improvement for three types of customer loyalty: willingness to purchase again, likelihood to switch to a competitor, and likelihood to recommend to a friend or colleague. Improvements in these areas directly affect a company’s bottom line with incremental purchases from existing customers, lower churn, and new sales from referrals.
- Research Without Action is a Waste: It’s somewhat baffling to us that companies invest the time and money to conduct research and then ignore the results. It’s important to reconcile what you believe with what you learn from your research. Setting the results aside merely because they don’t sync up with the company’s assumptions and instincts isn’t the best course of action. Uncovering issues and identifying unmet needs is a core component of marketing. The purpose of conducting research is to enable us to confidently make recommendations rather than rubber stamping what we already think we know. In the case of the Motion project, the company held an opinion regarding the location of the batteries. In one model, the battery location looked aesthetically more pleasing over another. The research participants provided insight into why the alternative approach would be more suitable.
Stretch Your Research Dollars
Research takes time and money. And money is often in short supply. Here are three ways to stretch your research dollars.
- Leverage secondary research. Sometimes research published by industry associations, government agencies, and consumer organizations is close enough that the results are suitable for your own purposes.
- Tap your current customers and contacts within easy reach. For example, engage your customer advisory board. Another simple and fast way to conduct cost-effective research is to develop a few questions you can train your outward-facing employees to ask every time they connect with prospects, customers, and suppliers. The questions will need to be asked the same way each time. Each person will need to enter the answers into a common database. Here are four questions to consider:
- What’s the biggest problem that keeps you awake at night?
- What one thing might help make this problem go away?
- Other than price, if you could change one thing about our products or services what would it be?
- Other than price, if you could change one thing about any of our competitors’ products or services what would it be?
While there may be some biases and other issues associated with the results, if you capture enough data you should be able to see trends and patterns.
- Join forces with another company in a comparable market. This isn’t a competitor, rather it’s someone with a complimentary product who would benefit from the same research within the same target market. Once you find a company who is willing to do a joint study, decide what information would be beneficial to the both of you and hire someone to conduct the study.
Remember this: Listening has its merits but it doesn’t replace solid research. And you can’t do it haphazardly. Follow the advice in this article and be prepared to reap the rewards of first-rate, superior research.