Before purchasing a car, computer, copier, or equipment, businesses do the usual due diligence. They do research, make comparisons, and then decide on the most appropriate product with the best value. John Graham explains why research is required before making an extensive marketing investment.
Yet, when planning marketing campaigns that can cost many thousands of dollars, they ignore research or dismiss it as a waste of time and money. They argue that research is unnecessary. They know their customers and, besides, they need a quick, income-producing hit. Anyway, the budget is tight and they know what they need to do. Research delays the much-needed time-to-revenue stream.
Accelerating the marketing initiative instantly into high gear lets managers think they’re attacking weak sales head on and resolving the company’s problems.
Although this seemingly aggressive move makes everyone feel good temporarily, the results are doomed to failure. Research is required to gather insight before making an extensive investment, only to find later that the decisions were the wrong ones. Marketing initiatives that evolve from research are far more likely to achieve faster time-to-revenue and desired results because they’re better developed and on target.
Most often, what clients really need to know is where they should spend their time, energy, and money in order to increase customer loyalty and attract new customers. It’s a universally accepted principle in marketing and sales that it’s far less costly to keep an existing customer than to acquire a new one. As a result, companies are increasing budgets aimed at customer retention.
Although this is a savvy approach in many situations, it’s not always a good idea. Three surveys we conducted recently revealed that investing in customer retention would be an ineffective approach for these companies. One survey discovered that although customers were quite satisfied with our client’s services, they had minimal needs; no amount of marketing could generate additional sales from these customers.
A second survey revealed a high level of customer satisfaction, together with a rapidly aging customer base, many of whom had been with the insurance agency since it opened its doors. The research dramatized the need to replace this customer segment with new, younger clients. Without this objective data, the agency might not have made a serious commitment to attract new customers.
The third survey uncovered low customer satisfaction due to past problems at the business. Although a core of loyal customers remained, many were dissatisfied and wouldn’t use the services of this company again. Reversing this attitude would be like climbing a very steep mountain with no mountain gear. It would be far more cost effective to allocate marketing dollars for changing the company’s reputation and attracting new customers. Without this research, the client would have continued down a dead-end path.
There are many approaches to research that offer insightful and timely input to help management make informed decisions. Qualitative research such as focus groups, telephone interviews, Web, and open-ended surveys help identify the more subtle aspects of the client’s product and service, while quantitative research such as closed-end surveys and e-surveys give hard figures and percentages, but can miss the nuances of open-ended questions.
In most cases, a combination of qualitative and quantitative research produces the best results.
STEPS TO SUCCESS
To guide your marketing research process, follow these steps:
1. Define your objectives. A clear, concise statement of purpose, together with a well-structured view of what you will do with the results, forms the most important part of your research. Some questions to ask yourself include why you want to do the survey, the information you really need to know, who will use the results, and how they will use them. Well-defined objectives become the compass that guides the research project.
2. Remain focused. Two common problems in surveys are overload and brevity. Although it might seem cost-effective to conduct a large study that includes a host of questions, you lose the ability to target specific issues and will probably kill your response rate. What’s more, the results often don’t set clear marketing objectives. On the other hand, a survey can be too brief and general. Web-based customer satisfaction surveys offer a good example: “How would you rate our customer service” is a common question on surveys. What does the answer tell you? If respondents rate customer service as “fair” or “poor,” you know you have a problem — but what is the problem and how can it be resolved? You need to drill down further to obtain valuable feedback on how to improve your customer satisfaction levels.
This is not to suggest that surveys should not be brief. A survey generally should take no more than 10 to 15 minutes to complete, but the questions must be framed to collect essential information.
3. Identify who can give you the answers. Once you’ve crafted the essential questions, the next step is to ask yourself who has the information you need. Is it all your customers, discrete groups within your customer base, former customers, prospects, or non-customers?
Although random selection assures the most representative sample, it might not be desirable in all cases. Your objectives will help determine your target audience. Once you’ve identified your target audience, make sure that you have an up-to-date and cleaned database.
4. Type of survey. Surveys (telephone, Web based, or written), focus groups, and key informant interviews are the most popular survey methods. The method that’s best for you depends on the time available, budget, characteristics of those to be surveyed, and the information you wish to obtain. It’s important to recognize the bias and response rate of each approach and understand how they might impact your ability to use the data. Consider having an impartial third party conduct the research to ensure confidentiality, and always pretest your survey.
5. Make responding worthwhile. Completing surveys isn’t a top priority in everyone’s busy life. Yet, people like to share their opinions if it appears that the company is serious about obtaining accurate information. To generate responses, take the time to explain to the participants the role of the survey in helping you serve them better. Offering such incentives as a chance to win a prize, a modest reward (we’ve offered a free dozen donuts from a popular store), or making a contribution to a well-known charitable cause for every survey returned can stimulate extra interest.
6. Use the results. It’s quite baffling when companies spend the time and money to do research and then ignore the results. Although it’s important to share marketing research findings with management, employees, and customers, it’s all to no avail unless you translate the findings into action. Setting aside the results because they don’t match your expectations sends a clear message to customers and prospects that you don’t value their opinion.
CONCLUSION
Creating demand is a core component of marketing. Proper research makes it possible to plan a strategy with confidence, rather than rubber-stamping what we think we know, but really don’t.