Maximise your market research budget to deliver genuine insight. Jonathan Salisbury, managing director at 100%Cotton provides five top tips
When finance is hard to come by, it is more important than ever to demonstrate how your new business idea will make money. Many new companies flounder because they have failed to fully understand their customers and make a sound business case. The problem is when it comes to testing new business ideas, traditional research tools, such as surveys, polls and customer segmentation, are limited.
Market research goes wrong when the innovator expects customers to predict the relative success of a business idea. The purpose of market research is to understand customers’ needs and behaviours in order to understand what you should do with your idea. A common approach is to ask for customer feedback on either a blank slate or a template of the new concept. But the customer is not always right; they are rarely aware of emerging needs and the bigger picture, and can only relate to what they know.
Here are five ways that will help maximise your market research budget and make sure that you really connect with customers in a way that delivers genuine insight for new business.
1. Get direct
Classic research methodology discourages clients and customers from meeting. The typical viewing studio where you anonymously observe a focus group discourages interaction and personal contact with customers. Any findings are reported in a written report or slide presentation. Yet actually being with real customers and listening to their opinions is a potent and memorable experience, especially for marketing people who rarely have this opportunity. It can deliver fresh perspectives and uncover hidden potential. What’s more, hearing it straight from the customer is also much more powerful than reading a report or yet another PowerPoint presentation.
B&Q used this technique very successfully in setting up TradePoint, its new chain of outlets for the building trade. Senior people spent time with customers in a variety of situations – such as shadowing trades people throughout the working day – listening and learning from that experience. As a result, direct customer input helped shape every aspect of TradePoint, from the layout of the store to delivery policies. One of many practical suggestions that emerged was for a covered canopy area, so that customers could load their vans on rainy days without products and materials getting wet. It is hard to produce such real-life input in the sterile environment of a meeting room.
Note this is not DIY research; it is important that any contact with customers is properly moderated by research professionals to maintain neutrality. Findings should be properly analysed and reported.
2. Aim for frequency
You don’t always have time to start new insight programmes so get into a regular conversation with customers and listen to what they have to say. Frequent, direct communication with customers provides an early warning system that alerts you to issues bubbling under, unsatisfied needs and emerging wants. Another B2B company in the building suppliers sector regularly holds ‘bacon butty’ sessions with its customers around the UK, helping it stay tuned in to their changing issues.
3. Leverage opinion formers
Consider setting up a panel or an informal group of movers and shakers, early adopters and opinion formers. Identify people who are thinking ahead and setting trends; they will be open to new ideas and will not shy away from giving you straightforward feedback.
4. Review existing research
Many organisations have market research sitting on the shelf, or subscribe to market reports they do not read. Before commissioning new research, ask a professional to review what you already have. You may find that you know more than you think you do. And the thinking that accompanies a review of existing knowledge and information may also open up new opportunities.
5. Choose the right provider
The more your research provider understands your business and your customers, the more they will be able to help you ask the right questions and develop the right strategy. A good consultant will make sure you:
- Get the right answer (which may not always be the answer you expect/want).
- Maintain objectivity, even when you are having direct conversations with customers.
- Interweave new insight with what you already know, and extract new value from existing information assets.
- Develop actionable strategies to help you make the business case and take your idea to market.
To build customer-centric businesses, we need to start treating customers as people, not sources of data. We need more open listening, more thinking about customers all the time, by everyone, not just the marketing team, so that we can tap into customers’ changing wants and needs. Once you have your new business idea up and running, get close and stay tuned in to your customers and you will build a customer-focused organisation for the long term.