You are here :
| Marketing: Ruling Research |
 |
 |
 |
| Written by Robert Gordman |
| Sunday, 30 November 2008 23:00 |
 is high risk. The challenge management faces is to recognize the huge difference between ordinary research and great research. Ordinary research yields “nice-to-know” information but nothing relevant that can guide decisions. Great research is insightful and provides the basis for effective action. No matter the industry or the size of the company, research must follow four rules to be effective. The following examples refer to retail companies, but the same principles apply to companies in any industry. Rule 1: Ask the right people Research must be confined to a company’s core and must-have customers. (Core customers are a company’s most loyal customers, the ones who love the services or products sold by the company and are willing to pay a fair price. Must-have customers are people who are very similar in needs, wants, or desires and could become core customers, but they currently do business with the competition.) Asking anyone other than core and must-have customers will taint the data and could send your company down the completely wrong path. The researcher should start the survey by asking “knock out” questions. Getting all the way through the survey questions only to find out that the person isn’t a core or must-have is a tremendous waste of time and resources. For instance, a national grocery store chain wants to know if it should increase its selection of fresh, frozen, and boxed organic food and advertise those brands in its weekly advertising circular. The company will only want the opinions of people who already purchase organic food or who intend to begin buying organic brands. Questioning people who don’t care about organic food won’t give management the information it needs to make the right decisions. In this instance, good “knock out” questions would include: • Do you currently buy organic food? • If so, where do you buy it? • If you don’t buy organic food now, do you intend to begin purchasing within the next 90 days? If the answers show that the person does not have a commitment to buying organic food, the interview should end at this point. Rule 2: Ask the right questions To formulate the questions, you need to have a good idea of the kind of answers you’re looking for. For example, a regional high-end electronics company wants to understand what motivates its core and must-have customers to buy expensive electronics equipment such as high definition televisions or stereo components. The marketing team wants to know where people who purchase products similar to the ones the company sells are buying now and why. This will enable the team to study the competition where its company’s must-have customers are shopping. Then the team can use the customer research to determine what brands to sell and what type of advertising will help keep core customers and attract must-have customers to the stores. To generate the least biased results, blind surveys are the best. After qualifying that the respondent has purchased high-end electronics in the past six months, questions to ask should include: • Where did you make your purchases? • What other stores did you shop before buying? • Why did you select the store you did? • If that store didn’t have what you were looking for, where would you go next? • If you want better quality electronics, where would you shop? • Did you shop (our store)? • Why did you decide not to purchase there? Rule 3: Use questions that are precisely framed Always adapt questions to the company’s specific research goals. Only the right questions asked the right way will get core and must-have customers to give you actionable information. Specific questions will reveal exactly why core customers are buying from your company but must-have customers aren’t. This will help you understand what products or services your company needs to sell and how to create effective advertising aimed at the target audience. The chart on the next page shows the difference between questions that will provide clear-cut facts for the electronics company and questions that will give nice-to-know, but not actionable, information. Rule 4: Do focus groups the right way Focus groups are one of the most misused research tools in the business. Typically, they’re small groups of people who are randomly selected and brought together to discuss a topic. Theoretically, the focus group is supposed to provide a good cross section of the likely consumers that the group’s sponsor is trying to reach. Done right, focus groups can generate powerful insights that can help a company increase sales. But done wrong, which is the way it happens in most cases, the downside risks far outweigh the possible benefits. Focus groups should consist only of core and must-have customers. The moderator’s guide should be carefully written to focus on recent actual shopping and purchasing experiences. The final discussion should require the groups to prioritize the answers they have previously provided. One client of ours, a national department store chain, hired us to figure out why its sales had dropped significantly two years in a row. I suggested that we conduct focus groups with core customers (whom we could identify from my client’s credit card database) in several markets. In all six groups, there was a definite pattern of previous years’ purchases being triggered by a major event, such as a wedding or the birth of a baby causing current purchases to be less than before. This exciting finding opened up a wonderful opportunity to learn about customers’ lifecycle events in advance and develop appropriate targeted advertising strategies to capture a larger share of these special expenditures. Unfortunately, the vice president of marketing observed one group where an extremely outspoken customer presented a very good case for a loyalty program that would give customers rewards based on their purchases. Coincidentally, the marketing VP had been lobbying for a loyalty program for some time, and this was all he needed to hear. He moved the research-based lifecycle strategy to the back burner and focused the company’s energies on the loyalty program. Sadly, that program was never implemented, and the company’s sales remained weak. Companies that conduct research using these four rules will learn what motivates their core customers to buy from them and how to attract more must-have customers. This information will guide management as they make customer-relevant decisions that will build sustained, profitable growth. Robert Gordman is president of The Gordman Group and the author of Secrets of the Super Sweet Spot: Building Sustained Profitable Growth and The Must-Have Customer: 7 Steps to Winning the Customer You Haven’t Got. His clients have included senior management of Fortune 500 companies including Berkshire-Hathaway Retail, IBM PC Company US, Kmart, VF Corporation, Weight Watchers, and Whirlpool. |