Chris Cowan, managing director and co-founder of insights and analytics specialist Clusters, explains how smaller companies can get to know their customers better.
When you are a business owner or manager, understanding what your customers want is arguably much easier than if you worked for a global corporation. Direct interface with customers, such as having conversations on the shop floor or directly overseeing orders and enquiries, offers a good insight into what people want. While this information is real and enables you to better position products or services in the market, it is only ever anecdotal.
Unfortunately, this means it can be extremely limited or, in some cases, even misleading. Suppose one person complains about delivery charges – how can you tell whether they are a lone voice or if their opinion represents your entire customer base? Cutting prices could make commercial sense if you want to secure repeat orders from many people, but not if you are only trying to appease one buyer.
Furthermore, anecdotal evidence tends to be based on your current, rather than prospective, customers’ needs. As you move into new markets and grow the business, quantitative market research provides larger and more robust data sets that suggest whether people will respond positively or negatively to your brand.
Researching the market
Traditionally, market researchers have divided customers using demographics such as how old they are, what their occupation is and where they live in the country.
However, you can leverage more value by segmenting consumers according to their motivations, barriers and behaviours. The data also shows what groups will prove most valuable to the business, as well as what is currently stopping them from making a purchase – providing you with actionable insights.
Launching a new product or service or rolling out a marketing campaign requires significant outlay, so you need to be sure your investment will pay off. As you allocate your limited budget, getting a handle on how to reach the right people, with the right message, at the right time, is vital.
Timing is everything
Deciding when to engage the services of a professional market research company depends very much on the ambitions of your business.
It’s certainly essential when developing products and services – however, it can also help you gauge trends and attitudes and see where you might be missing out. Continuous assessment of the market provides a springboard for future growth, opening up new opportunities and reassuring investors that your plans are based on evidence.
Return on investment
Nobody wants to squander money unnecessarily, but the point of market research is not simply to tick boxes. When implemented correctly, it can drastically cut your cost per lead, allowing you to target the customers most likely to spend money.
Surveys designed and operated by professionals are more reliable as they widen the scope of what you can achieve compared to running your own online or email surveys. Since the researchers are not directly associated with your company, they will also take an impartial view of the data, replacing your natural assumptions with real evidence.
Talking to your customers will always have a place in your business, but if you really want to get to know the market better, a more scientific approach is a great way to complement this. Ultimately, it doesn’t matter whether your business is large or small, as an in depth understanding of your market and customers will always provide you with a stronger platform from which to grow.
As managing director at London-based insights and analytics experts Clusters, Chris oversees projects for a range of B2B and B2C clients. Before this, he spent 25 years in international blue chip brand marketing, working for Unilever, Duracell, The Walt Disney Company and Sky.
For more information on Clusters, visit www.clusters.uk.com.