By Brett Hurt, CEO, Bazaarvoice
Marketers continue to strive to listen to their customers and to put them at the centre of their business decisions. They spend billions on market research, focus groups, and Business Intelligence systems. However, they are still no closer to understanding what their customers really want.
By holding tight to old ways of gathering customer data, companies reduce their sales opportunities, hurt their brands and make misguided business decisions. These mistakes cost billions a year in lost sales across the world. If products are not resonating with consumers, they won’t buy them — or they’ll buy them and return them.
In the US alone, product returns cost a hundred billion dollars a year. What’s more, according to the Harvard Business Review, 35 per cent of all new products fail on average, and 75 per cent of consumer packaged goods and retail products fail to make even $7.5 million during their first year, the benchmark of a successful industry launch.
Where did it go wrong?
It’s been known for a long time that market research is or can be flawed — yet it is still used by many companies to make critical marketing decisions.
Market research attempts to collect authentic customer opinions, but a series of studies from the Stanford Graduate School of Business has shown that "measuring consumer expectations can backfire by producing misleading information."
The researchers found that some popular survey methods actually put consumers in a negative frame of mind. The more questions shoppers were asked in advance, the more negative they became. In addition, findings are often delivered too late to make an impact — and fail to help a company to respond to rapid changes in market demand.
To get to the complete truth about customers, some companies have embraced technologies including Business Intelligence to tell them who is buying their products, what they have purchased and when they return it. However, Business Intelligence alone cannot tell if the customer was satisfied or why they were unhappy with a specific product they bought. Most recently, social community and listening platforms promise to allow marketers to “listen in” on the conversations taking place about their brands online.
They can be great to present a high-level snapshot of buzz and brand sentiment, but it is next to impossible to get insight into specific products and customer segments.
The path forward
Despite the shortcomings of social listening, the motivation behind making business more social is absolutely right. Now, for the first time in human history, word of mouth is a digitally archived, and therefore a highly measurable medium.
It was only years ago that word of mouth, the best representation of absolute truth - or reality of the situation - would “vaporise” as soon as it was spoken (and how often did that get back to the manufacturer of the product or the retailer?). With this new digital reflection of ground truth, companies like 3M and Rubbermaid are now showing that they can use social data to improve products, delight customers and slash go-to-market times.
Here’s how organisations get it right: Structure social data in a format that can be integrated across the enterprise. A company should work with a technology provider that structures word of mouth, so that they can analyse it effectively. Word of mouth data will need to be integrated with CRM systems, sales data, market research, web analytics and other customer-related information to get the clearest picture of customers.
Sentiment should be tied to products. Social data empowers a company to easily identify its promoters and detractors across categories and segments, provided that it links customer conversations back to specific products and services. Net Promoter Scores, as well as advocacy and influence scoring, can be combined with social data to uncover top influencers across all categories.
Additionally, by connecting individual sentiment to specific products, a company can run 24-7 focus groups, efficiently co-create new products and execute highly targeted marketing campaigns. Make sure all social data is actionable. Authentic customer voice is valuable to everyone in a company from marketing, sales, business development, customer service, product development, merchandising, and beyond. Anyone should be able to view and act on reports via simple-to-use dashboards.
With product-level and customer-level detail, employees will become far more efficient by leveraging the social data specific to their job (e.g., the tablet category manager at Best Buy and Wal-Mart can get the specific analytics they need to manage their category more efficiently). Structured data can bring amazing advantages to an organisation. In the early days of e-commerce, companies used packet sniffers and log files to try to make sense of a sea of unstructured information — but this type of analysis was never meant to be used in marketing.
Web analytics rapidly evolved to provide automatically structured data that people could use to drive decisions. Marketers need access to structured data — from product IDs to sales data to customer demographics — in order to drive action across their organisations. Word of mouth data will always be the most valuable customer data source — it is, after all, absolute truth precisely because it is real.
In this new age of social, using outmoded market research and data sources to try to understand customers requires too much time and can still leave a company guessing. The good news is word of mouth data can be structured. By listening to what customers actually say — and analysing this against what they do — a company can once and for all get the absolute truth about its customers. It will become more efficient, more competitive, and less frustrated — and its customers will love it.
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