Every quarter, Frank Lynn & Associates
conducts a channel-marketing workshop for sales and marketing managers from many different types of companies. Many — even large Fortune 1000
companies — do not use formal customer
research as a strategic marketing tool.
Some of their main excuses include:
- “Sales people talk to customers all the
time. They bring a lot of customer insight.” - “Customer research is done for product
development, and that isn’t a constant
need.” - “Internally, the discretionary annual marketing budget leans toward marketing
communications, like new literature campaigns, mailings, etc. to drive growth.”
Smart Business interviewed Jeanne Fec,
senior principal of Frank Lynn &
Associates Inc., to learn more about using
formal customer research to optimize
investments in new products and drive
growth in sales and market share.
What about using the sales force for
research? Aren’t they the critical interface
between a company and their customers?
The sales force is one of the biggest
investments a company makes, and it can
be used as a ‘conduit’ to understanding
customer sentiment. This is important. But
there are two problematic issues in gathering customer insight from the company
sales force.
How do typical sales people spend their
time? If they are good account managers, it
is with existing, high-value customers.
Here is the gap. How do we learn from
those outside the sales force’s circle of
presence? Companies that consistently
maintain double-digit growth make it a
point to learn and act upon perceptions,
purchasing behaviors and expectations of
prospective and low-profile customers.
Then there is focus and motivation. Sales
people are trained and paid to sell. It is a
challenge to get reliable and effective market research from salespeople. A formal
customer research effort more effectively
delivers unbiased data. Customers will also
note the extra effort taken to understand
their perspective.
Are there additional reasons to use consistent customer or non-customer research?
Research and development is another
big investment that market research
can optimize. Numerous companies
fail to include external customer
research in the product development
process.
Engineering-driven organizations are
especially vulnerable here. Great ideas
are put into motion because they seem
to solve problems or outstrip the competition on design and capabilities.
Successful marketing strategies must
also take into account the size, sensitivity and buying behavior of target end-user segments. This is a step best filled
with regular collection of insight from
those customers. But we still have
clients come to us regularly with great
products, seeking a market to buy
them.
End-user research can effectively and
efficiently answer critical acceptance
questions before a more significant
investment is made. These basic questions can be incorporated into a
research methodology that can be conducted in person, over the phone or via
questionnaire.
Give us some examples of key research
questions.
Certainly. Let’s continue with our example of a new technology product being prepared for a launch.
Technology: Does the technology meet
the customer’s needs or solve the problem?
Is it perceived to be robust enough? Or
overkill for the existing situation?
Economics: Are the benefits greater
than the cost? Developing an actual selling
price is a challenge in any research
methodology, but good research can define
a value-based price range in the mind of the
customer.
Timing: Are prospective customers capable and willing to make a purchase in the
short term? Asking questions about purchase cycles, budgets, approval processes,
centralized versus decentralized buying
behaviors, and other timing questions will
help gauge opportunity forecasts.
Environment: Research questions can
assist in understanding behaviors that have
a high impact on success. For example,
you can test the customer’s internal environment, which means the customer’s
level of sophistication and readiness to
adopt the new technology. It is also critical
to understand the customer’s external environment, such as alliances with competitors or previous negative experiences.
In the overall scheme of things, this type
of research investment is small relative to
the cost of R&D and product development.
We’ve talked about customer satisfaction
research, new customer access and new
product research. Are there other ways that
research helps companies grow?
Good research has proven to help companies maintain current share, grow within
their customer base, and strategically grow
outside of it. There is one additional benefit research can deliver. Customer research
can tell us how to raise the bar. It informs
us about unmet needs, or identifies unique
benefits that competitors do not deliver.
JEANNE FEC is senior principal with Frank Lynn & Associates
Inc. Reach her at (312) 558-4820 or [email protected].
