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 firstname.lastname@example.org.