Maximizing the effectiveness of marketing activities by better understanding prospects and customers Featured

11:22am EDT February 1, 2012
Maximizing the effectiveness of marketing activities by better understanding prospects and customers

A realistic and in-depth understanding of who a company’s customers and prospects are is the foundation on which all business and marketing strategy is built.

“Many times entrepreneurs have an intuitive sense of who their customers are — and this should not be discounted; however, as a company grows, that perception can become detached from reality,” says Wes Phillips, agency principal at Orange Label Art + Advertising. “Therefore, companies need a system in place that not only identifies the quantitative and qualitative profiles of prospective customers but also identifies the types of messages they will respond to.”

“This understanding helps a company develop powerful messages that reach the right people and motivates them to take action so you can increase sales  and generate greater profits and more market share,” adds Rochelle Reiter, also an agency principal at Orange Label Art + Advertising.

Smart Business asked Phillips and Reiter how companies can better understand their customers and prospects and leverage this knowledge to increase the bottom line.

How does a company go about gathering market research?

Depending on the size of the company and resources available, there are many ways to obtain this information. The main types available include formal market research, focus groups, online market research and informal research. The first step is to determine which method is most appropriate for the specific business and current circumstance. This can be done by meeting with various market research companies and or marketing firms to get a sense for what is available.

What are the main forms of market research?

The traditional approach, which requires a significant budget, is to conduct formal market research. This approach requires investment in terms of time and money. It will take 3 to 12 months to gather the data and incorporate the findings into a marketing plan. It also will require a commitment from the senior management team to support the research, because many times the findings will be contrary to preconceived notions they may have.

Another faster, more economical way to gather information is to use focus groups. Focus groups should be facilitated by an outside resource. The data may not be statistically valid, but it is still highly relevant and actionable and the results can be known quickly.

Online market research is another option. The advantage is that the research can be completed very quickly. Companies should take caution with this approach, though, as there is some uncertainty regarding the validity of the responses. Or the questions may be so objective that subjective issues, which can surface when using a more one-to-one approach, may be overlooked.

Small and medium-size businesses often find it difficult to implement formalized and statistically valid studies and/or focus groups. Another approach is to interview 20 to 30 existing customers and 20 to 30 prospects, asking the two groups the same set of questions. This method is commonly known as informal market research. Two questions that every company should ask existing customers are ‘What would you never change?’ and ‘What would you change if you could?’ Respondents will give real-time responses, in their own words, regarding what they like about the product or service, why it’s working for them and the benefits they’re experiencing. They’ll also reveal what’s not working, why it’s not working and the missing benefits. From this information, a company’s marketing and/or creative director will be able to identify the words or phrases that are being used over and over, the way benefits are being described and the recurring themes and messages, and take that information to creatively position the emotional selling message and select the right types of media.

What should the company do when the research is finalized?

The research needs to be incorporated into the company’s strategic marketing plan, which can be produced by the internal marketing department or an outside advertising/marketing firm. The strategic marketing plan includes a communication strategy that defines the creative messaging, the media vehicles used to deliver the messages, the frequency for delivery and the desired results.

How will the data impact strategic marketing decisions?

The data acts as a catalyst for the messaging — so it impacts the entire communication strategy. It also informs how the messages are developed, guides and directs the words and images that are used, influences the media that will be used to communicate the messages and helps to determine how much budget should be allocated to achieve successful results.

What is the impact on the bottom line when businesses understand their prospects and customers?

Research will provide information that, if used, will make a company more successful. Sometimes research surfaces insights that are unexpected and may initially appear to be negative. It may reveal that a product’s real benefits are not what were initially believed. This is powerful information because it provides insight into areas that can be managed before it’s too late (e.g., perhaps the R&D budget needs to be increased or the sales department requires additional resources). This insight allows a company to go back and revisit a product or service to evolve or enhance it and improve its competitive edge. Other times, conversations with customers and prospects may provide entirely new insights to evolve messaging to stay relevant and competitive.

Ultimately, the goal is to achieve a higher ROI on marketing investments (i.e., obtain more leads that convert to sales at higher profit margins). Higher margins mean a company can afford a better sales team and better distribution channels and can provide better returns to shareholders.

WES PHILLIPS and ROCHELLE REITER are the agency principals of Orange Label Art + Advertising. Reach them at (949) 631-9900 or or