The use of primary market research is not nearly as wide spread as it should be. Here’s my take on why that’s bad for business.
You’re spending a significant sum of money starting a new business, developing and launching new products, or introducing a new marketing campaign for an existing service. What portion of your investment is earmarked for gathering market understanding to direct your efforts? How much will you spend to reduce your risk of failure and maximize the return on your investment?
As a means of determining market potential, most companies engage in some level of information gathering: studying published industry statistics and reports, probing competitive web sites, doing feature-by-feature comparisons, etc. These are all examples of ‘secondary’ data—that is, they involve analysis of already-existing information. Further, many seek the guidance of industry experts, advisors and consultants. Many businesses use this research as the basis for identifying potential markets, developing market messaging, securing additional investors and setting sales targets.
As useful as these sources can be, often they are only broadly related to the specific marketing and business issues you face.
These sources and individuals, you see, are not YOUR MARKET!
the people who potentially will write you a checkfor what you sell…
and you need to ask them if your offer will be compelling enough to do so.
Because if it isn’t, you don’t have a product… or maybe even a business.
Truly listening to your market means doing primary market research—that is, getting information directly from existing or potential customers or sales channels about their reactions to your product or service. Doing surveys, holding focus groups or conducting in-depth interviews are some of the tools used for soliciting input from these most fundamental sources of information.
Primary research is a formalized method for objectively listening to your market to determine who your potential customers are, how they make purchasing decisions and the reasons they use the products or services they do. The key word here is objectively. This type of information does not come from group-think sessions in which senior management ‘envisions’ what the customers’ collective needs are—they are too closely involved with your current products. Nor does it come from your sales staff, who are hired to be proponents of and evangelists for your products. They are trained to influence and convert prospects into buyers, not to listen objectively.
The market research industry is on the order of $10 Billion. The majority of these sales were to large businesses—those who have long experience with research services and continue to place a high value on them. Small and medium-sized businesses, which need to be no less successful in their marketing efforts, use primary research to a much lesser extent. This is often due to lack of experience and understanding of the unique benefits it can deliver.
Beyond the marketing department, research benefits many core business functions:
- Sales—Selling is tough enough without trying to sell the wrong product to the wrong customers or with messaging that “misses-the-boat”. Creating effective sales tools requires having a clear sense of your customers’ pain and how your offer helps to relieve it.
- Finance—Revenue forecasts tacitly assume you’re selling the right service to the right set of customers. Assuring that this is the case will reduce your risk of missing your financial targets.
- Operations/Customer Satisfaction—Documenting customer needs for service and support assures better cost control and higher customer satisfaction and retention.
- Senior Management—Success in the market will increase market share, build company valuations, build business credibility and make it easier to raise additional capital to fund growth.
In Part 2 I’ll cover additional reasons why research is an invaluable business tool.