Saturday, March 7, 2009

Understand your Customers through Research

Don’t worry research is not as hard as it sounds and it’s not something exclusively for huge conglomerates or companies with massive marketing budgets. Every company can do it and more importantly, every company can benefit.
Everything you need to know about customer research you learned in 5th grade science class:
  • What is the question you want answered (hypothesis)?
  • How will you test it (experiment)?
  • What do you results say (evaluate)?
Do those three things and you’ll be able to make better decisions that will lead to better results.
Here are five keys to customer research:
1. The Research Plan.
Begin by figuring out what you know, what you don’t know and what you’d like to know. (what’s the question?) Then figure out how to gather the data (how will you test it?). Will you send out a survey, test offer response, conduct a field study, etc?
Say for example you want to figure out if it makes more sense to offer 20% off or buy two get one free: A simple way to test would be to put together two offer emails, that are exactly the same except for the offer copy and send them to two groups of customers that are roughly the same size.
When the customers respond, track the results. Did more customers respond to 20% off or buy two? You should also consider which one generated more revenue – more customers may have responded to the % off, but the fewer customers responding to the buy two offer might have generated more total revenue.
Evaluate your results. If 20% offer was better, what if you’d offered buy one get one, did you have to offer 20% or could you have offered 15% and gotten similar results, what if you’d offered 25% off?
Results often lead to more questions and as you can see, research isn’t something you do once. The best results come from continuously testing, measuring and evaluating.
2. Current Customers.
Find out what’s working by asking your current customers. You already have an existing relationship with them, and you can find out you what they liked, why they bought and what sets you apart from your completion. Their feedback will give you your competitive differentiators and should be the key sales points.
3. Potential customers (and your competition).
Learn how to improve by asking your competition’s customers or reviewing your competitors websites, sales materials, etc.. What is your competition’s value proposition? How are they positioning themselves? Ask their customers why they chose them over you.
The honest feedback may not be what you want to hear but it’s the key to uncovering your faults and finding out how you need to improve. If you can’t improve, then at least you’ll be able to address the issues pre-sale rather than post-lost sale.
4. Non-Customers (and other industries).
Explore untapped markets by evaluating other industries and talking to non-customers – people who aren’t in the market for your products. Why don’t they want what your selling? What are they looking for? Is there an untapped market in another industry that you or your competitors are missing or could easily exploit? If so, you can gain market share by getting their first.
5. What’s it all mean?
While research can be complicated and technical, it’s also something that can be done relatively easily. Every company already has or can easily start to gather a wealth of information -- from customers, competitors, industry and trade sources. By planning appropriately, then compiling and evaluating this data we can make better decisions, increase sales and improve revenue.
You should also recognize that it’s a continuous process, because the answers to the first question should lead to additional questions, answers and more questions….

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