Archive for the ‘market research’ Category

Survey Question Dos and Don’ts Redux

October 19, 2010

This past summer, I published a series of posts for Insight Central about effective questionnaire design.  It cannot be stressed enough that survey questions must carefully be thought out in order to obtain information you can act on.  In this month’s issue of Quirk’s Marketing Research Review, Brett Plummer of HSM Group, Ltd. reiterates many of the points made in my earlier posts.

Plummer’s article (you’ll need to enter the code 20101008 in the Article ID blank) provides a series of dos and don’ts when writing survey questions. I’ll summarize them here:

Do:

  1. Keep your research objectives in mind;
  2. Consider the best type of question to ask for each question;
  3. Think about how your going to analyze your data;
  4. Make sure all valid response options are included; and
  5. Consider where you place each question within your survey.

Don’t:

  1. Create confusing or vague questions;
  2. Forget to ensure that the response options to questions are appropriate, thorough, and not overlapping;
  3. Ask leading questions; and
  4. Ask redundant questions.

Plummer does a good job at reminding of the importance of these guidelines and points out that effective survey questions are the key to an organization’s obtaining the highest quantity and quality of actionable information, and thus maximizing its research investment.

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Why Surveys Go Well With Predictive Models

October 13, 2010

Thanks to advancements in technology, companies now have the capability to analyze millions – if not billions – of transactional, demographic, and psychographic records in a short time and develop sophisticated models that can assess several scenarios: how likely a customer is likely to purchase again; when he/she will purchase again; how much he/she will spend in the next year; how likely he/she will defect; and many more. Yet, by themselves, predictive models don’t provide a complete picture or profile of the customer. While models can provide information on a prospect or customer’s willingness and ability to purchase based on similar characteristics of current customers, they don’t provide much information about the customer or prospect’s readiness to buy. Hence, a survey can be a highly useful supplement.

Using a survey before a promotion – assuming no effort is made trying to sell to the customer under the guise of the survey – can provide valuable information. With a simple attitudinal and behavioral survey, a marketer can gain a read on the market’s readiness and willingness to buy at that moment. Moreover, the marketer can gauge the purchase readiness of certain customer groups and segments, so that he/she can structure marketing promotions in a manner that makes the best use of marketing dollars. In addition, if certain groups are wary of or unwilling to buy a product, the marketer can look for ways to reach out to these groups for the future.

Another benefit of surveys is to help classify customers and prospects into market segments based on their answers to carefully designed questions. Often, surveys can capture data about prospects and customers that transactional and third-party overlay data sources cannot.

Surprisingly, many companies either do marketing research or predictive modeling, but not both. This is squandering a great marketing opportunity. These two approaches together can provide the missing pieces to the puzzle that will help marketers improve their planning, increase their marketing ROI, and maximize their profits and market share.

Marketing Research in Practice

October 12, 2010

Most of the topics I have written about discuss the concepts of marketing research in theory. Today, I want to give you an overview of how marketing research works in practice. Marketing research from a practical standpoint should be discussed periodically because the realities of business are constantly changing and the ideal approach to research and the feasible approach can be very far apart.

Recently, I submitted a bid to a prospective client, who was looking to conduct a survey from a population that was difficult to reach. My bid came up higher than was expected. The department who was to execute the findings of this survey was on a tight budget. Yet, I had to explain the largest cost driver was hiring a marketing research firm to provide the sample. One faction within the company wanted to move ahead at the price I quoted; another wanted to look for ways to reduce the scope of the study and hence the cost. The tradeoff between cost and scope is often the first issue that emerges in the practice of marketing research.

Much of the practice of marketing research parallels what economists have long referred to as “the basic economic problem:” limited resources against unlimited wants. Thanks to the push for company departments to work cross-functionally, there have never been more stakeholders in the outcome of marketing research, with each function having its own agenda from the outcomes of the research. The scope of the study can expand greatly because of the many stakeholders involved; yet the time and money available for the study are often finite.

Another issue that comes up is the selection of the marketing research vendor. Ideally, a company should retain a vendor who is strong in the type of research methodology that needs to be done. In reality, however, this isn’t always possible. Many marketers don’t deal enough with marketing research vendors in order to know their areas of expertise; many believe that every vendor is the same. That’s hardly the case. Before I started Analysights, I worked for a membership association. The association had conducted an employee satisfaction survey and retained a firm that had conducted several. As part of the project, the employee research firm would compare the ratings to those of other companies’ employees who took a similar survey. However, most of the employers who called on this firm to conduct surveys were financial institutions – banks in particular – and their ratings were not comparable to those of the association. As a result, the peer comparison was useless.

Moreover, picking a vendor who is well-versed in a particular methodology may not be possible because they do it so well, that they charge a premium for the service. Hence, clients are often required to develop second-best solutions.

There are many other political issues that come up in the practice of marketing research, too numerous to list here. The key to remember is that marketing research provides information, and information provides power. The department with control of the information has great power in the organization, which results in less than ideal marketing research outcomes.

To ensure that your marketing research outcomes come as close to ideal, it is necessary to take a series of proactive steps. First, get all the stakeholders together. Without concern for money and time, the stakeholders as a group should determine the objectives of the study. Once the objectives are set, the group needs to think through the information they need for those objectives. Collectively, they should distinguish between the “need to know” and the “nice to know,” information and first go with the former. Generally, about 20% of the findings you generate will provide nearly 80% of the actionable information you need. It’s always best to start with a study design whose results provide the greatest amount of relevant, actionable information at the smallest scope possible.

Once the stakeholders are on board for the objectives and the information they must obtain for the objectives, then there should be some agreement on the tradeoffs between the cost of executing the research, the sophistication of the approach, and the data to be collected. Then timeframe and money should be considered. Once the tradeoffs have been agreed to, the study scope can be adjusted to meet the time allotted for the study and the budget.

Marketing research, in theory, focuses on the approaches and tools for doing marketing research. In practice, however, the marketing research encompasses much more: office politics and culture; time and budget constraints; dealing with organizational power and conflict; and identifying the appropriate political and resource balance for conducting the study.

Rankings – not Ratings – Matter in Customer Satisfaction Research

October 5, 2010

Companies spend countless dollars each year trying to measure and improve customer satisfaction. Much research has indicated that improved customer satisfaction brings about improved sales and share of wallet. Yet, the relationship is a weak one. Despite how satisfied customers say they are in customer satisfaction surveys, nearly 80% of their spending doesn’t relate to their stated satisfaction. Why is that?

In the Fall 2010 issue of Marketing Research, Jan Hofmeyr and Ged Parton of Synovate offer two reasons for this weak relationship between business results and satisfaction: companies don’t measure how their customers feel about competitors, nor do they recognize that they should be concerning themselves with the company’s rank, not its rating. For these reasons, the authors argue, models of what drives customer share of wallet offer little confidence.

Hofmeyr and Parton suggest some ways companies can make these improvements. Companies can start by getting ratings of the competition from the same respondent. If, for example, you are asking your customers to rate your company on a set of attributes that you believe are part of their customer satisfaction experience, if one customer gives a rating of “9” on a 10-point satisfaction scale, and another gives a rating of “8,” you are naturally inclined to treat the first customer as more likely to return and do business with you in the future. But that is only one piece of the puzzle, the authors say. What if you ask your customers to also rate your competition on those same attributes? What if the first customer assigns a competitor a “10” and the second customer a “7”? Basically what happens is that the first customer is very satisfied with your company, but even more satisfied with your competitor; the second customer may not be as satisfied with your company as the first customer, but he/she is most satisfied with your company over the competition. You’d probably want to spend more time with the one who gave the “8” rating.

In this example, the authors are essentially turning ratings into rankings. The ranking, not the rating, the author’s say, is the key to increased share of wallet. Hofmeyr and Parton’s research showed that if a customer shopped predominantly at two retailers, regardless of rating, as long as a customer rated one retailer higher than the other, then the top ranked retailer got an average of between 59% and 68% share of the customer’s wallet, while the lower ranked retailer got just 32% on average. If a customer shopped at three retailers, the pattern was similar: the top-ranked retailer got as much as a 58% share of the customer’s wallet; the second-place retailer, 25%, and the lowest ranked, 17%.

While it is important to have customers rate your company on satisfaction, it is just as important to have them rate your competition on the same evoked set and then order and rescale the ratings so that you can see where your company stands. By ranking your company with respect to your competition, you can much more easily determine gaps between satisfaction expectations and delivery so that you can increase share of wallet.

Former Customers Can Be Goldmine – Both in Marketing Research and Winback Sales

August 24, 2010

The other day, I stumbled across this May 28, 2010 blog post from MySmallBusinessMentor.com, which discussed how to re-activate former customers. While you should definitely reach out to former customers and try to get them to buy again, your former customers can also provide a wealth of information from a marketing research and process improvement standpoint.

If a customer has lapsed for, say a 90- or 180-day period, or a customer who used to buy once a month is now only buying every other month, reach out to that customer and mention that you noticed he/she isn’t frequenting your business as much, and ask if there’s anything with your company that they aren’t getting, or would like to see. It could be that they’re not happy with the product, or they found a similar, less expensive product from a competitor. Maybe they’ve “outgrown” your company’s products; or maybe they lost their job and can no longer afford it, whatever. You won’t know unless you ask.

For the purposes of marketing research, a lapsed customer can be more valuable than a loyal customer, especially when you consider that acquiring a new customer is six times more costly than retaining an existing customer. Taking the time to hear out a former customer can help you take corrective action to prevent other customer defections, improve your practices and product benefits, and even win back your lost customers.

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