Posts Tagged ‘primary research’

Secondary Research Can Enhance Primary Research

August 4, 2010

Most of the marketing research a small business owner or startup entrepreneur does is secondary: research that has already been conducted by another entity for some other purpose, and later published in mass media sources. Often, businesses rely upon secondary research for marketing information because conducting their own primary research can be very expensive. While one must be careful to understand the purpose for and methodology by which the secondary research was conducted, it can be quite beneficial in many ways, including enhancing primary research. Secondary research provides the following benefits:

Setting the Stage for Future Primary Research

Sometimes you have no clue what you’re trying to find. Let’s say that you want to start a coffee shop in your town, but because of the likes of Starbucks and Caribou Coffee, you’re not sure whether your market is saturated, or if there is a way to differentiate yourself. Secondary research can be an invaluable tool to help you explore. The Yellow Pages, the Web sites of chain stores – Starbucks, Caribou, Dunkin’ Donuts, McDonald’s – selling coffee, and the entertainment sections of newspapers can tell you how much competition you’re facing.

Secondary research might even be able to help you identify demographics of your community that you can use to your advantage. You examine the Census Bureau’s demographic data for the ZIP codes within a five-mile radius of your proposed location. You notice from other sources that there are about 10 competing eating and drinking establishments like those we named above. But from the Census data, you uncover a sizeable ethnic Middle Eastern or Eastern Mediterranean population. You might be able to refine your business concept to be a coffee shop that specializes in selling Eastern Mediterranean style coffees, or medium- to highly- acidic variety coffees, as is common in the Middle East. Now, you can do some basic primary research like small-scale surveys and focus groups to members of the community to see how receptive they would be to a coffee shop with that theme.

Reducing the Scope and Cost of Primary Research

Why spend $20,000 on a full-scale primary research project if you can find available data to meet a large amount of your needs? For example, you’re trying to find out what types of Middle Eastern coffees are selling well in the area. Conducting a survey can be very costly. But if you can find out what you need to know from trade publications covering the food and beverage industries, you might be able to save yourself quite a bit of time and money. Assume you read that a few kinds of Middle Eastern coffees are selling well – or are on an increasing trend – in various parts of the country. Now, you might order a few pounds of each, and then invite local residents to do a taste test and give their thoughts. Your secondary research has saved you thousands of dollars and several days of fieldwork.

Putting Primary Research Results in Perspective

You can even use secondary research to help validate what you find in your primary research. If you were to conduct a survey of your coffee shop’s customers and ask them what kinds of pastries you might serve in your shop, you might see a lot of responses suggesting berry-flavored cobblers and scones, pastries containing cinnamon or cardamom, and even some chocolate. By doing your secondary research, you will also find that, in the Eastern Mediterranean, berries, cinnamon, and cardamom are common flavor pairings, since coffees of that region tend to have berry- and wine-like characteristics, with some element of spice and cocoa. Secondary research, in this case, has validated what your primary research is indicating.

Most times, secondary research is all the marketing research you’ll need to do. However, when you need to do primary research, a good, ongoing system of secondary research can help you discover new information so that you can explore and pursue different avenues in your primary research; fill in several blanks in your research so that you need not reinvent the wheel; and complement any primary research so you can substantiate its findings.

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Help! Customer Satisfaction is High But Sales are Down!

July 28, 2010

Customer satisfaction measurement has been of great interest to service organizations for some years now. Nearly every industry that is both highly competitive and heavily customer-facing – like restaurants, hotels, and banks – know that a poor customer experience can result in lost future sales to the competition. As a result, these service-oriented businesses make every effort to keep their ear open to the voice of the customer. Indeed, customer satisfaction surveys proliferate – I once received five in a single week – as company after company strives to hear that customer voice.

And the effort may be futile. This isn’t to say that measuring customer satisfaction isn’t important – most certainly it is. But many companies may be overdoing it. In fact, some companies are seeing negative correlations between customer satisfaction and repeat business! Is this happening to you?

Reasons Why Satisfaction Scores and Sales Don’t Sync

If your customers are praising you in satisfaction surveys but you’re seeing no improvement in sales and repeat business, it could be for one or more of the following reasons:

You’re not Asking the Question Right

Often, a disparity between survey results and actual business results can be attributed to the two measuring different things. If you simply ask, “Overall, how satisfied were you with your stay at XYZ Hotel,” it only tells you about their current experience. If 80 percent of your respondents indicate “Satisfied” or “Very Satisfied,” you only get information about their attitudes. Then you compare satisfaction scores to either total sales or repeat sales from quarter to quarter. And you find either no correlation or a negative correlation. Why? Because the survey question measured only their perceived satisfaction, while the business results measured sales.

On the other hand, if you were to ask the question: “How likely are you to return to XYZ Hotel,” or “How likely are you to recommend XYZ Hotel to a friend or relative,” you might get a better match between responses and business outcomes.

Only Your Happiest Customers Are Responding

Another reason satisfaction scores may be high while sales are declining is because only your most loyal customers are taking the time to complete your survey. Your most loyal customers might have been trained to complete these surveys because they have been spoiled with special incentives because of their frequent patronage, and hence get better treatment than most customers.

Another, more dangerous, reason your happiest customers may be the only respondents is because the distribution of the survey is “managed,” being sent only to the people most likely to give high scores. There is a great risk of this bias in organizations where top executives’ compensation is tied to customer satisfaction scores.

Respondents Aren’t Telling the Truth

As much as we hate to admit, we’re not as honest as we claim to be. This is especially true in surveys. Entire books could be written on respondent honesty (or lack thereof). There are several reasons respondents don’t give truthful answers about their satisfaction. One obvious reason is courtesy; some just don’t like to give negative feedback. Still, even with the promise of confidentiality, respondents worry that if they give a poor rating, they’ll receive a phone call from the business’ representative, which they aren’t comfortable taking.

Survey incentives – if not carefully structured – can also lead to untruthful respondents. If you offer respondents a chance to win a drawing in exchange for completing your customer satisfaction survey, they may lie and say positive things about their experience, in the hopes that it would increase their odds of winning the prize.

You’re Hearing Your Customer but Not Really Listening

In many cases, your customers might say one thing, but really mean another. The customer could be quite satisfied on the whole, but there might be one or two smaller things, that if unchecked, can reduce the customer’s likelihood of repeat business. For example, if you sell clothing online, but not shoes, and your customer doesn’t find out until after loading everything else into the online shopping cart, assuming he/she doesn’t abandon the cart, the customer completes the order for the clothes he or she wants. When the customer gets the survey, he or she might indicate being very satisfied with the order he/she executed. But deep down, that same customer might not have liked that your online store doesn’t sell shoes. Whether or not the customer indicates the issue about the shoes, the next time he/she wants to buy clothes online, the customer may remember that you don’t sell shoes and choose to place the entire order with a competitor who does.

How Can We Remedy This Disparity?

There are a few ways we can remedy these situations. First, make sure the questions you ask reflect your business goals. If you want satisfied customers to return, be sure to ask how likely they are to return. Then measure the scores against actual repeat business. If you want satisfied customers to recommend your business to a friend, make sure you ask how likely they are to do so and then measure that against referrals. Compare apples to apples.

Second, reduce incentives for bias. Ideally, no executive’s compensation should be tied to survey ratings. Instead, tie compensation to actual results. If compensation must be tied to survey results, then by all means make sure the survey is administered by employees with no vested interest in the outcome of the survey. Also, make sure that your entire list of people to survey comes from similarly disinterested employees of the organization.

Third, encourage non-loyal customers to participate. You might create a separate survey for your most loyal customers. For the non-loyal customers, make sure you have ways to encourage them to respond. Whether it’s through an appropriate incentive (say a coupon for a future visit), or through friendly requests, let your non-loyal customers know you still care about their feedback.

Fourth, place reliability checks in your survey. Ask the same question in two ways (positive and negative) or phrase it slightly differently and compare the results. In the former example, you would expect the answers to be on opposite ends of the rating scale. In the latter, you would expect consistency of responses on the same end of the scale. This helps you determine whether respondents are being truthful.

Finally, be proactive. In the example of your online clothing store, you might have the foresight to realize that your decision not to sell shoes may impact satisfaction and future business. So you might be upfront about it, but at the same time, offer a link to a cooperating online retailer who does sell shoes, and allow the customer to order shoes from that retailer using the same shopping cart. That may keep the customer’s satisfaction high and increase his/her likelihood of future business.


 

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Considerations for Selecting a Representative Sample

July 27, 2010

When trying to understand and make inferences about a population, it is neither possible nor cost effective to survey everyone who comprises that population. Therefore, analysts choose to survey a reasonably-sized sample of the population, whose results they can generalize to the entire population. Since such sampling is subject to error, it is vitally important that an analyst select a sample that is adequately representative of the population at large. Ensuring that a sample represents the population as accurately as possible requires that the sample be drawn using well-established, specific principles. In today’s post, we will be discussing the considerations for selecting a representative sample.

What is the Unit of Analysis?

What is the population you are interested in measuring? Let’s assume you are a market research analyst for a life insurance company and you are trying to understand the degree of existing life insurance coverage of households in the greater Chicago area. Already, this is a challenging prospect. What constitutes “life insurance coverage?” “A household”? or “The greater Chicago area?” As the analyst, you must define these before you can move forward. Does “coverage” mean having any life insurance policy, regardless of amount? Or does it mean having life insurance that covers the oft recommended eight to ten times the principal breadwinner’s salary? Does it mean having individual vs. group life insurance, or either one?

Does “household” mean a unit with at least one adult and the presence of children? Can a household consist of one person for your analysis?

Does the “greater Chicago area” mean every household within the Chicago metropolitan statistical area (MSA), as defined by the U.S. Census Bureau, or does it mean the city of Chicago and its suburban collar counties (e.g., Cook, DuPage, Lake, Will, McHenry, Kane, Kendall)?

All of these are considerations you must decide on.

You talk through these issues with some of the relevant stakeholders: your company’s actuarial department, the marketing department, and the product development department, and you learn some new information. You find out that your company wants to sell a highly-specialized life insurance product to young (under 40), high-salaried (at least $200,000) male heads-of-household that provides up to ten times the income coverage. You find that “male head-of-household” is construed to mean any man who has children under 18 present in his household and has either no spouse or a spouse earning less than $20,000 per year.

You also learn that this life insurance product is being pilot tested in the Chicago area, and that the insurance company’s captive agent force has offices only within the City and its seven collar counties, although agents may write policies for any qualifying person in Illinois. You can do one of two things here. Since all your company’s agents are in the City and collar counties, you might simply restrict your definition of “greater Chicago area” to this region. Or, you might select this area, and add to it nearby counties without agencies, where agents write a large number of policies. Whether you do the former or latter depends on the timeframe available to you. If you can easily and quickly obtain the information for determining the additional counties, you might select the latter definition. If not, you’ll likely go with the former. Let’s assume you choose only those in the City and its collar counties.

Another thing you find out through communicating with stakeholders is that the intent of this insurance product is to close gaps in, not replace, existing life insurance coverage. Hence, you now know your relevant population:

Men under the age of 40, living in the city of Chicago or its seven collar counties, with a salary income of at least $200,000 per year, heading a household with at least one child under 18 present, with either no spouse or a spouse earning less than $20,000 per year, and who have life insurance coverage that is less than ten times their annual salary income.

You can see that this is a very specific unit of analysis. For this type of insurance product, you do not want to survey the general population, as this product will be irrelevant for most. Hence, the above italicized definition is your working population. It is from this group that you want to draw your sample.

How Do You Reach This Working Population?

Now that you have identified your working population, you must find a master list of people from which to draw your sample. Such a list is known as the sample frame. As you’ve probably guessed, there is no one list that will contain your working list precisely. Hence, you will spend some time searching for as comprehensive a list, or some combination of lists that will contain as complete a list as possible of everyone in your working population. The degree to which your sample frame fails to account for all of your working population is known as its bias or sample frame error, and such error cannot be totally eradicated.

Sample frame error exists because some of these upscale households move out while others move in; some die; some have unlisted phone numbers or don’t give out their email addresses; some will lose their jobs, while others move into these high paying jobs; and some will hit age 40, or their wives will get higher paying jobs. And these changes are dynamic. There’s nothing you can do, except be aware of them.

To obtain your sample frame, you might start by asking yourself several questions about your working population: What ZIP codes are they likely to live in? What types of hobbies do they engage in? What magazines and newspapers do they subscribe to? Where do they take vacations? What clubs and civic organizations do they join? Do they use financial planners or CPA’s?

Armed with this information, you might purchase mailing lists of such men from magazine subscriptions; you might search phone listings in upscale Chicago area communities like Winnetka, Kenilworth, and Lake Forest. You might network with travel agents, real estate brokers, financial advisors, and charitable organization. You may also purchase membership lists from clubs. You will then combine these lists to come up with your sample frame. The degree to which you can do this depends on your time and budget constraints, as well as any regulatory and ethical practices (e.g., privacy, Do Not Call lists, etc.) governing collection of such lists.

Many market research firms have made identifying the sample frame much easier in recent years, thanks to survey panels. Panels are groups of respondents who have agreed in advance to participate in surveys. The existence of survey panels has greatly reduced the amount of time and cost involved in compiling one’s own sample frame. The drawback, however, is that respondents from a panel self-select to join the panel. And panel respondents can be very different from other members of the working population who are not on a panel.

Weeding Out the Irrelevant Population

Your sample frame will never include all those who fit your working population, nor will it exclude all those who do not fit your working population. As a result, you will need to eliminate extraneous members of your sample frame. Unfortunately, there’s no proactive way to do this. Typically, you must ask screening questions at the beginning of your survey to identify if a respondent qualifies to take the survey, and then terminate the survey if a respondent fails to meet the criteria.

Summary

Selecting a representative sample is an intricate process that requires serious thought and communication between stakeholders, about the objectives of the survey, the definition of the relevant working population, the approach to finding and reaching members of the working population, and the time, budget, and regulatory constraints involved. No sample will ever be completely representative of the population, but samples can and should be reasonably representative.

A Typical-Length Survey or A Few Shorter Ones?

June 28, 2010

Most online surveys today take between 10 and 15 minutes, with a few going as long as 25 to 30 minutes. As marketing researchers, we have long pontificated that surveys should be a reasonable length, as longer ones tend to cause respondents to disengage in many ways: speeding through, skipping questions, even abandoning the survey. Most marketers realize this, and the 10-15 minute survey seems to be the norm. But I wonder how many marketing researchers – on both the client and supplier side – have ever considered the length of a survey from a strategic, rather than a tactical, point of view.

Sure, a typical-length survey is not super long, and is often cost effective for a client. After all, the client can survey several people about several topics in a relatively short time, for a set price, and can get results quickly. But sometimes I believe that instead of one 15-minute survey, some clients might benefit more by conducting two 7- or 8-minute, or three 5-minute surveys, stretched out over time. Marketing researchers on both sides will likely disagree with me here. After all, multiple shorter surveys can cost more to administer. However, I believe that – in the long-run – clients will derive value from the more frequent, shorter surveys that would offset their cost. Multiple, shorter surveys will benefit clients in the following ways:

Focus

As marketing research suppliers, it is our job to make sure we understand the client’s key business problem. Many times, clients have several problems that must be addressed. We need to help clients look at all of their business problems and prioritize them in the order of benefit that their resolution would bring. If we could get the client’s survey focused on the one or two problems whose resolution would result in the most positive difference, we can keep the survey short, with more targeted questions. As a result, the client doesn’t get bombarded with tons of data tables or reports with lots of recommendations and end up immobilized wondering which ones should be implemented first. On the contrary, the client will receive a few, very direct, insights about how to respond to these key problems.

Reduced Incentive Costs

Since surveys are shorter, respondents may be willing to do them for little or no incentive. This can save the client money.

Higher Response Rates

Surveys that are 10-15 minutes long generally get decent response rates. However, a survey that’s 3, 5, or 7 minutes long will likely get excellent response rates. Why? Because they’re more convenient, straight to the point, and can be knocked off quickly. As a result, respondents are less willing to put it off. Respondents are also less likely to terminate the survey, speed through it, or skip questions.

Increased Trust by Respondents

Because you didn’t waste their time with the first survey, respondents may be more inclined to participate in your subsequent surveys. If they took your 5-minute survey today, then you send them another 5-minute survey four to six weeks from now, they are likely to trust that this survey won’t take long either, and will likely respond to it. Of course, the key here is to space the surveys out. You don’t want to send all three at once!

More Reliable Data

As mentioned above, respondents are less likely to speed, terminate, or skip questions to a short survey than they are with a longer one. As a result, there will be less non-response error and more truthful responses in the data, and hence more trustworthy findings.

Ability to Act on Results Faster

Because the survey is short and to-the-point, and response rates are higher, the client can achieve the desired number of completed surveys sooner than if the survey were longer, so the survey doesn’t have to be in the field as long. And because the survey is short, the time the marketing research firm needs to tabulate and analyze the data is much shorter. Hence the client can start acting on the insights and implementing the recommendations much sooner.

Discovery

What would happen if a client conducted a typical-length survey and found a theme emerging in open-ended questions or a trend in responses among a certain demographic group? The client may want to study that. But custom research is expensive. If the client did a typical-length survey, the budget may not be there to do another survey to investigate that newly discovered theme or trend. With a shorter survey, the cost may be somewhat lower, so funds might be left in the budget for another survey. In addition, if the client is scheduling subsequent shorter surveys, the learnings from the first survey can be used to shape questions for further investigation in those upcoming surveys.

The Shorter Survey May Be Enough

Several times, problems are interconnected, or generated by other problems. If research suppliers helped clients isolate their one or two biggest problems, and focused on those, the client might act on the insights and eliminate those problems. The resolution of those problems may also provide solutions to, or help extinguish, the lesser-priority problems. As a result, future surveys may not be needed. In that case, the research supplier did its job – solving the client’s problem in the shortest, most economical, and most effective manner possible.

Granted, many clients probably can’t do things this way. There are economies of scale in doing one longer survey as opposed to two or three shorter ones. Moreover, the client probably has several stakeholders, each of whom has a different opinion of which problem is most important. And each problem may have a different urgency to those stakeholders. This is why it is so important for the research supplier to get the client’s stakeholders and top management on board with this. As research suppliers, it is our job to inform and educate the client and its stakeholders on the research approach that maximizes the best interest of the client as a whole; and if that is not possible, work with those stakeholders to identify second-best solutions. But once the key issues – problems, budget, politics, and urgency – are on the table, research suppliers can work with the client to develop the shortest, most focused, most cost effective survey possible.

No Money to Conduct Primary Research? You May Have Done a Lot of it Already!

June 8, 2010

Last week, I wrote about an entrepreneur who was conducting secondary marketing research so he could develop his business plan. This week, I am writing to talk about primary research – data your company generates on its own. Often, we think of surveys and focus groups when we hear “primary research.” And those methods can indeed be costly. However, your business is probably generating volumes of primary data right under your nose. You’re out to hear the voice of your customers and prospects when you do primary research, and primary data is coming to you at nearly every touch point you have with them. Think of these sources:

Customer Service Calls

When customers call for customer service, or prospects call for information, what are the most common things they ask about? If your business sells handbags, which ones are frequently inquired about? Are the handbags most inquired about those that are higher or lower priced? Are they new handbags you’ve introduced? Are they mostly imported handbags? Also, who is making the inquiries? Are they long-term customers? Prospects? If long-term customers are inquiring about one line of handbags and prospects about another, you can tailor your marketing messages to their interests.

Customer Complaints

Nobody likes to be on the receiving end of a complaint. But complaints can be a great source of information. They can alert you to product defects, service breakdowns, and even give you ideas for enhancing your product or service. They can even help you save a long-term relationship and avoid bad word-of-mouth press. If women are complaining that the strap on one of the handbags you sell is uncomfortable to hang over their shoulders, that can prompt you to look for alternatives, or contact the supplier with that information. If a customer complains about the treatment an employee gave him/her, you might use that as an opportunity to either train your staff on improved customer service or discipline that employee.

It’s often said that 96% of a business’ dissatisfied customers will not complain; 91% will quietly go away; and those silent dissatisfied customers will likely communicate their dissatisfaction to at least nine other people. Encourage your customers to speak up when they’re not happy. Complaints can be a rich source of research.

Your Salespeople

Your salespeople are out in the field. They see everything at the frontlines. What successes are they having? What gripes do they have? Let’s say that a salesperson occasionally sells handbags to men, who are buying it for their wives, girlfriends, or mothers. You might have them inquire about the occasion. Perhaps it’s a birthday. When you know  the buyer’s spouse or significant other’s birthday, you might send a personal message to the gentleman around the same time next year, encouraging him to buy a new handbag. Salespeople can also tell you that they’re losing business to competitors because the sales cycle is too long, or too complicated, or there’s too much administrative work. They might also tell you that they’ve lost sales because your business doesn’t accept credit cards. All of these insights can be very helpful. You should encourage your salespeople to engage the customers and prospects, and also encourage them – without judgment – to share their successes, failures, and challenges with you.

Your Competition

Your competitors can be a great resource for your marketing research. Check out their Websites from time to time; follow them on Twitter; “Like” them on Facebook; read their blogs; subscribe to their newsletter; buy their products from time to time; drop in on them if they are a retailer, restaurant, etc. These techniques can alert you to their promotion schedule, the types of customers they are pursuing; the products and/or services they are emphasizing most heavily, what markets they’re in, and so forth. You might also be able to pick up the phone and talk to your competitors directly. It may be that they serve a different niche and that there’s plenty of business to go around. Plus, the fact that you are in the same business gives you an affinity that encourages both your competitors and you to help each other out.

Warranty Cards

Encouraging your customers to fill out a warranty card can also provide useful information: contact information, birthdate, age, type of product purchased, and other kinds of information. This will give you an idea of the type of customer that buys your product. Also, if customers invoke the warranty at some point, you can also get some idea for the products that are having the issue, the types of customers it has been happening with, and the most frequently occurring defects.

Previous Promotions

Look back at some of the ads you ran. How did they perform? Did you test two types of ads? Which one did better? Knowing which promotional tactics work well and which don’t can ensure that you’re directing your marketing dollars more effectively.

This list is far from comprehensive. You can also obtain primary research from trade and professional associations in your industry, as well as from chambers of commerce. You can also get information from your suppliers/vendors. And just plain old networking can give you information.

Primary research is generally expensive, but there’s so much of it that you’re likely already doing, that you may have a wealth of research right within your walls. Mining that information is like mining gold!

Do you have a lot of information you’re collecting that you’re not using to generate new or repeat business? Are you collecting mountains of information but can’t make any sense of it? Would this kind of primary research be of valuable to you, but you just don’t know where to start? Analysights can get you on the right track. Call us at (847) 895-2565 or visit our website at www.analysights.com.