Market research – explaining why, not what

It’s understandable to ask why we need market research at a time when digital marketing techniques provide fast and exact metrics on any conceivable activity.

The reason is simple: metrics are incomplete. Metrics tell us what happened. They don’t tell us why. Metrics give us quantitative results. Research gives us qualitative answers.

Contents

  1. Market data & bespoke research
  2. Brand attributes survey
    1. The interview stage: qualitative research
    2. The survey stage: quantitative research
  3. Brand awareness survey
  4. Customer satisfaction survey (NPS)
    1. Limitations of NPS
  5. Research that guides your future plans
    1. How you get responses
  6. Do you need agency support?
    1. Here’s the test

When metrics align we don’t need market research to infer a connection between them. Improved search rankings, increased web traffic and growing sales are probably related to each other.

We need market research when metrics contradict each other. If search rankings improve and web traffic increases but sales fall, research helps us understand why.

Metrics tell you what happened. Market research tells you why.

Metrics tell you what happened. Market research tells you why.

 

Market data & bespoke research

The term “market research” covers two types of activity.

  • Market data gives you a global overview of a market. How many companies are active in it? What’s the value of the market? How many units were sold last year? Is the market growing or contracting? What do the next five years look like?
  • Bespoke research tells you about your own local section of a market. How is the market behaving for your current, lost and almost customers? How strong is their relationship with you? What are their future plans?

Market data is best sourced from major research organisations such as Plimsoll. If the price is unappealing (and it can be), your own trade association might provide free market research to its members. It’s one of the most valuable functions they can perform.

Bespoke market research is the domain of in-house marketing departments and marketing agencies. They can leverage your customer and prospect relationships to reveal trends that can guide your future activities.

Primary & Secondary Research

There’s also a distinction we don’t need to dwell on between primary research (gathering the responses yourself) and secondary research (analysing data collected by others).

 

Brand attributes survey

Market research will tell you about your brand. The most unsettling aspect of brand marketing is that you don’t control your own brand. At best, you can influence it. Your customers decide what your brand means and the only way you can find out is by asking them.

A survey of brand attributes tells you the characteristics customers associate with you. For example,

  • If you think you’re experts in your field, a brand attributes survey might reveal that you’re perceived as average.
  • If you feel you struggle with customer service, a brand attributes survey might show that you’re seen as better than your competition.

When we listen to a recording of our own voices we normally say “Do I really sound like that?” How can we not know how our own voices sound? We use them every day.

The truth is that it’s impossible to tell how the outside world hears us from inside our own heads.
The same applies to brand attributes. You have to ask the outside world what they are. Theirs are the only opinions that matter.

The interview stage: qualitative research

You can’t jump into a survey asking people if they see you as expert, good value, service-oriented, etc. You need to get a feel for the attributes that apply to you.

Your first survey consists of a series of interviews. For SMEs it could be fewer than ten. The goal is to ask open questions about the way customers see you. The topics you choose depend on the business areas that matter to you:

  • A bank might focus on security.
  • A law firm might need to know about confidentiality.
  • A consultant might care most about expertise.
  • A telecoms company might live and breathe customer service.

Interviews should always be recorded. A smartphone’s voice recorder is adequate and convenient. The recording has to be clear, not broadcast quality.

Recordings are more reliable than note-taking.

Recordings are more reliable than note-taking.

The questions need to start open to avoid leading the interviewees e.g. “How would you describe our service?” rather than “Would you describe our service as expert?”

If your initial questions don’t elicit answers that describe the attribute you want (e.g. skill levels) you can add more direction to the questions without leading the interviewee e.g. “How would you describe the skill levels of our staff”?

Once the interviews are complete, the answers need to be collated. Group synonyms together so, for example, “adept”, “experienced”, and “highly-skilled” are all grouped under “expert”.

If you have fewer than 50 customers, a qualitative survey of 10 would satisfy the quick route to a brand attributes survey. At that point, you could compile a brand attributes report. However, we have to acknowledge that this wouldn’t satisfy a strict statistical definition of an adequate sample size. It would just give you a reasonable estimation of brand attributes.

The other problem with relying on the qualitative part of the survey is that the interviewees were self-selected. It’s easy to ’forget’ lost customers or almost customers. It’s human nature to be drawn to good customers who are likely to suggest positive attributes. A mechanism needs to be put in place to randomise the selection of interviewees.

The survey stage: quantitative research

Once you know the brand attributes you want to test, you need to survey a larger number of current, lost and almost customers to measure whether they agree that those attributes describe your brand.

The number of responses you need is calculated using one of the many sample size calculators available online. Once you tell it the confidence level you want (95%), the margin of error (10) and the population (the sum of your current, lost and almost customers), it tells us how many responses you need.

The results can be gathered by email. A phone survey can be used as a follow-up if you’re short of responses.

The questions would follow a standard Likert scale:

“On a scale from 1 (strongly disagree) to 5 (strongly agree), would you describe our support as expert?”

Depending on the attribute, Likert scales can also be used to measure frequency (always to never), importance (very important to unimportant), quality (very good to very poor) and likelihood (definitely to definitely not).

The importance measure is worth noting because the brand attributes you care about are ones that affect buying decisions. If your sample strongly agrees that your pricing is high, that seems bad. But if they also strongly disagree that price is an important selection criteria, it’s not so bad.

Analysing data from a Likert scale is challenging. It is tempting to use the mean of the responses, rounded to a whole number. Statisticians frown on this.

They suggest using the mode of the responses, the most frequently occurring answer. They also allow the use of the median of the responses, the middle number, but this is too often “3” to be of practical use.

The End Result

Once you’ve completed your market research into brand attributes you’ll be in one of two positions:

  • The research confirms that you have the attributes you expected. It gives you statistics you can promote. You have your “8 out of 10 cats” data.
  • The research shows that your attributes are different to expectations. It tells you where you need to improve your performance.

 

Brand awareness survey

A brand awareness survey serves three purposes:

  1. It reveals where your strongest chances of future growth lie. It is easier to grow in markets that know you. If you have grown as far as you can in those markets, a brand awareness survey guides you towards your next best market.
  2. It tells you how far into a target organisation your influence extends. Is it only the people directly involved in purchasing your product/service or are other influencers aware of you?
  3. It tells you the nature of that awareness. Do the people who are aware of you view you in a positive or negative light?

A brand awareness survey needs to extend beyond your current, lost and almost customers. You know these groups are already aware of you.

To reach the wider economy you either need a to buy a GDPR-compliant database that you can contact or you need a market research agency with a suitable panel.

If you buy a database you must be able to segment it by industry type and job role. The industry types tell you which markets represent the strongest growth prospects for the future e.g. manufacturing or retail. The job roles tell you how far into an organisation your awareness reaches e.g. Financial Directors or HR Assistants.

What questions should you ask? You need to understand how responsive contacts are to your brand:

  • Are they aware of your company?
  • Would they consider your company as a supplier?
  • Would they prefer your company as a supplier?

When the responses to these three questions are analysed alongside the respondent’s industry type and job role, you understand which industries represent your growth prospects and which job roles are most receptive to you.

You can add two refinements to the standard brand awareness survey. The first is to repeat the questions for different parts of your business. BUPA, for example, might have great awareness for healthcare and hospitals, but how aware are people of its dental services?

The second refinement is to add a competitor into the assessment. This gives you a relative indication of how far ahead or behind you are in your markets. It also weeds out unusual respondents: if they haven’t heard of you or a competitor, they’re probably not very knowledgeable about the market.

The end result

The completed brand awareness survey shows you the industries in which you have growth potential and the job roles that are most (and least) receptive to you.

 

Customer satisfaction survey (NPS)

Everybody, even the most aggressive cost-cutting retailers, claims to offer good customer service and to have satisfied customers. This makes it a very weak value proposition to promote. How do you separate fact from fiction?

Net Promoter Score (NPS) is one way. At its simplest, NPS asks customers “How likely is it that you would recommend {company name} to a friend or colleague?”

The answers range from 0 (not likely) to 10 (extremely likely). Respondents who answer between 0 and 6 are considered detractors; 7 and 8 are considered neutral; only 9 and 10 are considered promoters.

The score is calculated as the percentage of promoters minus the percentage of detractors. It can range from –100 to +100.

NPS is widely accepted but is open to abuse.

NPS is widely accepted but is open to abuse.

Imagine you had a small survey of 11 respondents, each of whom had selected one of the possible answers. You could have 7 detractors representing 65% of the respondents and 2 promoters representing 18% of the respondents. Your NPS would be -45 (18 minus 65). You would have work to do!

How do we gather NPS scores?

Email is the best way to gather NPS scores. The process has to be automated to be cost-effective. Use a marketing automation platform (Pardot, HubSpot, Zoho One, etc.) to automatically ask customers for their NPS score after you have completed a transaction with them. Give them enough time for the transaction to complete but not so much time that they forget who you are.

To make it easier for respondents, construct the emails so that pressing a button submits their score. It’s an instant, one-click process. Don’t ask them to go to a webpage. That’s an extra step they won’t appreciate. A good marketing automation platform can collate the scores based on which button was pressed.

A more thorough approach sees you addressing one of the main limitations of the NPS system: it doesn’t tell you why people are promoters or detractors. You can follow-up the scores at each end of the scale to get a better understanding.

Marketing automation can do this by email, but many organisations prefer to do this stage by phone.

Limitations of NPS

Although it’s widely accepted, NPS has many weaknesses:

  • NPS doesn’t say when the surveys were taken. Less scrupulous organisations could endlessly publish the results from October 2017 because that was an especially good month.
  • NPS doesn’t say what the survey asked about. Many organisations run separate NPS surveys for separate divisions or product families. They could choose to promote the best scores and shelve the rest.
  • NPS doesn’t force us to disclose who was surveyed. It’s common practice for organisations to exclude bad customers or focus their attention on the best. This distorts the results.
  • Because it only relates to a recent transaction, NPS isn’t a strong indicator of long-term behaviour.

Despite these limitations (and many others), NPS still has two benefits that make it worthwhile:

  • If you want to promote your customer service levels, NPS is a metric you can publish that your audiences will understand.
  • It reveals the promoters you should approach to become case studies.

 

Market research that guides your future plans

We all face the same problems when we’re trying to grow our businesses. We have an idea but we don’t know if there’s a market for it. We wonder:

  • How many customers need this product/service?
  • How much would they pay for it?
  • If they already buy it, who do they buy from?
  • Are customers satisfied with their current supplier?

Research can guide you. By wording survey questions carefully, you can establish market size, market demand and the competitive landscape without disclosing the plans you’re considering. For example:

  1. You can ask what problems customers face in the coming 12 or 24 months. When we worked for an engineering company, many customers were desperately worried about new emissions legislation that would affect diesel engines. That revealed a need for an emissions abatement solution.
  2. You can ask how much customers typically spend (or expect to spend) on a product/service. Letting them choose from several financial ranges is more productive than asking for specific figures. This helps you understand both competitive pricing and market potential.
  3. You can ask them what priority they would give to a series of problems. This reveals the problems that are waiting for a solution – the foundation of any marketing strategy or lead generation campaign.

How you get responses

When you receive an email that asks “please complete our annual survey”, what do you do? Most people groan and hit the delete button. Even if there’s an incentive and even if it’s a good supplier, we’ve got more important things to do with our days.

There are two ways that do get survey results:

  • If you want to ask a series of question in one session, you need to compile a questionnaire that you can go through face-to-face with your customers. This technique generates accurate, complete answers in a defined time period. The disadvantage is that only your best customers will give you the time and they might not be the respondents you need.
  • An alternative is the ‘one question survey’ email. Instead of sending an email that asks a massive series of questions, send an email that asks one question. Make the email personal. Make it look like it came from a known person’s Outlook account, not the marketing automation system that really sent it. If the one question prompts a follow-up, send this as a separate email a couple of days later.

There are two disadvantages of the ‘one question survey’ email technique. It is relatively complex to setup. It requires a marketing automation programme and somebody who knows how to build branching email routines. Secondly, you can’t be totally certain when you will get the responses you need. It depends how quickly people respond.

Having said that, it does work continually and automatically to build a valuable database of market knowledge. And it does this without annoying your customers.

With market research, customers can guide your future plans.

With market research, customers can guide your future plans.

 

Do you need agency support for market research?

In an ideal world, you can do surveys yourself. They’re not complicated.

The only genuine disadvantage is that people tend to talk more openly about you when they’re not talking to you. They’re more honest with an independent third-party.

So if you can do surveys yourself, the question becomes “Will you?” rather than “Can you?”

Here’s the test

Put a deadline in your diary. Give yourself three months to do one of these tasks:

  1. Complete the first stage interviews for a brand attributes survey.
  2. Conduct a ‘quick’ brand awareness survey (awareness, consideration, preference).
  3. Create a programme to automate NPS survey collection.
  4. Create a programme to ask your first ‘one question survey’ email and collate the answers.

If you miss that three-month deadline, call Forbes Baxter Associates for help. That’s what we’re here for.