This Data’s Got Game

Understanding customers and their needs and wants is the primary driver of successful multichannel businesses. This industry hallmark is one of the reasons we’ve successfully gained wallet share over the past 30 years. Yet how many great research projects end up collecting dust in some filing cabinet?

While database research can be eminently useful in understanding the composition of a database and the purchase behavior of customers, it doesn’t provide the complete and nuanced knowledge required for developing successful strategic change. Insightful primary customer research adds tremendous knowledge, even to those companies with sophisticated databases, and artfully created primary research informs a company’s strategic direction.

Primary Research
Primary research adds qualitative information, or the “why.” It adds customer attitudes and intent about companies and their competition, as well as insight into the “how come,” “where else” and other qualitative measures.

Primary research allows you to ask about customers’ decision-making processes, their influencers, barriers to loyalty, motivators of response, why they decide to shop with you vs. the competition, and even their views of the economy and the future. It’s amazing the things customers will tell you if you just ask.

Unlike secondary database research, primary customer research can be tailored to answer precisely the question you want answered. It also gives insight into both prospects and customers, if prospects are included in the research pool. This will provide insight into those who don’t buy from you as well as those who do, which can inform positioning, strategy and tactics in a powerful yet precise way.

Primary research can be cost-effective and fast. Many direct marketers fear primary research will be cost-prohibitive. However, e-mail can deliver surveys inexpensively and quickly. Customers do their own data entry, and it’s easy to survey many segments of your database — including current and lapsed buyers, as well as prospects. The most relevant responses return within a few days.

Successful primary consumer research incorporates these steps:

1. Senior leadership buy-in. When contemplating research, ask yourself, “What will the company do differently based on research findings?” If a company is unwilling to change what it does or how it operates, research is merely academic. Executive sponsorship is critical to success if research is to drive change.

2. Spend time developing the right objective. We find that people don’t spend enough time thinking about research objectives and often end up with lower-level tactical research. Strategic objectives will lead to strategic results. Time spent ensuring your research is at a high enough level will pay off handsomely. Consider the following:

• Determine what drives loyalty among buyers and what needs to be done to increase loyalty and decrease attrition.

• Determine the behavioral differences of heavy vs. occasional users to gain insight on how to improve financial results.

• Understand why customers prefer to shop with the competition and what can be done to better compete.

3. Cross-tab for the real power. Averages cloud data and hide real distinctions that exist among groups. The most insightful understanding comes from comparing responses of various customer segments and finding the differences in their opinions and attitudes. These insights fall into six categories:

• Behavioral: For example, developing an understanding of why heavy users are loyal helps develop strategies that are more relevant to lapsed or occasional users. Sometimes the reasons for loyalty are surprising, not intuitive.

• Attitudinal: Learning why some customers are brand promoters while others are detractors helps uncover hidden market segments and highlights operational weaknesses that must be fixed before profitable growth can be achieved. Additionally, price sensitivity can vary significantly across customer file segments. Understanding nuanced differences helps to maximize marketing contribution while stimulating demand.

• Sales channel: Understanding which customer segments prefer to shop by which channel and why helps define strategies to convert single-channel users to more profitable multichannel users. We can determine which segments are underrepresented and how to increase share of wallet.

• Demographics: Studying the generational differences of your customers can show the path to being relevant to younger customers. Variables or filters — such as time on the job, position and income levels — often correspond with different decision-making processes and purchasing cycles. Understanding these differences informs marketing, copy, promotional and contact strategies, and ultimately affects response.

• Competitive insights — strategies to capture market share. Filtering responses by customers who shop with competitors can show what’s needed to increase market share at the expense of the competition.

• Insights into the decision-making process — strategies for retention. Filtering responses by promoters vs. detractors can demonstrate weaknesses in the company’s performance that negatively affect loyalty.

4. Have readable results. A common mistake is to administer a survey to a population whose size is insufficient to support readability within cross-tabs. Interpreting statistically insignificant results generally leads to the wrong conclusions and, ultimately, to companies going astray.

5. Spend time with the research findings to discover the strategic intent. Prioritizing the implications of the findings is beneficial in thinking through the strategic initiatives that are derived from the work.

6. Get organizational and senior leadership buy-in to the results. Decision makers should be thoroughly involved in the entire process, especially in step 5 to ensure that actionable change will occur as a result of the work.

Get the Full Picture
Using both database research and primary consumer research will create a rich picture of your customers, including their behaviors, attitudes and beliefs. Learning these “whys” and “where elses” can help drive profitable growth, and it doesn’t have to be difficult or expensive. The knowledge you gain by combining these two powerful tools will pay off handsomely.

John Craig and Becky Jewett are partners of Windward Group, a national consulting partnership specializing in strategic issues for multichannel brands. They can be reached at jcraig@windwardgroup.us and bjewett@windwardgroup.us.