80% Of Your Research Should Be With Your Customers
By Ray Poynter
When I joined the market research industry in the 1970s, most market research was conducted with the whole market, i.e. with nationally representative samples. But that approach reflected the times. There were fewer products, fewer brands, and fewer channels for advertising. Markets were less mature, brands were establishing themselves, they often had genuine product differences, and market researchers were like explorers, mapping an unfamiliar land.
The later 1980s and the 1990s saw a shift to researching target groups and customers. Ad and brand tracking focused on target groups and customer satisfaction focused almost exclusively on customers. Concept and product testing, which had previously used whole market samples, started to focus on heavy users versus light users versus non-users – i.e. most of the sample were users, even for brands with say a 10% share. This change in focus represented changes in the market place, the number of brands and lines had grown, product advantages were proving to be illusory or temporary, and the battleground was shifting to logistics, sourcing, and image based advertising.
Since 2000 the focus in marketing has moved on again. Most brands manage to achieve product, service and advertising parity. Organisations have become much smarter about calculating the cost of customer acquisition, lifetime value, and the problem of churn. For many brands the issue has become increasing share of throat, size of shopping basket, and total usage, ahead of growing the customer base.
Over the last 15 years the focus in much of the business literature has focused on the use of customers, and co-creation, as a key source of competitive advantage. The writings of authors such as Mark Earls (Herd) and Rijn Vogelaar (The Superpromoter) have highlighted that brands tend to succeed through social copying, rather than through non-users being ‘persuaded’ by marketing or advertising.
In many cases, perhaps most cases, the best way to grow a brand is to increase the number of customers who ‘love’ it, because these people will recommend it, use it ostentatiously, and offer it in group settings. In most cases, a new line, a new campaign, a new service will only succeed if existing customers respond positively to it.
According to reports such as the GreenBook GRIT study the fastest growing major new research methodology is the use of research communities, such as insight communities and MROCs. Given the shift from the whole market to customers in the wider research world, it is not surprising that most research communities focus on customers. There is a community of interest between a brand and its customers, they all benefit if the products and services are improved. Customers know about the strengths and the weaknesses of the brand, they are in a position to give insight into where the brand should go next.
What proportion of research should be with customers?
For most brands and services (I will mention some exceptions in a moment) my research has led me to suggest that about 80% of research budgets should be spent researching customers. This would include measuring satisfaction, usage, the largest part of the ad and brand tracking sample, testing product and service concepts, product and service refinements, and co-creating the future.
The 20% conducted with the wider market would include market sizing, mapping needs in the market, and competitive intelligence (for example why do users of competitive brands use those brands).
This 80:20 prediction is based on two key points:
- The brand is most likely to grow through social copying/recommendation/word of mouth.
- Most good ideas for the brand will be seen as good ideas by customers.
The main exception to the 80:20 rule is where the main focus is to massively grow the number of users, either from a zero start (a product launch) or from a very small base. Examples of this situation would include Apple when it launched the iPod, iPhone, and iPad. When these products were launched Apple had no customers in these segments, and the users of existing MP3 players, smartphones, and tablets were not their primary target – so researching customers was not a viable strategy.
Sometimes a brand tries to re-gain customers, a sugar-loaded soft drink launches a diet version, a popular beer tries an alcohol free option, and a coffee brand tries a decaff option. In these sorts of cases there is scope to research non-users, particularly lapsed users, but success tends to occur (when it occurs) by appealing to current users who are considering defecting. For example, Diet Coke is mostly drunk by people who moved from regular Coke to Diet Coke, not people who moved from not drinking Coke to Diet Coke.
Most brands and services focus on customer retention, providing the right products and services to delight their customers. The thinking behind Fred Reichheld’s Net Promoter Score is based on data that shows that brands that do well have more people who recommend them. A key finding from Andrew Ehrenberg’s double-jeopardy model is that dominant brands have customers who are more loyal.
Most market research, for most brands, most of the time, should focus on customers. I believe that this customer focus is one of the key reasons why insight communities are currently so popular. Insight communities are not pushing brands to focus on customers; the focus on customers is pushing brands and organisations to use communities in order to get closer to their customers.
So, what are your thoughts?
I’d love to hear your comments, or perhaps you can vote on the poll below.