Consumer Research – Know the Customers for the Bottom Line
Market research collects information systematically about a specific market or markets. Consumer research is a part of marketing research that is customer centric. In decades past, market researchers looked more to customers’ needs than the wants of customers. Consumer research, also called customer research, looks to the customers’ motivation to purchase a product or service – call it the psychology of conversion. People have identifiable wants and desires, and it is essential for promoting sales to know the customer base.
Individuals are diverse, but consumers can be sub-grouped according to common traits (segments) in the aggregate. These groupings can be delineated by opinion, motivation, choice, behavior and age group (variables). These are typical examples, and the specific products and market should determine variables. Other examples could be gender identification, location, interests, cultural group and income.
Through research, customer segments create the opportunity to target specific profiles. This is the opposite of a marketing “shotgun approach.” For example, making assumptions about the customer base is more likely to fail. A good marketing strategy makes few assumptions.
A customer persona, or buyer persona, is developed from analyzing a customer base. It is a refinement of a segment that creates an ideal customer profile for targeting. In most cases, there will be several personas to target.
Collecting the Data
There are essentially two types of data collection. First, there are many opportunities to collect information passively. For example, sales metrics can be compared and tied to location (zip code) with credit card payments. Customers from specific zip codes will have different spending habits. Complaints, when recorded, can be insightful.
Second, there are more structured ways to collect information. The most common are interviews, focus groups and surveys. Structured data can be correlated with passive data and between all data collection methods. As a subset, analytics collects data from what customers actually do instead of what they think or say.
Surveys are the most used method of consumer research. The ones that ask closed questions are inexpensive and easily interpreted. Closed questions are the surveys that ask multiple-choice questions, scales 1 to 10, or have responses to be ranked. Open question surveys ask the responder to answer with a few words or more, and this form is more difficult to get responses. Most surveys are a combination of both.
Interviews are more challenging to conduct. It requires time and coordination, but the data collected is more specific and valuable. Focus groups require even more effort but with greater rewards. The customers often share unexpected insights in interviews. In a focus group, participants interact, and the banter can bring even more insights. In both cases, confirmations of expected responses are valuable, as well.
The simplest form of analytics is collecting data from the company website. This answers questions like; what they are looking for, what products they are dwelling on, click-throughs, and more. In retail, “heat maps” will show where sales are best on the floor. The basic concept is that the products have a known location, and real-time sales are recorded at the register (or online sales). Companies can also analyze the competition’s consumer reviews and gain insight for attracting customers.
The Bottom Line
Avoid believing you know what the customers are thinking. The reason consumer research is essential is for the bottom line. Success means knowing the marketplace and the behavior of the most valuable players – the customers. Profit margins can be expanded when the customers’ behavior is known and accounted for.