Why researching your target market is more important than ever: Score budget by defeating the naysayers
The spectre of a global recession coupled with hazy retail and lending numbers is understandably making CEOs and key decision makers queasy about their financial position. ‘Competition is fierce and budgets are tight’ they keep saying. Naturally this anxiety impacts on heads of marketing, analytics, strategy, customer experience and insights trying to achieve their KPIs with limited budgets. Short-termism is widely par for the course and anything not directly linked to a sales target is consigned to the ‘nice to know but not right now’ dumpster. External market research has increasingly become a casualty of this thought process. Here are some tips on how to constructively push back against the naysayers and secure funding for your next research project.
Let’s first define what we mean by external market research. Broadly speaking, external market research encompasses research into a subject, problem or challenge that cannot be measured or solved by internal data sources or measurement systems. It is almost always conducted independently by someone outside your organisation with access to a representative sample of people who resemble your target market. Typical examples of external market research projects include ideas testing, advertising and content marketing effectiveness, product and price forecasting and optimisation, brand health and market snapshots.
OK, this all sounds great, so then why would someone object to funding such projects? Here are four common objections we often come across and what you can do to slay them.
Objection 1: ‘Analyse our own data instead’
Your own data undoubtedly provides you with a multi-dimensional lens into your heavy, medium, light, lapsed and churned customers not to mention everybody else who leaves their digital footprint (e.g. search, abandoned shopping carts). However, you will still have blind spots in your business intelligence schema. Simply put, these markets contain your next customers. Researching them will yield insights that could surprise you, inspire you to create new opportunities or find white spaces, or help you to set more realistic growth targets. You don’t want to be leaving this group out on the field so to speak.
None of these reasons may excite a CFO under the strain of meeting financial imperatives. Suppose you have a pressing need to better understand the lay of the land, test an idea, get a read on your latest TVC, quantify the impact of your brand equity on site traffic, or just want some basic numbers on critical funnel metrics such as unprompted and prompted brand awareness, consideration or penetration…ask yourself whether your own data sources can answer these questions.
Without adequate research on the ‘market’, you’re simply flying blind.
Objection 2: ‘Just use a DIY service’
A DIY service isn’t an objection in the literal sense, but it is a cheaper and inferior substitute to using a professional service. Let’s unpack what DIY services are and why anyone serious about understanding and improving business performance should not be using a DIY.
DIY services are an affordable way to ‘get some numbers’ without breaking the bank. They can be as easy as downloading a ready-to-go survey template or in some cases allowing you to freely pen your own surveys. Many DIY services plug into research panels which means that running a quick project of 500 respondents is just a click away. However, they do more harm than good. Here’s why.
Questionnaire design is the first casualty of DIY surveys, with poorly worded and designed surveys leading to inaccurate outcomes. Common errors include surveys which are too wordy, long, ambiguous, presents an inadequate or misguided list of brands, uses marketing speak, isn’t mobile friendly or unwittingly asks leading questions.
Another issue with DIY surveys are that they are subconsciously engineered to confirm personal biases. It may be difficult for people close to the business to remain objective when fleshing out a DIY survey. An independent researcher removed from the process will be impartial at all times and not buy into their client’s agenda. They can ensure that the survey language is completely neutral, provide an equal opportunity for respondents to give positive, negative and neutral answers, will not ‘lead the witness’ with layered questions and can expertly disguise their client’s most pressing questions about their ideas, brands, products, services or market within a competitive prism or alternatives, thereby ensuring the survey respondent is unaware of the end-client or the motivations for fielding the survey.
Targeting is also problematic with DIY solutions. Can you be sure your questionnaire screener is set up to only include those truly reflective of your target audience? Is it appropriately weighted across at four to eight dimensions for representativeness? A screener is the foundation of any good survey and the correct wording is critical as you don’t want to invite or exclude the wrong people. As the survey instrument is highly sensitive, it’s best to consult an expert in questionnaire design who adheres to best practice principles.
A DIY solution may be costly in the long run and there are sensible alternatives such as cross-purpose research studies (surveys shared with other clients to drive costs down) or efficiently designed research (built using experimental designs), which considerably trim down the survey’s length and price tag.
Objection 3: ‘Research can’t predict anything’
Recent election results in the US, UK and Australia have failed to predict the winner and the post-mortem hasn’t come back with anything conclusive. My hunch is that the political climates nowadays are more polarised, trust in major institutions such as governments and media have plummeted over the last 20 years, and the line of questioning in surveys requires more nuance as voters are less forthright in their views for fear of being ridiculed, embarrassed or even challenged by the interviewer. Doubts over sample representativeness also play a factor, but I digress.
Research that fails in its predictive powers can be attributed in some cases to survey over claim. Over claim is exemplified by survey respondents saying they are more open to new ideas, more willing to trial or buy new products or services, or even switch to other brands. In some categories we find the percentage of people intending to buy new products in surveys are as high as five times the actual number.
Over claim be countered by an expert practitioner using different analytical techniques such as advanced experimental designs. Rather than asking someone bluntly out about their views, a more subtle method might be to ask them to consider a few disparate topics at time so that they aren’t fixated on a single issue. An experimental design is employed to feed respondents a pre-determined and statistically robust assortment of different exercises such as rating issues or statements, making choices or stating their preferences. It is also important to keep these surveys short, punchy and preferably down to about 6 minutes in duration. An experimental design is one suggestion on how to counter overclaim and lead to more accurate forecasts.
Objection 4: ‘We don’t have any money’
The old chestnut. We get it, pricing is always a concern in this economic climate and it may be true that funds are low. If you only have a few hundred dollars to spare, then perhaps a DIY option is satisfactory if one is after raw numbers. In most cases however, the price objection is a result of not adequately showing the value of external market research.
The benefits of research should be articulated well. Generally speaking, a key driver of conducting external market research is to gather intelligence, derive insights and brainstorm recommendations pertaining to the subject at hand, which will ultimately improve your brand’s position. This is executed at the market level and includes gathering intelligence on your competitors, providing you with a window into the behaviours, attitudes, needs and intentions of your target audiences. The benefits are immense if done correctly, furnishing one with different layers of information which inform the business decisions you and your stakeholders make.
Some other benefits of external market research include:
- It helps minimise your investment risk in future plans by only testing on a small fraction of your target market;
- It takes the guess work out of setting business KPIs by giving you data-driven bandwidths based on the behaviours of your potential customer;
- It gives your raw feedback on what your target audience likes and doesn’t like, for your brand and competitors. This can inspire your company up to new ideas about how to change course or adopt a new approach; and,
- It can help cross-validate other data sources such as your voice-of-customer programs and internal behavioural data.
Do the right thing by your company
Market research has been marginalised over the past decade thanks to the advent of big data, digital analytics, in-house customer experience feedback mechanisms and concerns about its usability, accuracy and of course price. Somewhere along the chain, an issue or challenge will arise that can't be answered by a company’s own data, shiny deep learning algorithms, AI (however you choose to define it) or their inner and outer loop voice-of-customer systems. External market research is therefore necessary and unavoidable, and failing to secure a budget for external market research is failing your organisation. External market research still has a seat at the table and is instrumental in explaining the overall market picture and answering the why.
The next time you need to present your business case for securing investment in external market research, be ready to sell its short-term and long-term benefits to your business. Describe how the insights can be leveraged over a time scale, demonstrate how the information you intend to capture speaks to your business strategy and KPIs, highlight the current gaps in your market intelligence, and spell out the risks of undertaking cheaper DIY options.
Modern markets are constantly in a state of flux and the more successful organisations are those that are passionate to get answers from their target market, rather than solely relying on what their current customer base is saying. With a well-constructed business case for funding external market research, you will be better positioning to convert your future customers.
Test & Measure is an Australian based independent research and insights consultancy founded in 2016 which helps marketing and product teams, agencies, SMEs and entrepreneurs optimise their ideas, campaigns and offers with potential customers ahead of time, by using scientific survey-based techniques. Our difference is that our measurement frameworks consist of a hybrid of branding and sales metrics, are statistically robust and repeatable, thereby ensuring the insights we provide help you to easily navigate towards achieving both your short-term and long-term business KPIs.