Do
you really know your customer?
So much has changed in our world in the past five years and certainly
in the past few months, that many of the assumptions we have made
about our businesses are no longer valid. On the business side,
massive consolidations in all phases of the food industry has
flat out given customers less choice.
In a marketplace as dynamic as America’s, fewer choices facing
customers can give rise to frustration. In addition, the success
of private labeling has confused the market for customers. Who’s
product are they buying anyway?
Market research is a proven method for determining what customers
want. It is fair to say that the majority of food manufacturers
and food distributors use “a priori segmentation” as their primary
research.
This is a non-empirical method based on assumptions of customer
behavior. It occurs in boardrooms, sales meetings and at the water
cooler where informed and intelligent insiders of companies make
statements about their customers and prospects.
In most cases, most of the assumptions are right. Company personal,
especially those with direct contact with customers, do know what
customers want.
Assuming this method works, do they also know what prospects want?
If they truly do know, how come they are prospects instead of
customers?
If your company has never done market research, where do you start?
The vast majority of market research is contracted with outside
firms. Having experience is a requirement with research. Doing
it wrong can aggravate and isolate current customers. Equally
important, company insiders bring a bias that neutral outsiders
don’t possess. Research works best without an agenda.
Basic research is aimed at expanding knowledge, rather than solving
a problem. Primary research is conducted to collect new data.
It answers the who, what, where, when questions. Common examples
are telephone, mail and intercept questionnaires.
Secondary research is used to aggregate existing research. Examples
of this type are studies by the NRA, GMA and Technomic. They are
useful in learning what industry organizations have previously
found. Research methods also include field studies, focus groups
and mystery shoppers. These kinds of research are tremendously
effective in the food industry.
Traditional statistical market research gathers the type of raw
data that yields unbiased, clinically pure results. To my mind
it is nearly impossible to gather that type of data around the
water cooler.
Traditional methods are designed to identify median responses
and standard deviations. These are appropriate results for traditional
retail based food companies who are trying to understand the behavior
of our vast 285 million-person market. Standard research oftentimes
yields results whose purpose is for the greater good of society
or an industry at large.
I believe that foodservice industry companies don’t really need
traditional market research. Foodservice is a much simpler marketplace.
What they do need is customer research. This type of activity
is designed to gain insight into customers and prospects and further
the profit motives of an individual company.
Customer research aimed at understanding customers and prospects
is designed to strengthen relationships with customers and build
relationships with prospects. It is intended to give customers
a voice, to project a belief that you value their business and
that you are willing to listen to how to better service their
needs. Prospects similarly get the message that their opinion
matters. It is a good next step in converting prospects to customers.
Choosing the proper method is critical. Research design is the
fundamental determinant in creating success. There are obvious
blunders. Telephone surveys to pizzeria operators on a busy Friday
night would probably result in a 99 percent hang-up rate.
Other design criteria are not so obvious. This is where experience
counts. Building the proper assumptions and techniques into the
research method is the difference between interesting data collection
and “home run” results.
Unlike traditional methods, targeted customer research is not
designed to find the median response, but the extreme fringe.
Companies would want to know that a few responses were in the
“extremely dissatisfied” category.
When a few customers report dissatisfaction, it is a safe bet
that many more feel this way and simply haven’t complained. Those
are the customers that one day leave for “no reason”.
The focus on this type of research is the individual comments
that bring clarity. Therefore, large mail surveys with response
cards are not nearly as effective as telephone surveys or field
visits.
Another design consideration is the philosophy supporting it.
Are you collecting data or push polling? Politicians have used
push polling effectively. The survey poses a hypothesis and the
questions are designed to influence the survey taker to that opinion.
This is very dangerous in a business application. If customers
perceive that you are trying to sway them or trick them, the positive
gains of the survey will backfire. Prospects will definitely sour.
Field surveys offer fantastic results. The downside is the expense
involved. Expenses are similar to sales expenses without the immediate
payback.
Using targeted field surveys to bolster telephone surveys is probably
the most effective and cost efficient method for foodservice manufacturers
and distributors. Sending a letter or card in advance announcing
the survey will increase the response rate dramatically. In addition,
the message that you value the survey taker’s opinion is delivered
with or without their participation in the survey.
So why do research? We operate our companies from a point of imperfect
information. Many assumptions are made about our customers and
prospects as well as the perceptions these groups have toward
our companies.
Market research is not perfect, but it will close the gap and
get closer to perfect information. With our economy and social
structures in flux right now, market research can be an effective
tool in the collective head scratching that many are doing.
Predicting the future has always been a tricky business. Feedback
from those who our futures depend upon is a timely and smart way
to guide our endeavors.