Todd Hollander Market Research

While no amount of research can ever completely eliminate the risk of deploying a marketing strategy, effective marketing research should significantly reduce uncertainty and financial risk. Here are a few tips for developing a marketing research project that pays off.

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There is an excellent article in the latest issue of Strategy and Business about how successful high-end brands such as Lexus, Nordstrom, and the Ritz-Carlton Hotel Company are able to maintain consistently high levels of customer satisfaction.

Authors Robert Reppa and Evan Hirsch assert that for companies such as these, superior service — rather than superior products — is the crucial ingredient of customer satisfaction. The products are essentially the “table stakes” that get these companies in the game. Superb service is what keeps them at the table. Specifically, the authors state:

“Interviews with 40 executives at a broad spectrum of high-performing luxury brand companies confirm that what makes these luxury products truly stand apart is the superb level of service in which they are wrapped. Indeed, the services surrounding each of these brands can be viewed not only as an intrinsic part of the products themselves, but as an important differentiator of the brand.”

The article says that there are four things that nearly all top-performing luxury brands do:

1. Create a customer-centered culture.

2. Use a rigorous selection process to populate the organization with superior sales and support staff.

3. Constantly retrain employees.

4. Systematically measure and reward customer-centric behavior and excellence.

The bottom line: Superior products alone do not guarantee customer satisfaction. Superior products delivered with consistently superior service are the true measure of successful high-end companies, nearly all of which have a top-down commitment to customer satisfaction.

For more information, see “How to build a customer-centric organization: Step 1- Change the corporate culture” (April 10, 2007).

In a recent posting (”How to develop a customer-centric business model,“ March 08, 2007), I discussed an article in the San Francisco Chronicle about the benefits of corporations developing a customer-centric approach to business. The author, who defined a customer-centric company as “one that recognizes the only way to add lasting value to the company is to value the customer,” identified seven guiding principles of successful customer-based firms:

1. Focus extensively on delivering value to customers.
2. Forgo short-term results and look instead at long-term business value.
3. Include senior-level buy-in in your customer-based program.
4. Share your customer-focused initiatives with employees, partners and customers.
5. Recognize that traditional measurement tools may not adequately track your customer values, such as emotions and loyalty.
6. Incorporate employee (and contractor) training as part of the customer-centric movement.
7. Identify internal stakeholders (owners, employees, partners, suppliers) and work to build support within this group.

When attempting to build a customer-centric organization, many companies find it necessary to change the culture of the company from an internal perspective focused on the goals and priorities of each customer-facing department (sales, marketing and service) to an external perspective based on using all of the company’s resources to improve the customer experience.

In a recent posting on SearchCRM.com, Donna Fluss, founder and principal of DMG Consulting, noted that one of the most formidable obstacles to building a customer-centric organization is the fact that there are often conflicting goals among the primary customer-facing departments. Fluss used an illustration to highlight these conflicts.

In assessing these common conflicts, Fluss notes, “Somehow, in the drive to achieve goals, each department loses sight of customers as people and sees them only as “objects” that need to be optimized. Clearly, the obvious answer is to shift the focus back to customers and to align corporate goals.”

Of course, aligning the goals of each customer-facing department is much easier said than done. Nonetheless, it is an essential first step in developing a customer-centric organization. In my experience, companies that succeed in changing the corporate culture tend to do two things:

1. Acknowledge that customers do not care about the goals and priorities of the various departments.
2. Initiate the cultural change from the top down. Senior leadership is essential.

The bottom line: If your company is more focused on the goals and priorities of each customer-facing department than on the needs and wants of each customer, the corporate culture must change - but it has to come from the top.

When a company begins to explore the possibility of conducting a market research project, it is frequently assumed that the first step is to send a Request for Proposal (RFP) to market research suppliers. In reality, during the intial phases of scoping a possible project, the RFP is usually the wrong tool both for the research buyer and for potential research suppliers. Here’s why:

An RFP carries an implicit assumption that the project has been approved and budgeted, and that the company plans to award the project to one of the recipients within a reasonable period of time. Therefore, it is improper (some would say unethical) to submit a Request for Proposal when the project has not been approved and budgeted. Yet this is precisely what many companies do. Why? Not because they are unethical, but because they are unaware that there are other types of requests that can be made of research suppliers prior to submitting a formal RFP.

In short, the RFP is the wrong tool to use when what you really want to know is:

• What types of research services are available to address my needs?
• How much would it cost?
• How long would it take?

To answer these questions, you need to know about two alternatives to the RFP: the RFI and RFQ.

So for those who seek information from a market research supplier, here is a brief overview of the three major types of requests available to potential research buyers: Request for Information (RFI), Request for Quote (RFQ), and Request for Proposal (RFP). In order to get the information you need from suppliers while establishing or maintaining credible relationships with them, it is important to understand the differences, applications, and assumptions of each type of request.

Three Types of Market Research Requests

1. Request for Information (RFI)

A Request for Information (RFI) is used when a research project is being considered and scoped. At this stage, the objectives of the research have been established, but the methodology and budget have not, and final project approval has not been granted.

The RFI is used to solicit recommendations from a potential supplier about services that would meet the buyer’s research needs. It generally requests:

• A recommended method of achieving the research objectives
• An estimated price or price range
• An estimate of the amount of time required to complete the research

An RFI can also prove useful in making an initial assessment of the capabilities of a potential supplier. Unlike an RFQ or RFP, an RFI carries no assumptions of the likelihood of the buyer to commission the project. Suppliers understand that the RFI is not an invitation to bid, is not binding on either the buyer or seller, and may or may not lead to an RFP (or RFQ).

2. Request for Quote (RFQ)

A Request for Quote (RFQ) is used when the research methodology (online survey, focus groups, etc.) has already been established but the budget and/or research supplier has not. At this stage:

• Detailed project information is not needed from the supplier (usually because the specifications of the research have already been determined).
• Information about the supplier’s ability to provide the research is not required (either because this has been established previously or will be included in a subsequent RFP).
• Price is the main or only factor in determining whether the project will be funded; or
• Price is the main or only factor in selecting the supplier (or determining which suppliers will receive an RFP).

Often, an RFQ is used for the buyer to make a Go/No Go decision about the research project. Suppliers understand that if the project is approved, the RFQ will lead either to the awarding of the project to one of the recipients or the submission of a full-blown Request for Proposal.

3. Request for Proposal (RFP)

A Request for Proposal (RFP) is used when the project has been approved and budgeted. The RFP is an invitation for research suppliers to submit a detailed proposal on a specific research project that the buyer plans to award to one of the recipients within a reasonable period of time.

The RFP should include detailed information about:

• Why the research is being commissioned
• Specific objectives of the research
• How the research results will be used and by whom
• The contents of the proposal to be submitted, such as
  • Methodology
  • Timeline
  • Price
  • Key Personnel
  • Qualifications and Experience

Suppliers understand that the RFP will lead to the awarding of the project to one of the recipients. Therefore, an RFP should only be submitted when the project has been approved and budgeted.

The bottom line: If you are scoping a market research project, a Request for Proposal is usually the wrong tool for gathering the information you need. Understanding the other options - the Request for Information (RFI) and Request for Quote (RFQ) - will ensure that you have the right tools in your toolbox. Using the right tool at each stage of the project development process is a Win-Win approach for your company and potential research suppliers.

There was an interesting article in yesterday’s San Francisco Chronicle about the benefits of corporations developing a customer-centric approach to business. The author defines a customer-centric company as “one that recognizes the only way to add lasting value to the company is to value the customer.”

While some may beg to differ with the assertion that this is the only way to add lasting value to the company, there is certainly a body of evidence to suggest that customer-centrism is one of the best ways to add lasting value. But how does a company that is not explicitly and implicitly customer-centric develop this orientation? The Chronicle article offers the following suggestions:

Seven guiding principles of successful customer-based firms:

1. Focus extensively on delivering value to customers.
2. Forgo short-term results and look instead at long-term business value.
3. Include senior-level buy-in in your customer-based program.
4. Share your customer-focused initiatives with employees, partners and customers.
5. Recognize that traditional measurement tools may not adequately track your customer values, such as emotions and loyalty.
6. Incorporate employee (and contractor) training as part of the customer-centric movement.
7. Identify internal stakeholders (owners, employees, partners, suppliers) and work to build support within this group.

These are good suggestions. Of course, they are not always easy. Take for example the point (#2) about forgoing short-term results in favor of building long-term value. This is a often a difficult challenge, especially for public companies. The recently-leaked memo from Starbucks Chairman Howard Schultz questioning whether Starbucks’ drive for growth and efficiency had diluted the customer experience underscores this challenge.

The bottom line: We can learn from the experiences of other companies and use these models to underscore the importance of developing a customer-centric business model. If we don’t, our customers will simply migrate to a company that has one.

For marketing researchers seeking to expand their skills and expertise, one of the best options is “Principles of Marketing Research,” a distance-learning course offered through The University of Georgia Center for Continuing Education. The first self-paced, self-study, online certificate course designed specifically for research professionals, Principles of Marketing Research has become the most respected and widely-supported educational program on the fundamentals of marketing research.

The course is designed primarily for people with some practical experience in marketing research who want to enhance their knowledge of the entire research process. The web-based distance learning approach allows students to work through the course material at the time and pace most convenient to their busy schedules.

Developed and managed by experienced professionals, Principles of Marketing Research was developed in response to educational needs expressed by the marketing research industry. The course was initially created through a partnership between the Marketing Research Association (USA) and the University of Georgia. In 1998 ESOMAR entered the alliance to form the Marketing Research Institute International, a non-profit educational foundation whose purpose is to fulfill the fundamental educational needs of marketing research professionals worldwide.

Graduates receive 20 continuing education units (CEUs) from The University of Georgia and are awarded a Certificate of Completion from Marketing Research Institute International, Marketing Research Association, ESOMAR and the University.

For detailed information about Principles of Marketing Research, visit www.georgiacenter.uga.edu/is/mr/.

My brother is a very smart guy. His company Group 80/20 works with marketing teams who are brilliant at messaging but obstructed by technology. One of the solutions he recommends to his clients is to use RSS feeds to manage the information overload experienced by most executives today. According to Mark,

“The purpose of using RSS feeds is to “put you in charge of the news you read and track. Why not just create your own personal newspaper with only the items you care about? The companies you have to track… The sports teams you follow… The keywords you care about.”

This is good advice. I have used it with very positive results and, thanks to Mark, you can too. Just follow his easy step-by-step guide to setting up your own RSS feeds. You’ll be glad you did!

In today’s competitive environment, companies that survive and prosper place an emphasis on meeting or exceeding customers’ expectations.

The American Marketing Association defines customer satisfaction as “the degree to which there is match between the customer’s expectations of the product and the actual performance of the product.” Customer expectations are generally formed by:

• Information consumers receive from companies (advertising, marketing communications, salespersons, etc.)
• Other people (friends, family, opinion leaders, etc.)
• Past experience with the product

By understanding these expectations (through marketing research) and managing them (by providing excellent products and customer service), the firm can deliver superior value to its customers and establish customer loyalty.

Customer satisfaction also includes the customer’s definition and the firm’s interpretation of the concept of quality. To many customers, their perception of the value of their purchase goes beyond the good or service itself to include additional elements such as their interaction with the company during the purchasing process and any after-sales customer service.

Customer satisfaction research can serve as an effective tool in evaluating the firm’s marketing programs and can deliver valuable feedback to assist in making necessary changes. It can help the marketer understand what the customer perceives as value, and what his or her expectations might be. It can also measure how well the firm has performed against customer expectations.

Ultimately, customer satisfaction exists whether or not it is formally measured. Prudent companies conduct customer satisfaction research in order to:

1. Understand the customers’ expectations of their products and services
2. Measure the company’s effectiveness in meeting customers’ expectations
3. Identify ways to better align their products and services with customers’ expectations

Eighty percent of companies believe they deliver a superior customer experience, but only 8 percent of their customers agree, says Bain & Company. Here’s how to repair the disconnect. From Harvard Management Update.

The authors of this article call it the dominance trap: The larger a company’s market share, the greater the risk it will take its customers for granted. “As the money flows in, management begins confusing customer profitability with customer loyalty, never realizing that the most lucrative buyers may also be the angriest and most alienated. Worse, traditional market research may lead the firm to view customers as statistics. Managers can become so focused on the data that they stop hearing the real voices of their customers.”

According to the article, “financial software powerhouse Intuit briefly fell into this trap, despite a history of excellent customer service. In 2001, its Turbo Tax program commanded 70 percent of the retail market for tax-preparation software and 83 percent of the online market. But then it began doing things that annoyed customers, such as upping the price of tech-support calls and limiting software licenses to one computer. Store-based retail growth flattened, and as Web-based tax preparation sites sprang up, online buyers started jumping ship. In 2003, Turbo Tax’s share of the online market plummeted.”

The article cites a Bain & Company survey that revealed just how commonly companies misread the market. The company surveyed 362 firms and found that 80 percent believed they delivered a “superior experience” to their customers. But when customers were asked about their own perceptions, they rated only 8 percent of companies as truly delivering a superior experience. The conclusion? “It’s easy for leading companies to assume they’re keeping customers happy; it’s quite another thing to achieve that kind of customer devotion.”

So what sets the elite 8 percent apart? They take a distinctively broad view of the customer experience. “Unlike most companies, which reflexively turn to product or service design to improve customer satisfaction, the leaders pursue three imperatives simultaneously:

• They design the right offers and experiences for the right customers.
• They deliver these propositions by focusing the entire company on them with an emphasis on cross-functional collaboration.
• They develop their capabilities to please customers again and again—by such means as revamping the planning process, training people in how to create new customer propositions, and establishing direct accountability for the customer experience.

Each of these “Three Ds” draws on and reinforces the others. Together, they transform the company into one that is continually led and informed by its customers’ voices.”

Many online services offer do-it-yourself web-based surveys. While the low cost of do-it-yourself surveys may be appealing, this approach entails several risks and drawbacks compared to using a full-service survey provider. The pitfalls of do-it-yourself surveys include:

Professionalism
While a well-designed survey improves respondents’ perceptions of the sponsoring company, a survey that is poorly designed, does not function properly, or is hosted on a site with a strange name (e.g., surveymonkey.com) can backfire and produce a profoundly negative effect on customers’ perceptions of your company’s professionalism and capabilities.

Functionality
Most of the do-it-yourself internet survey services do not have the functionality to create a survey with the skipping, branching, and piping capabilities required to design a professional survey.

Data Quality
As important as the survey itself is the back-end application that accurately captures customer input and allows for meaningful analysis. Without extensive experience in designing and managing marketing research databases, you run the risk of losing vital customer input or gathering data that cannot be analyzed.

Cost
There are several software packages you can purchase to design and deploy sophisticated marketing research surveys on your website. However, the price of the software alone (typically $3,000 to $10,00) is often higher than the entire package of services from a full-service research firm.

Speed
A professional research firm can usually program a surveys in 24 - 48 hours. Compare this to the time and aggravation of learning how to use do-it-yourself software.

The bottom line: Compared to using a company with proven expertise in the design and deployment of web-based surveys, the risk and expense (both in dollars and time) of trying to do-it-yourself are often too high.