It is always a good idea to ask your customers for their feedback on your products and services to find out how you’re doing. However, there are certain business situations when market research takes on a heightened level of importance. Here are ten critical situations that scream for market research attention.
1. You don’t know who is purchasing your product or service or why. Business is booming and you’re selling more than ever before. But who are your customers? Do they tend to be older or younger, men or women, where do they live? Why are they buying from you? Is it your customer service or product selection? There are dozens of possible reasons, and if you don’t understand them then you can’t repeat them.
2. You are not sure if there are any other customers who may be interested in your product or service or how you could grow the business. You want to grow your business and maybe even enter a new market. Should you open a new location? If so, where? Are there different competitors in the new market? Will customers in the new market like your product?
3. You are not sure why a certain product or service is either a sales star performer or a dud that nobody wants to purchase. Some products fly off the shelves and others just sit there. Knowing why that happens and what causes it would help to eliminate the duds and create more stars.
4. You use the term “quality” in a general sense but cannot explain how your customers’ define quality. The customers’ definition of quality is really the only one that matters. So how do your customers define quality? Is it personal service, knowledgeable staff, on-time delivery, a well-manufactured product, or an easy-to-use website? The possibilities are almost endless.
5. You experience an unexplained change in sales, customer behavior shifts, and/or changes in the level of repeat business. Here’s a scenario; sales have skyrocketed (or plunged), and business has never been better (or worse), and you don’t know why. If you don’t understand the reasons for the changes, then you can’t replicate the good trends or prevent the bad trends from happening again.
6. You lack information about your competitors and the overall competitive landscape of your business. Who else does what your company does? What do you do or offer that your competition doesn’t? What do they do better than you? These are essential questions to ask to remain competitive and relevant in today’s market.
7. There is no ongoing, systematic collection of customer feedback. Market research isn’t always about huge questionnaires and confusing statistics. Sometimes five to ten simple, well-developed questions can provide a great deal of insight and serve as an excellent stating point, especially if you’ve never done any market research before.
8. You are unable to provide any facts, figures, or evidence beyond historic sales figures or other accounting data of your customers thoughts, attitudes, or perceptions toward your products or services. Without a doubt, the historic information is a great place to start looking for trends. However, this valuable information can be “cold” and very one dimensional. Effective market research can help to add insight to the sales figures. For example, is there something you could do that would increase sales with existing customers?
9. You are not aware of emerging trends that could have a huge impact on your business. Change is both inevitable and unstoppable. Imagine a business where a majority of the revenue had been generated from the sale of typewriters, or carburetors, or pagers…the list could go on and on. While there might still be a market for some of these items, it has certainly changed.
10. You can’t articulate your firm’s strengths, weaknesses, and/or it’s unique position in the market. Every firm has strengths and weaknesses. So, knowing (not guessing!) what your customers believe your firm does better than the competition gives you a strong competitive advantage.