Posts Tagged ‘market segmentation’

Social Market Research Will Save Marketing

October 15th, 2010

Even as I write the title, I cringe. As I am a late convert to the value of formalized market research. I still have flashbacks of my market research class in grad school. All I remember is statistics, database, demographics, statistics, blah, blah, blah… all I retained is that mean and medium are somehow different and important. I got lucky in that my immediate neighbor in the first class was an actuary so when they formed teams, he became my best friend.

As I progressed in Sales and Marketing management, I realized the value of asking customers what they really wanted and how they felt. I also realized there are limitations in that process. Not that customers lie, but I can’t always tell you why I do something instinctively. I just do. In asking me to explain, you may or may not get to the heart of “why.” Also, depending on “when” you ask me my opinion will vary greatly.

That is why good market research leverages statistical sampling to make sure the sample size is large enough to represent a target population. We use sampling techniques because the population is too large to cost effectively poll or they are too difficult to get all of the responses.

Shocker Statement: Traditional Market Research has a Fundamental Problem

If you know anything about political polling, they have lots of discussions about the difference between likely voters and registered voters, etc. They also beat each other up about polling techniques; whether it was phone based, did they include cell phones, the average age of the respondent, etc. What they really are trying to do is correct for the impact that the process of polling has on the outcomes. Minor differences can radically shift the results of the poll.

Corporate market research has the same challenges. Not that they don’t account for much of it, the state of the art is pretty sophisticated and gotten much more so with algorithms, etc. What the challenge for corporate marketers is always who constitutes “likely buyers” versus potential buyers. If I poll based on demographics, I can’t really tell who is likely to be a potential buyer. On websites, they spend a lot of money on predictive algorithms and website “cookie crumb trails” to try and predict potential buying behaviors.

But the challenge in primary market research is that it is an approximation of the market. A sampling set if you will. The challenge that I contend is that we sample the wrong sets in market research.

Ok, before I get lynched by a bunch of analytics, let me explain. We have been doing social market research over the last year. We probably surveyed the landscapes of 60+ markets — probably 100+ sub-markets.  Everyone of them is showing a difference in the way buyers are approaching markets versus sellers. Not talking subtleties, but in most cases, the majority missed the mark —buyers are talking over social media at a 10:1 clip versus vendors. AND they are using completely different language. Vendors are focused on the “solution stack” -– features, functionality, benefits. Buyers are focused on pain, experience, exploration, decision support, value, etc.

What it is telling us in aggregate is that vendors are only focusing on a subset of the market; those who understand the industry jargon. The vast majority of buying markets are not being serviced with the right information. I would guess somewhere about 80% of buyers or potential buyers don’t know what they don’t know and therefore cannot perform structured searches or clarify their buying interest to market researchers.

I also think this is why major brands are shifting much of their new product innovation to social media and online communities. P&G has dictated something like 50% of their new product innovation will come from its customer community. Staggering, but also a recognition that the traditional market research approach cannot get to those who don’t self identify as being part of the market.

10 Really Cool Insights from Social Market Research

  1. Disconnect between buyers and sellers in markets
  2. Difference in buyer types leads to different online buying processes
  3. Most buying processes now intersects online and goes non-linear via social media at some point; research, validation, comparison, transaction, etc.
  4. Sellers are still trying to push a linear buying process that they think they can actually influence
  5. Estimated 80% of potential buyers don’t know that they are in the market and are engaging outside of the vendor communities traditional venues.
  6. We can see language differences in different types of buyers and vendors
  7. We are using this analysis to segment and target specific types of potential buyers who would not normally consider themselves as active in the market.
  8. Good social market research allows organizations to identify gaps in their approach to the market, focus on the psychographic buyer behavior, and eliminate the high-cost/low return marketing expenditures that they have had to cling to because they produced critical volumes of sales albeit at higher cost of acquisition.
  9. Customer experiences for good or bad are now bleeding into the non-linear buying processes. Vendors who don’t get control of their poor experiences will experience a different kind of bleeding; profits.
  10. We haven’t even touched the tip of the iceberg as the semantic analytics and market research techniques get updated.

Today Social Market Research is largely a blend of qualitative sampling and quantitative support. Just because you can measure it doesn’t mean you can derive meaningful business impact from it. The qualitative analysis allows us to overcome the challenges with the state of the social media tools. We can sometimes use up to 16 different tools for just one function. It isn’t about clicking a button and “poof” you have your answer to grow market share overnight. Also, having your own community allows you dimensionality of insight versus just polling public social network sites. Add in structured customer data and you have the backbone for some amazing buying behavior analysis. Over the next couple of years, the semi-automated process will mature and give way to more automated, trending, and analytical driven systems that integrated with the current business intelligence systems.

For us today, Social Market Research is the first step in building a social business plan. Not just for marketing, but all of the customer facing touch points and all of the customer support functions. In short, pretty much all of the business. You don’t know what you don’t know.

The challenge is can you figure it out before your competitors do.

Is Your Marketing Like Teaching A Dog to Read? Part 2

June 9th, 2009

In part 1 of this series, I shared a story about a professor who taught his dog to read… obviously, the dog could not read at the end of the semester, but the professor “taught” the dog. Unfortunately, this is very common in marketing, especially in emerging growth companies. The companies have very “pretty” marketing materials; website, collateral, powerpoints, but when you cannot really understand the audience, value proposition, or why they are different.

The litmus test for marketing materials is whether you can use your competitors name in your materials and it would apply. Or you could insert a company name from another industry and it reads just fine. Finally, you could insert any company name and no one understands what you do.

The real challenge is that the organization did not go through a structured exercise to map the value chain: audiences to benefits to functionality to features. Here is a high-level process to do just that:

1. Focus on identifying the market & associated segments

2. Fnd the pain – immediate call to action – for each segment; ie. this is the problem or opportunity you address; your solution = benefits

3. Communicate in the language the market understands – means you need to have a market SME, customer advisory board, or perform lots of prospect interviews to understand their needs in their language.

4. Test your messaging – social media participation, sales calls, speaking events, networking events, advisory boards, analysts, etc. Frequency and time allow you to polish your messaging. I know that I am ready when I can get through the 1st several meetings with a prospect or an investor without them finding holes in my presentation and Q&A. Doesn’t mean your offering won’t have challenges in due diligence, but if you are targeted to the right audience with the right solution, the first two meetings should be about concept, relationship, and “fit”.

5. Model your marketing on the sales process – each stage is idenitfied and marketing’s support required – One of the biggest challenges to getting the marketing materials “right” is identifying the scenarios under which it will be used. If your sales process is to work through partners, then providing a generic sales presentation won’t work. If you are selling into a specific vertical, then understanding the buying process may mean that you have to have 2 different presentations; one executive and one technical for different meetings. Collateral and sales support materials are very expensive to produce (opportunity costs) so focusing on a limited number of high-quality tools versus having a checkmark for materials is critical.

6. Focus on how to speed up the sales process – optimize, accelerate, replicate – momentum, reselling, bridging – One of the biggest challenges in any sales process is the “porpoise effect”. You build momentum and then it subsides, you resell and build momentum, and then it subsides. Most qualified buyer sales that seemingly look qualified with a need, but don’t get beyond the initial sponsor die due to lack of momentum. Either the sponsor could not sell internally or lost focus… The ability to empower your sponsor to be an evangelist will assist you in maintaining momentum. Everything in sales support should be around how do we help the potential customer make a decision faster. You will close more sales this way.

7. Participate in the early sales – look for objections – price, package, credentialling, references, technology, features/functionality, language, benefits, positioning, competitors. My biggest beef with some marketing communications people is that they don’t understand the market, customers, or the products. I want to get in front of the customers and interact with the market. I need to understand the buyer behavior and get feedback to fine tune the messaging.

8. “Save your powder” – the first set of sales to early adopters doesn’t require big marketing; focus on sales support, business development, online marketing, andPR; expensive marcom, tradeshows, events, and brochureware after the message has been tested. Save the marketing dollars till you have proofed the model and are ready to grow big. My approach to marketing budgeting is like “rolling a snowball downhill”. Make a small investment to credential your sales process; when the market is proofed, build upon the foundation.

9. Build a customer lifecycle early. Know where you are going and how you will get there. Build towards a critical mass of referencable customers. Shrink the product’s functionality & features to slightly beyond what your target market requires. Also, make sure you set customer expectations so that you can exceed them. Make sure the roadmap is clearly articulated and scales with your customer expectations and your identified new market segments.

10. Your first set of references and referrals are the most expensive & the most valuable. Focus the organization on wowing the customer and tie all organizational goals to customer satisfaction.

Making sure your marketing “dog” can actually read is critical to scaling your business. If you have to personally evangelize to every new prospect to get them to understand the concept of your product and the value for them, you will have a very expensive sales process. Even service companies need to package their services to scale effectively.

Part 3 will address the challenges of Mid-Market companies.

Part 4 will address the challenges of Established Brands.

In Web 2.0 Software, Adoption Trumps Functionality

May 21st, 2009

The last several years have seen the greater adoption of social media and other Web 2.0 software components. These component software tools provide users with a more interactive experience, personalization, with the ability to create their own content, links, tags, navigation, etc. Additionally, you are seeing the growth of the “connected web”; web services, RSS, embeddable code, ubiquitous meta-tagging, widgets, consumable data, etc.

The proliferation of these software applications has migrated to every sector; consumer, enterprise, SMB, etc. What used to take NDA’s, sharing and modification of API’s, and endless meetings now can be accomplished with a snippet of code.

As the web transitions to more semantic driven applications and less user-interface driven, you would think that functionality would become increasingly important in applications.

In my experience, the trend is towards the opposite and that ADOPTION trumps functionality. The challenge is that we have too many options on the internet; too much data, content, search results, websites, applications, etc. The word I hear over and over is “overwhelming”.

So, if you have a very limited window of attention from your audience, why would you throw extraneous “stuff” at them hoping something would stick. Instead, take advantage of the Web 2.0 technologies and provide them with a tailored experience with just-enough functionality.

More importantly, focus on what is their motivation and interests. Not all potential buyers are the same. Don’t provide a generic website experience that meets 80% of 80% of the visitors and satisfies none. Instead, focus on identifying what a 100% of a smaller audience that you know will buy and add additonal functionality to support additional segments over time. Customers provide unsolicited referrals when you exceed their expectations and provide them a WOW! experience. This is the heart of word-of-mouth marketing. EXCEED CUSTOMER EXPECTATIONS!

If you cannot exceeed the whole group, then focus on a small enough group that talks to each other and build from there. You see countless blogs and articles about how to launch products on the interet. This is the reasoning behind the axioms. You need a critical mass of associated happy customers that will tell others about it.

It is about numbers. If you satisfy 1% of a large group, that doesn’t make much of a market impact. If you satisfy 80% of a small group, you own the market. Bottom line, adoption of your solution is more critical than providing everything, including the kitchen sink.

Of course, the secret is prioritizing the “right” functionality to satisfy the customer which takes someone asking them….