Farmspring Equipment (not the real name) needed a new and improved set of sell sheets for their ag products, which include cattle feeders, hay wagons, and horse feeders. As the Rosewood team started the project, we ran into questions that we didn’t have good answers for:
- How do these products compare to others in the market?
- Should the sell sheets be printed individually or be combined into a single catalog?
- What is important to the farmers who buy these products?
Whatever your industry, I’m sure you can identify with questions like these. For example, you may sometimes wonder what is the real reason that people buy your product. Is it the price? The quality? A certain feature? Your location?
What is market research?
Market research is the way to answer these questions. It is a key step in creating accurate customer personas (see previous article in this series). Market research is the process of collecting and analyzing information that will help you make better marketing decisions. This includes information about your customers, your competitors, your industry, and even your own company.
The term “market research” may sound sophisticated or expensive, but it is simpler than you think. Business advisor David Sauder says, “Research is two words: ask questions.” That sounds manageable, doesn’t it?
Research is not:
- Merely copying what your competition is doing.
- Trying to stay ahead of your competition.
- Discussing ideas in the shop or around your conference table.
- Conducting a one-time survey (this can be a great start!).
- Creating a new product that you believe your customers will like.
Research is:
- Studying real data about customers, market conditions, and competitors’ products and services.
- Installing a process in your business to collect ongoing feedback from customers.
- Having conversations with customers or prospects – ideally on their turf.
- Searching for hidden problems that you can potentially solve.
- Testing a prototype in real life with real customers.
- Becoming “one of the guys” by going where your customers go and doing what they do. For example, attending industry events such as training or expos; if selling to farmers, going to the field days, the local sale barn, and farm auctions.
Market research includes testing ideas in a small way before risking a large investment on an unproven plan. The book Great by Choice recommends a strategy of “firing bullets, then cannonballs.” Instead of lobbing large amounts of resources (a cannonball) at something, fire some bullets (small tests) first to ensure that you are aiming at the right target. When your “aim” is proven with real-life results, then you can fire a cannonball with confidence.
This is similar to how a farmer wanting to grow a new crop might plant a small field the first year to determine how well the crop will do. If he gets a good yield, he could plant a larger acreage the next year and implement the lessons he learned during the first year.
Market research vs. assumptions
Without actual data, we are left to make educated guesses. Too often, these guesses are simply assumptions based on our frame of reference. In This Is Marketing, Seth Godin tells how a new CEO, Ron Johnson, abruptly discontinued JCPenney’s long-time practice of steep discounts and sales.
Godin writes, “Johnson took that action based on his worldview, on his bias about how to shop. He didn’t think it was possible that a quality retailer, a store he’d like to shop in, would constantly be pitching clearances, coupons, and discounts, and so he tried to transform JCPenney into his kind of store. As a result, sales plummeted by more than 50 percent.”
I like this quote from the book Tuned In by Craig Stull, Phil Myers & David Meerman Scott: “Your opinion, although interesting, is irrelevant, and so are the opinions of your family members.”
We’ve experienced this with our research more than once. Recently we dedicated 25% of our annual marketing budget to research whether a new service we were considering appealed to a specific customer persona. Within a few months, we were able to determine the viability of the service and gained insight into the challenges this persona faced in their business day to day. This information was extremely helpful in shaping our service offering. We learned that we needed to adapt our original plan so the service could actually solve our customer’s problem.
Market research is an opportunity to see how your assumptions align with reality. In The Personal MBA, Josh Kauffman writes: “Every business or offering has a set of critical assumptions that will make or break its continued existence. The more accurately you can identify these assumptions in advance and test whether or not they’re true, the less risk you’ll be taking and the more confidence you’ll have in the wisdom of your decisions.”
Conducting market research
In this section, we’ll use the example of the Farmspring Equipment sell sheets to cover some basic steps you can follow to conduct your market research.
1. Define the decision you need to make and/or the specific information you need.
Maybe you need to know which features to add to your next model, or you want to add an entirely new line of products, or you want to change your hours of operation or open a new location.
In the sell sheets, we needed information from farmers and dealers to help us make the new sell sheets more effective.
2. Decide how you will gather the information.
Who has the information you want, and what would be the easiest way to acquire it? General information can be gleaned from online sources, industry events/magazines, and business publications. Government agencies, trade associations, and research universities sometimes publish reports or studies that contain useful information.
Customer information can be gained in formal ways like interviews, surveys, or more informal ways through your everyday interactions. Your store clerk can ask each customer certain questions as they check out. Your salesman can ask prospects. Your team can record information each time they sense a customer is frustrated about your company.
Depending on the type of information you need, you’ll want to talk to both customers and prospects who are considering a purchase. And don’t forget former customers or prospects who have decided not to buy from you. Bill Gates said, “Your most unhappy customers are your greatest source of learning.”
To learn about your competitors’ pricing, products, and services, you can collect their advertising literature and visit their stores. You can analyze their website and read online reviews of their products. You can purchase and use their products. You can ask customers about competitors.
For the project, we knew that we need to talk to both dealers and farmers. The dealers could tell us what would work best for selling the products, and the farmers could tell us what they liked about using “in the wild.” We decided to conduct interviews via phone.
3. Create the questions you will ask.
This may take some careful thought. Craft your questions so that they do not influence the answer. We knew we wanted more effective printed materials. We created open-ended questions that would allow a wide variety of answers. We also needed to make a specific decision — to either print individual-line brochures or combine all the lines into one catalog. On this issue, we asked a very specific question to get a specific answer.
The questions you ask may vary depending on whether you are doing an oral or written survey. An oral survey offers you the opportunity to ask questions to clarify the customer’s responses, but on the downside, it takes a lot of time. A written survey where the recipient fills out a form on paper or online is more efficient, but it can be difficult to gain deep insights this way. Written surveys work well when you want to discover simple preferences or ask multiple-choice questions or yes/no questions. Response rates on written surveys are often very helpful. Adding a reward for completing the survey can help.
4. Conduct the research and record the results.
Executing your research plan takes time and discipline. Assign a specific person/people to the task and make sure they have the time in their schedule to work on the research project.
We called a list of dealers and farmers and walked them through the prepared questions. The dealers appreciated the opportunity to influence marketing materials and willingly shared their time. Answering the survey questions took about twelve minutes, but some dealers were so eager to help that they spent a half-hour giving us insights into their sales challenges.
Over two weeks, we learned a lot about the industry, Farmspring’s strengths and weaknesses, and how farmers like to do business. After we finished the survey calls, we sorted the information into meaningful groups. We then wrote a summary of important points and key takeaways.
5. Apply the insights to improve your business.
Most times, you will find one or two recurring themes in your research. There may be some isolated information that is very negative or very positive. These outliers may merit some follow-up to understand what they mean.
You went to a lot of hard work to get the information. Now make sure you put it to good use. Armed with the truth of reality, you can confidently make informed choices about moving your business forward. Do not discount the research findings if you find them hard to believe or difficult to accept. If you conducted your research correctly, it is much more trustworthy than your own biased opinion.
Farmspring Equipment was surprised that the research revealed that dealers strongly preferred a complete catalog instead of separate sell sheets for each product line. That was good news because catalogs cost less in the long run and help cross-sell lines.
Based on the research results, we put all the products into one catalog instead of separate sell sheets, included farmer testimonials that we had recorded during the interviews, and added product and delivery schedule information to answer common questions.
These improvements resulted in a marketing piece that saves time for everyone, sells more products, and lowers marketing expenses. All from some simple market research!
Conclusion
Market research can help you understand which products or services are in demand, learn how to provide superior value to your customers, know how much people are willing to pay for your product or service, reduce business risks, spot upcoming problems, and identify sales opportunities.
Research is not one and done. It is a continual process because your customer and your market are constantly changing. A standard item on your annual marketing budget should be assigned to Research and Development. Continue the process to build deep insider knowledge of your customer’s daily lives, problems, goals, and values.