Most Interesting Findings

Do You Really Know What Your Customers Think? A Case For Market Research

If asked, most managers will declare with confidence they know what their customers think. But, when asked how they know it, their confidence often wilts like a flower in the sun with no water.

Every quarter Frank Lynn & Associates conducts a channel marketing workshop attracting sales and marketing managers from many different types of companies. Channel Marketing

Frequently, we ask the following question, “How many firms represented here use formal customer research as a strategic marketing tool?” In some cases, no hands are raised. In other cases, only a few hands go up, even from large Fortune 1000 companies.

When asked, “Why,” we find some common responses:

> Sales people talk to customers all the time! They bring a lot of customer insight.
> Customer research is done for product development, and that isn’t a constant need.
> Internally, the discretionary annual marketing budget leans toward marketing communications, like new literature campaigns, mailings, etc. to drive growth

What about using the sales force for research? Aren’t they the critical interface between a company and their customers?

The sales force is one of the biggest investments a company makes, and it can be used as a “conduit” to understanding customer sentiment. This is important. But, there are two problematic issues in gathering customer insight from the company sales force.

How does the typical sales person spend their time?

If they are good account managers, it is with existing, high-value customers. Here is the gap. How do we learn from those outside the sales force’s circle of presence?

Companies that consistently maintain double digit growth make it a point to learn and act upon perceptions, purchasing behaviors and expectations of prospective and low-profile customers.

Then, there is focus and motivation. Sales people are trained and paid to sell. It is a challenge to get reliable and effective market research from salespeople.

Research and development is another big investment that market research can optimize. Numerous companies spend hundreds of thousands of dollars developing new products and fail to include external customer research in the process.

Engineering-driven organizations are especially vulnerable here. Great ideas are put into motion because they seem to solve problems or outstrip the competition on design and capabilities.

Successful marketing strategies must also take into account the size, sensitivity and buying behavior of target end-user segments. This is a step best filled with regular collection of insight from those customers.

End-user research can effectively and efficiently answer critical acceptance questions before a more significant investment is made. These basic questions can be incorporated into a research methodology that can be conducted in person, over the phone or via questionnaire. Market Research

What types of research questions should be considered?

Let’s assume we are launching a new technology product.

Technology
Does the technology meet the customer’s needs or solve the problem? Is it perceived to be robust enough? Or overkill for the existing situation?

Economics
Are the benefits greater than the cost? Developing an actual selling price is a challenge in any research methodology, but good research can define a value-based price range in the mind of the customer.

Timing
Are prospective customers capable and willing to make a purchase in the short term? Asking questions about purchase cycles, budgets, approval processes, centralized versus decentralized buying behaviors, and other timing questions will help gauge opportunity forecasts.

Environment
Research questions can assist in understanding behaviors that have a high impact on success. For example, you can test the customer’s internal environment, which means the customer’s level of sophistication and readiness to adopt the new technology. It is also critical to understand the customer’s external environment, such as alliances with competitors or previous negative experiences.

Are there other ways that research helps companies grow?

Good research has proven to help companies maintain current share, grow within their customer base, and strategically grow outside of it. Channel Workshops

There is one additional benefit research can deliver. Customer research can tell us how to raise the bar. It informs us about unmet needs, or identifies unique benefits that competitors do not deliver. Raising the bar means doing the right things just a little bit better than the competition on a consistent basis.

Jeanne Fec is a Principal of Frank Lynn & Associates, an internationally recognized management consulting firm based in Chicago. For more information, please contact Jeanne at jmfec@franklynn.com or visit http://franklynn.com

Tags: Business, Distribution, management, market research, strategy
Posted in Business · April 25th, 2010 · Comments (0)

How To Evaluate An Effective Go-to-Market Strategy?

For many manufacturers around the world, marketing/sales are considered more of an art than a science. Companies resist applying hard measures because it is difficult to measure cause & effect—how can you isolate one specific marketing or sales initiative and attribute business success to it?

Frank Lynn & Associates, a global channel consulting firm based in the Chicago area has developed a more formula based approach to the problem of measuring an effective go-to-market strategy. The PPH formula (product-presence-hit rate) is a diagnostic tool to first identify the limiting factors to market strategy effectiveness, then implement discrete changes to improve it and measure the results. Market Strategy

What is the PPH Formula, and how does it provide a measure of strategy effectiveness?

PPH is a formula that breaks market share into measurable components of product/service coverage, sales presence, and hit rate. Factored together, these three variables equate to market share (PxPxH=MS). By breaking your market share into these components, the limiting factors to strategy effectiveness can be quickly identified. And since it is a mathematical formula, the model provides a basis to measure the cost/benefit to any actions the marketer may take to try to boost strategy effectiveness.

A closer look…Multi-channel distribution

What is Product/Service Coverage?

Product/service coverage is a measure of the degree to which your product/service offering is considered a viable alternative to the customer. Assessing product/service coverage begins with understanding what the end user is buying – - including physical product and the service/support provided around it. Product/service coverage determines whether your offering is viable from a form/fit/function perspective.

This assessment includes a review of product line gaps, especially if missing products are being purchased in conjunction with your product offering.
It should also include a look at price points. Consider the “good/better/best” product positioning. Customers focused on a “best” offering will rarely consider a “good” product a viable alternative, and vice versa.

What is Sales Presence?

Sales presence is a measure of how often the customer considers your offering at the time of making a purchase. Sales presence has several contributing factors;
• Geography; i.e. do you have appropriate sales/channel presence in the location where brand/source decisions are made?
• Account; if present in the geography, does your sales organization and/or channel partner have a relationship with the account. Within the account, do you have access to the key decision makers/influencers?
• Decision presence; even if you have generated revenue with this account in the past, are you involved in the current purchase decision? Or is the account awarding business for which you are not allowed to compete?

What is the Hit Rate?

The hit rate measures how often the sale is won. It is a reflection of how well your product/service offering and support align to the decision variables used by your target customer. It is a result of several factors considered part of the traditional marketing mix including: brand preference, price preference, ease to do business with, product/service bundle, technical support, product availability and the manufacturer’s and channel partner’s reputation.

How does the PPH Formula yield actionable guidance for the marketer?

The PPH formula provides granularity to strategy measurement. And it is this granularity that allows strategy changes that yield rapid results. The granularity is provided at an organizational level—product management can gain insights from the product/service coverage analysis, sales management can gain direction from the sales presence variable, and the marketing organization generates guidance to its resource allocation from the hit rate assessment. Executive management also gains insight into where to place its bets based on the cost/benefit trade-offs associated with changes in any of the market share components.

By allowing the effectiveness assessment on a territory and/or market segment basis, the effort allows for a change in your marketing approach away from the traditional one-size-fits-all-markets strategy to an approach that employs individual strategies that are highly focused on targeted segments. channel workshops

For a discussion about the PPH formula contact Karl Edmunds, Vice President of Frank Lynn & Associates at kedmunds@franklynn.com For more information go to: http://franklynn.com

Tags: Business, Distribution, management, Pricing Strategy, Sales
Posted in Business · March 21st, 2010 · Comments (0)