Market research needs to be the first step in any digital marketing campaign. Effective marketing is designed to reach a target audience that is well-defined with results that are very beneficial for a company. New customer acquisition costs are very high for most businesses. Marketing budgets are limited. Wasteful spending on digital marketing efforts, which are not well-organized, can cause great harm to a company. The marketing budget may be spent very quickly, in ineffective ways, with less than optimal results. The goal is to avoid these problems by first doing market research. Market research is the map that helps us know where we are going before we try to get there.
I told my Dad, “We sold 1,000 brand new dollar bills online!” “Great!” he said and then asked, “What did we get for them?” “900 dollars,” I answered proudly and then I added, “Imagine that, we got 900 new customers.” My wise old dad then said, “That’s terrific son. Let’s sell one million of them and really go broke.”
Know Your Customer
Before launching a digital marketing campaign, it is important to know as much as possible about potential customers. The wise business truth, which is very clear for most businesses, is that 80% of a company’s revenues come from about 20% of its customers. While these ratios may be slightly different for particular companies, the general truth is something not to be ignored. Any business does better by identifying its best customers and then serving their needs.
How do we find new customers?
Here are some great tips to conduct market research that helps find customers:
Become a Customer Any easy way to begin this market research process is to pretend to be a customer for a product or service. Imagine being a potential customer that is already interested in a something that will be offered by a company. Develop a keyword list and key phrase list that a regular person would use to search for a product or service. Go online and use the search engines to find it.
Competitive Analysis While pretending to be a customer, collect as much data as possible about the competitive offerings. Look for marketing materials that are used by competitors, advertising, and especially find out the price for competitive offers of similar things. Check websites, review systems, and their presence on social media. Look for the best and the worst from the competitors. Try to determine any gaps in the marketing efforts of competitors. There may exist an opportunity for a disruptive effort that changes the game and gives the company a competitive advantage.
Look for Potential Industry Disruption Opportunities
Here is an example of an industry disruption: Walmart is severely challenged by Amazon’s same-day delivery program. Why drive to a store when the same (better-priced) item is brought to the office/house? Delivery is free for Prime Members of Amazon that pay an annual fee for membership, Amazon is the clearly the winner over Walmart in this highly competitive retail market because of these market disruptive tactics that are based on more effective delivery systems. When making a competitive analysis, do not rely on lazy assumptions such as:
- There is nothing else like this!
- All we need to do is capture a 2% market share of a gigantic market to be a success.
- This thing will sell like crazy because my friends and family love it.
- Any other false presumptions that have not been market-tested properly.
Become the Worst Customer
Critical analysis of a product and/or service includes looking for flaws and negative attributes without hesitation. Start by complaining about a product and/or service to find everything real or perceived that can be wrong. Complain, complain, and then complain more. Make a list of statements that start with “This product and/or service is bad because of ________.” Fill in the blank with as many negative attributes as possible. Many companies use focus groups as part of their market research to learn more about these negatives. If a company has a group of supportive customers, it is possible to beta test a product and/or service to learn more about these things. The focus on the negative helps uncover things that might be severe problems when the digital marketing camping for the product and/or service is launched. It is much better to be proactive about these issues than to suffer from them when they come up after a full marketing effort is already underway.
My dad used to say, “I always know how well I am doing by asking your mother.” My mother used to say, “Your father never listens to me.” When I was younger, I never listened to either of them. I should have listened to both.
Find the Best Customers
Marketing research helps identify the best candidates for potential customers. There are seven stages for market research that include:
- Quantify the Marketing Problem(s)
- Identify the Marketing Research Objectives
- Design the Research Study
- Select an Appropriate Sample Group
- Collect the Data
- Summarize Conclusions
- Form an Action Plan Based on the Market Research Results
1. The Marketing Problem
Digital market research is only effective if it answers the question(s) necessary for a company to solve a marketing problem. The statement of the problem needs to be as explicit as possible. Simple marketing problem statements, such as “Figure out how to make more online sales.” are less effective than detailed statements such as, “Increase the market share of a company’s product or service by a certain pre-determined amount that is cost-effective, sustainable, and contributes a certain amount of profit to the bottom line of the business, which continues to support the company’s growth in a certain market area with a specific customer demographic.” A long-winded problem statement is better than a short one. Being able to see how to measure the results of a digital marketing campaign, which solves the marketing problem(s), in terms of real numbers, is a critical component of this step.
2. Marketing Research Objectives
The marketing research objectives are designed to answer the questions proposed by the marketing problem identified in the first step. Questions that need to be answered in this stage may include such things as:
- Will a certain type of digital marketing increase sales in a cost-effective way?
- Will the efforts bring repeat business?
- Will the efforts contribute to the company’s profits?
- Can these ideas be tested without full commitment?
- What proof can we generate to support the conclusion that the ideas are valid?
3. Research Study Design
The key to this stage is to make the research plan design effective in answering the marketing questions. Research needs to be very focused with definitive results that are useful. Do not assume the answers; however, be sure to ask the right questions.
4. Sample Group
The sample group has to be large enough to be representative of the whole group being investigated and small enough to be manageable. There is both an art and a science to selecting the sample group. The “margin of error” that is often referred to in statistical samplings makes it seem like the researchers know what they are doing to some degree.
However, in reality, the margin of error is only a best guess, which may offer a sense of false security in the research results. Saying “three out of four people recommend something” has far more meaning when 1,000 people were asked instead of just four. To avoid these statistical problems, it is best to choose a sample from the real world. It is better to focus on real-world marketing tactics to see what the results may be if the digital marketing campaign is expanded to involve a larger group of people.
One very useful technique in digital marketing research is the “A/B” test. With an A/B test, half of the sample group of potential customers is exposed to alternative marketing messages about the same product and/or service. Then, the results of the better performance between the A campaign offering and the B campaign offering become readily apparent. This A/B market testing style may continue to be used even when a full digital marketing campaign is underway.
For the digital marketing efforts, which include SEO and paid advertisements, it is possible to adjust the digital marketing campaign in real time. If one ad is “pulling” better than another, it is possible to promote that ad more than others by changing the campaign dynamics, while the campaign is already underway.
5. Data Collection
Data collection is the final step necessary before the analysis of the market research results. Data collection should be thorough and not leave the collection of any of the results neglected. Depending on the market research conducted, it may be necessary to put a lot of effort into the data collection stage. For example, if a survey method is used, this may require consistent and repetitive requests to get the surveys filled out and sent back.
6. Summarize Conclusions
Prepare a summary report of the research and make sure it is understandable. It needs to get to all the key people in the organization that need to know about it. Ask for feedback and opinions from those who read the report. The idea is to see if they can come up with insights from their own point of view that may be helpful for the company to consider.
7. Implement an Action Plan
Digital market research is only effective if it leads to conclusions that support a positive action plan for the company. While it is very important to start with market research, it is just as important to use the results of the market research to launch a digital marketing campaign.
As my wise old dad said, “Think about what you are going to do first. Make sure you know what the heck you are doing. Decide how to do it. Then do it!”