Not as I do
Alan Hale is the founder and president of Consight Marketing Group. He can be reached at alanhale.consultant@gmail.com.
I’ve spent many years in consulting and marketing research and have conducted over 275 B2B projects. I’ve seen many successes – and also numerous failures. This has allowed me to identify common marketing mistakes that I’ve seen repeated across a wide variety of companies and industries.
Most of these mistakes could have been addressed and resolved with robust marketing research. Research is most valuable when the insights it gathers drive actionable strategies and tactics. This use of research turns it from a line-item cost into an investment. Sadly, Bain Consulting has estimated only 22% of B2B companies identify and act on insight.
Use the following as a checklist to see what mistakes, if any, your organization is making.
Be unwilling to have your paradigm challenged. Are we sure there is not a better way to do something? Does senior management still believe the market acts as it did 15 to 20 years ago? Are accounts really leaving due to price, as your salespeople say? Do we really know what our customers want and value? How loyal are they to us? Are our customers raving fans and brand advocates or are they brand assassins?
We once had a construction equipment manufacturer client that said they knew their customers very well. They estimated the Net Promoter Score for their top customers at 35%. The research indicated a -47%. Issues of delivery, service and responsiveness badly hurt them. They were absolutely shocked they were so far off in their assessment. It was a complete disconnect.
Incorrectly identify your target market(s). We find there are too many companies who do not identify their target market or who do only demographic characteristics, which is not sufficient. When I hear, “The product (or solution) is right for everyone,” I cringe. There are few products like sliced bread. As part of your segmentation, identify and profile your ideal customer. I don’t care how good your product is; you cannot sell generators to the Amish community.
Assuming products will fly off the shelf without feedback from customers. Sometimes engineering is left alone to develop a next-generation product. That can lead to an offering with too many features or without certain functions customers view as critical. Or maybe all the new features make the product more likely to break down and/or make it more expensive. And then there is the opportunity cost of engineering’s time as well as revenue lost due to delays in market launch. We had a client that had its team of engineers working for several months on 32 features for its next-generation laboratory product. Once we did the market research we narrowed it down to four features, one of which the client did not initially consider. The product was finally commercialized and deemed a success.
Failing to reach out to your customers via talking and listening to them and combining that with voice-of-the-customer research. In my opinion, companies rely too much on web surveys and data analytics in B2B rather than developing a true qualitative understanding of what customers want. The insights give context to the data. A company should be engaging with its customers, not just surveying them to death.
The VP of marketing and the CMO should be spending a minimum of 10% to 15% of their time in front of key customers. Top customers should also have a representative from senior management calling on them and their senior management. Engineering and other functions should visit customers once a month. The goal is insight.
Close the feedback loop with your customers. Tell them, “This is what we heard. Here is what we are going to do.” Identify the key areas to focus on, prioritize and differentiate from the competition. You want to far outperform your competition on the most important criteria. Conversely, the stuff that does not matter to the customer and costs time and money should be stopped.
Not crafting the right value proposition/product fit. Why should someone buy from you? Some people call it the unique selling proposition. Others call it WIIFM – What’s in it for me? Is your solution solving a pain point? When you are trying to poach a company from a competitor or get a customer to switch to a new technology, you have to go beyond being me-too and give them a reason. Does it do something faster, cheaper or better than the alternative? Is it different? Does it allow your customer to sleep better at night?
We use the following mathematical equation: V = B ± CX/(C+R). Value equals benefits of the product and brand, plus or minus customer experience, divided by the sum of cost added to perceived risk.
Risk is an interesting variable. Suppose a plastic bottle manufacturer develops a new bottle that costs 10% less than the current one. This savings doesn’t mean much to the potential new customer if there’s a possibility the bottling line might have to be shut down and the plant manager loses her bonus. You need to look at the overall value of buying from you versus buying from the current vendor. What does your value proposition need to look like for them to seriously consider purchasing from you? If you are a new vendor, it might be something like: a pilot program; someone working at the plant; highly visible customers using this product; independent laboratory tests of the product; or a guarantee that reduces the level of risk.
Acting in silos. In many cases, sales, marketing and engineering are each in their own silo rather than aligning to meet the customer’s needs. Much has been written about this problem; little has been done. This is another practice that needs to be challenged and stopped. It requires a change in culture, a change of paradigm at the top and alignment of the desired goals and compensation.
Not collaborating on marketing materials. Marketing needs to listen to sales and to their customers to develop the right collateral materials. Are they effective? Do they help the customer? Do they help the sales process?
Relying solely on sales to push the product. Sales needs to have direction and input from marketing. Is the target market right? Is the value proposition right? Marketing should help drive customer acquisition and provide qualification criteria to the rep. In our opinion, the days of solely cold-calling and pressuring the customer to buy does not work. It is about relationships, diagnosing the problem and designing a solution that addresses the customer’s issues.
Not measuring key performance indicators or other metrics of customer satisfaction and loyalty on an ongoing basis. This, along with failing to improve in areas in which you are seen as deficient by your customers, can be a disaster. Utilize Net Promoter Score combined with other diagnostic questions. You should be constantly measuring to make sure you are making progress. You do this to delight your customers as well as identify customers who are not happy and could churn (thus potentially changing the trajectory of your relationship).
NPS has a poor reputation. There are three reasons for this. First, in many cases the concentration is on the score not the process to improve relationships. Second is the lack of actionable strategies and results. (To combat these two problems, NPS now also encompasses the Net Promoter System.) Last, CEOs are using NPS scores as vanity metrics rather than a tool for improvement. We think it is a very powerful tool to use across the organization. Implement actionable initiatives and then measure your progress over time. Rinse and repeat. It works!
Failing to benchmark to the competition. Determine how valuable certain functions and criteria are to your major customers. How do you stack up to your competition, to the best-in-class suppliers? What do leading suppliers in other industries do? What can we do to improve? Are we improving over time from the customer’s perspective?
Not properly valuing (and funding!) your customer service department. Are you still treating customer service as a cost center? Paying incentives on the number of calls handled? Compensation should be based on how well they resolve the customer issue. Are you pooling all your reps until the next available rep answers, even for large customers? Large customers do not want to wait for the next available rep. They want the rep to know the issue and build a rapport. This has been verified in several research studies. Large accounts should have a customer service rep assigned to them. Use the pooled structure for the rest of the accounts to lower your costs.
Failing to identify why key customers have churned. Why did your major customers leave? Salespeople will tell you it’s pricing but research has found that accounts churn due to bad product fit and bad experiences/not being serviced the way they want. A customer may be upset, disappointed or feel neglected. And you might be making the same mistake with others. When an account leaves, either the company or a service provider needs to identify the reason or reasons why. Don’t guess; do the research and find out what drove the customer away. This is where you need to be engaged and have discussions rather than firing surveys at them to solicit ratings of your company.
Not conducting adequate marketing due diligence. When you enter a new market, do you have enough market intelligence to develop a successful go-to-market strategy? Have you conducted marketing due diligence for your M&A candidate companies by talking to their largest customers? Will they buy from you after the acquisition/merger? If a large customer leaves, you will be overpaying for the acquisition. The larger the threat or opportunity, the more you need market intelligence. It gives you insight to make more impactful decisions and helps you avoid making costly mistakes.
Not including customer input on your marketing and branding efforts. Branding and messaging need to be aligned with what customers think and be consistent over time, channels and platforms. Ad agencies race to design new logos and messaging frequently without getting input from customers. They want to wow their clients. Does this brand and messaging truly reflect your company and the experience customers have? What does the research say? Does the perception of the customers match the perception of senior management? Branding is more than the logo, colors and taglines. It is the emotional connection to our customers, the brand promise. How can you redesign branding without talking to customers?
Failing to consider the impact of the sales channel. One of the key reasons to buy from a distributor is to have one-stop shopping (buying many products at the same store). This is in addition to breaking bulk, immediate access to inventory, lower or free shipping, access to credit, etc. You need to measure the power of the channel versus the power of the brand.
Do your customers ask for your brand and are they, for the most part, unwilling to change to another brand in stock? Or do they accept whatever the distributor has on hand? Do you have the right type and the right number of outlets? Where do your customers shop? We have found that there usually are not enough distributor outlets in an area as companies are afraid of channel conflict. While too much channel conflict (over 20% to 25%) may be destructive, some channel conflict proves you have enough channel outlets.
I was leading a research project years ago for a manufacturer of power tools. A big-box retailer told the company in a line review that if it did not receive more discounts and promotion money, the manufacturer would be thrown out in the next six months. We did over a thousand interviews with contractors and found out several things. First, contractors were very loyal to their preferred brand of power tool as the tools are an essential part of how they make their living. In fact, if the retailer did not have the brand in stock, they would go to another outlet over 80% of the time. Second, the contractor would typically spend $200 to $300 in addition to buying the power tool. So if the retailer did not stock these products, it would miss out on millions of dollars of power tool purchases and millions more in add-on sales. The retailer reluctantly relented and caved in on its threat.
Optimized with research
The above is not an exclusive list but it does show areas that can be better optimized with extensive research. Customer research can launch a product faster, leading more quickly to sales and profits. It can help develop go-to-market strategies that either get you a beachhead in the marketplace or increase your share of wallet. It can reduce churn and show you how to convert current customers into raving fans. We wish you much success in your marketing research activities.