In a recent American Marketing Association (AMA) article, the authors identified seven challenges for marketing leaders today. The challenge they identified as the top, most-important one? How to effectively target high-value sources of growth. As the AMA article reminded marketing professionals: “With all the fascination with new marketing concepts, digital technologies and new tactics, there continues to be one foundational issue that is proven and reproven to have a disproportionate impact on the value you create for your business: identifying the highest-value source or sources of growth for your brand, product or service. Choosing the wrong target, or one of less value, will certainly lower your growth and return-on-investment potential. It might even fail completely.”
Identify ways to pinpoint your high-value sources of growth
Let’s start with common yet usually less effective methods businesses have used to identify high-value growth targets. You could do nothing and assume last decade’s best customers are your future best customers. You can try trial-and-error techniques to find new sources. You could assume that getting more business from your current customers will ensure target growth. You can attempt to grab market share from competitors by leveraging against their weaknesses in your marketing or sales presentations.
Or, if you want to be sure you are going to hit your growth goals, you can conduct a thoughtfully-
designed market research study and gain the insights you need to target and engage with your highest-value prospects and customers.
Benefits of strategic market research
Conducting strategic market research will help you understand the drivers behind the behaviors you see in data you may already collect (sales, customer service calls, etc.). For example, a car dealer may notice that sales to first-time buyers are strong, but repeat business has declined. Research might discover that these two types of buyers have very different expectations for the buying experience, but receive exactly the same treatment by staff (which on the surface seems a good thing but may not be). Or, the research might reveal that first-time buyers visit the dealer because of its highly-marketed reputation for helping consumers with lower credit ratings, while older buyers don’t care about financing deals and instead want a more personalized experience and competitive price.
When we conducted a study for a university that was experiencing stagnant enrollments in its MBA programs, we were able to identify its highest-value sources for growth. Instead of just ramping up the marketing budget in an effort to increase admissions, the university took a zero-based look at its program and sources of growth and made changes that should generate additional enrollments.
By including a conjoint analysis in the research and running market simulations, the university could see exactly which MBA concentrations and program features would increase or decrease market share preference against its competitors in multiple markets. It tested some program features that no one in the market was offering and found a couple that made an impact. It also gained invaluable data on tuition sensitivity. Last, it found out that the substantial marketing and communications efforts directed toward HR directors wasn’t getting equal ROI.
What type of research will help you identify and evaluate your high-value sources of growth?
Performing research that helps your organization understand your prospects’ and customers’ psychology, needs and expectations, correlated with their past and anticipated behaviors, is the most effective way to identify your customer segments and determine which ones offer the greatest value to your growth. You also need to put the research data into context – with industry trends, technology changes, communication preferences and more – to determine high-value targets that don’t also carry high acquisition costs. Then, you can develop wise growth goals and choose your tactics.
At Vernon Research, we love discussing market research, no obligation. If you’d like to understand how market research can help you identify high-value growth customer segments – or any other opportunity – please get in touch.