The choice of tools depends on the research objective. When looking for statistically reliable data on a large population, use quantitative research. Alternatively, when seeking finely detailed information on opinions and motivations, qualitative research is better. As is the case in many other areas of business, one size does not fit all when it comes to selection of research methodologies. Often, a combination of tools produces the least biased and most actionable results. Face-to-face “intercepts”, for example, complement anonymous Internet research, and small focus groups can be balanced with questionnaires to a large sampling. When selecting tools and methodologies, consider the following:
• Focus groups. Qualitative research in the form of focus groups is particularly useful when introducing new offerings, when positioning, branding or promoting products, and when assessing opinions on a proposed change. Since focus groups are expensive and can only survey a small population, it is particularly important to have a clearly identified objective and to use highly focused questions. • Surveys and interviews.
“Even a 5% increase in customer retention rates results in a 25-95% increase in profits, depending on the business.”
Customer surveys and interviews are not only a cost-effective means of learning what matters to customers, they also contribute to retention because they let customers know that their opinions matter. This type of research can take the form of mailed surveys, phone or face-to-face interviews. Email questionnaires have the potential to reach a large audience on a limited budget, but must be administered very carefully to avoid ethical issues and to reach serious respondents. For business-to-business purposes, scheduled phone interviews produce the most actionable results.
• Competitive analysis. Although market research can provide valuable information about competitors, competitive analysis focuses on this aspect of the marketplace by answering questions about primary competitors’ markets, revenues, percentage of market share, range of products and services, strategies, pricing structures and profitability. Information required to profile competitors is readily available in the library or on the Internet from sources such as Dow Jones Interactive, S&P’s Industry Surveys, Hoover’s Online, Lexis/ Nexus and many others such as industry associations, the U.S. Census Bureau, government agencies, business schools, trade publications and competitors’ websites.
• New business research. Market research is indispensable in determining the viability of a new business concept. Tools in this effort are those listed above under competitive research as well as associations, forums, and proprietary groups. While large, established companies have substantial research budgets and vast numbers of consumers to survey, it is particularly critical for new and smaller companies to focus on a carefully targeted segment with questions formulated to meet research objectives. Even a small mistake not only wastes resources, but more importantly, it can render false results and shift strategy in the wrong direction.