Cracking Customer Insights: A Rookie's Fun, Fast, and Foolproof Guide
Are you trying to influence your leaders but not quite able to convince them? Customer-research & Insights could be the missing link in your arguments
It's common to encounter a problem and immediately generate an idea to address it. However, in the fast-paced and high-stakes environment of business, simply relying on your intuition and charisma won't suffice.
To truly convince your manager and achieve success, you must present a well-thought-out strategy, supported by data and evidence. Rather than asking your manager to take a leap of faith on your new idea, consider harnessing the power of customer research as a fuel for innovation.
It's important to understand the basics of research to conduct simple surveys, as well as guide and evaluate agency work for bigger projects. These basics are -
What research to conduct?
How many people to survey?
What is a good budget for research?
After conducting more than 200 research projects on new products, I've developed a comprehensive framework that can help those who are conducting research for the first time. In this article, I'll share some real-life examples and provide answers to some of the most common questions.
What questions should I ask?
What type of research you need to do depends on how much you know already. To help answer that question, I've created a flowchart that can guide you in the right direction.
If you already know the problem and all possible answers, a close-ended survey is the way to go. But if you don't know the possible answers, then you'll want to use open-ended questions. Open -ended questions help us discover possible answers. You would notice the answers start repeating after 10-15 responses, or they start to fall into a few major buckets.
Once we know a few major buckets of answers, we can make our question close-ended
For example, if you notice customers are returning your product but you don't know why, ask open-ended questions like "What happened? What is the reason for returning the product?" From there, you can identify broad themes. Later when you see most responses are falling in these buckets only, then convert your open-ended questions into closed-ended ones with an option for "other".
Example: A business leader wanted to expand her online stationery shop but was unsure which category to launch next. She had a few ideas in her mind, but don't know what all her customers were expecting. Her marketing manager conducted an open-ended questionnaire with 30 prospective customers. Most of the answers were among 5 major buckets of art-supplies, postal supplies, office-supplies, Gift-sets, Theme-based stationery. However, just 30 responses were not giving her confidence to go with the most-asked category. She then administered a closed-question survey to 200 prospective customers. She found that 50% wanted Colors and 40% mentioned Postal supplies under "Others". Customers were also asked to rank the options, leading to a strong confidence in the launch of the Colors category.
How many people should I ask?
No, it is not “5% of the total population that we are targeting as out market”. Remember that sampling is exactly this - sample out of the population. We can never talk to the entire population in B2C retail categories.
First, decide on the smallest "unit" of your target audience as per your category. The number of units will depend on the level of homogeneity in the behavior among the target audience. For a product like food, the behavior may be clustered into broader regions like North India and South India, while for a social network with regional languages, it may be necessary to cluster the behavior into individual states of India, resulting in more units. The key is to determine the smallest unit that adequately represents the behavior of the target audience.
Then, distribute your data well among other factors such as gender, age-group, and funnel-stage.
Now that you have decided on the smallest "unit", you need to get at least 100 samples in it. If the "cost per sample" is too high, you can use a formula to know the exact number of samples you need.
A simple way is to do 100 responses in each unit. In my experience, this sample size-per-unit has very good accuracy and acceptability for taking decisions.
If you have two "units", and you will do 100 responses in each unit. So, your total sample size becomes 200.
However, if you want an exact perfect-sample-size, then use the formula in the link given at the end of this article.
How much should I spend?
At Least 1% of your marketing budget, or product-development budget. Instead of struggling to justify an absolute number (Like Rs 2 L or $1500), it is better to view it as a share of the marketing budget.
Example: Once, I had a budget of USD 2 million for advertising on TV and digital media. I was uncertain about how our new ad concept would perform on TV, so I considered two options to test it. The first was to launch the ad on digital media and spend up to USD 5,000 to gather data on click-through rates. The second was to hire a research agency and spend up to USD 10,000 to research how the audience would respond to the advertisement.
However, since we were creating a brand-story ad to showcase our values instead of just discounts, the digital medium was not the ideal platform to predict its acceptability on TV. Digital ads typically respond well to very short ads about discounts or specific products in just a few words, but our campaign needed to attract new patrons based on our values. So I decided to proceed with both tests, and the budget was justified as we discovered key insights that were affecting attention. Ultimately, we modified the ad-creative based on these insights, and the campaign turned out to be a mega-hit.
Way forward
By familiarizing yourself with specific research tools and methodologies, you can simplify even the toughest growth challenges. It's like having a trusty mechanical tool set - once you know how to use a screwdriver, you can easily fix that stuck drawer. Similarly, knowing your research tools gives you the power to unlock your business's full potential. So let's go forth and upward, my friend!
Useful Links:
Read about my experience as a Research Leader of BYJU’S global group.
If you need help on your research work, please ask me any question regarding setting up a research department or doing first research for your startup. I am reachable on https://www.linkedin.com/in/charu1007/ and respond within 1 day.
No surprise here, Charu, this piece is as usual, soaked with practical wisdom and down-to-earth advice. And every junior and senior employee and manager needs to know this. Minor nit: "At Least" in the 1st paragraph in the section "How much should I spend?" has an unnecessary capitalization.
Other than that, it's perfecto! :D so glad to see your writing again!