Using Market Research to Save Your Business Money AND Still Increase Profits

A question Drive Research hears a lot is, how can market research help my business save money – whether it be on marketing, operations, or strategy expenses.

I sat down with our President and Founder, George Kuhn and Research Director, Chris Coville to answer this question and more.

Prefer to read? Navigate to each question by clicking the titles below:

Q: What is the best market research study to conduct to find ways to save my business money?

I would immediately jump to a customer survey and there's a couple of reasons for that.

One, it is a low-cost study. If you have a sample, such as customer emails, on hand it's really easy to send an online survey out to collect the type of feedback you are looking for.

With easy access to this audience, market research becomes much more affordable.

There are a couple of different areas that a customer survey can be used to save business money that we often talked to our clients about. This includes their marketing, strategy, and operations.

How to Save Money on Marketing

In a customer survey, you can identify what channels those customers are spending time on.

Once the fieldwork is complete and you find out none of your customers are on Facebook, but the majority of them spend a lot of time on Instagram, you can instantly adjust your budget accordingly to target people on Instagram.

How to Save Money on Strategy

From a strategy standpoint, you might find out that there are reasons people are choosing your products over competitor products.

If you understand X, Y, and Z of why your product is different, you can work some of that messaging into your strategy and some of the messaging that goes out to prospective customers to try to convert them.

How to Save Money on Operations

Last, from an operations standpoint, there is also some value there in using some of the feedback from a customer survey.

In the email survey, you find out whether customers really like your customer service team for certain reasons or there are certain frustration points in dealing with this team.

You can take some of that feedback directly from customers and go to your customer service team and use that as a training tool to make that experience better.

Acting on the feedback from a survey is the best way to increase customer retention.

Q: Would you recommend a quantitative or qualitative customer survey?

Our recommendation would be a quantitative approach.

With quantitative market research, you're going to get statistically reliable data results to lean on - whereas qualitative research, where it can be valuable, it is more exploratory in nature.

If your objective for market research is finding ways to save your business money, then there are several decisions to be made. In this case, a quantitative study will give you comprehensive data to help guide those choices.  

Measure over, explore. If you’re trying to find very specific metrics and measurements, a quantitative approach is certainly the way to go.

Don’t count out qualitative research quite yet.

Qualitative research can be a good value add after conducting quantitative research.

Say you conduct that initial research and you want to learn a little bit more about the findings. Perhaps the survey results pointed you in multiple directions and you want to figure out how to develop marketing messaging off this different feedback.

In other words, how should you optimally create this new product or this new service based off of what I learned in the customer survey?

Qualitative research such as focus groups or in-depth interviews can help you expand on these findings and learn more to really move forward with the results.

Don’t make assumptions about your customers.

At the end of the day it's something our market research company speaks with our clients about every day – don’t make assumptions about your customers. With the help of customer research, you are able to create strategic and fact-based marketing campaigns to help move the needle forward.

Take the time to ask your customers what they want, what they need and then do what they want and need.

There are a lot of different strategies and messaging that floats around conference rooms when marketing and leadership teams get together. Everybody has their own opinion.

However, the real opinion that matters is the customers. It is a much better strategy to revolve your entire approach around customer needs.

Q: What is most cost-effective market research approach for collecting customer feedback?

I would say if the audience is accessible by email, an email customer survey is the way to go.

Many businesses have access to a database of customer information, therefore making an email customer survey the most cost-effective approach in terms of collecting their feedback.

If customers are not accessible through an online method, your next options would by conducting a survey by mail or phone – however, these will both cost more.

There are pros and cons to each methodology, but in this case, the pros of an online survey far outweigh the cons.

Why an Online Survey?

Decades ago, not a lot of people were online using emails. That has completely changed. Everybody is doing that now. Everybody is comfortable with taking online surveys nowadays.

The real key advantage with an online survey is low-cost. It's one click and you can send it out to tens of thousands or hundreds of thousands of customers.

They are also timely. Customers are going to get that email and they respond back. Those responses come right back in your system within hours or even minutes.

You get a lot of quality data and quickly too.

Why Not a Phone Survey?

An advantage of phone surveys over online surveys is that the interviewers do end up having good conversations with customers during the process. They are able to probe respondents for more information or expand on their answers.  

For this particular question – how can market research help save my business money? – I’m assuming those asking are looking for a more cost-effective approach.

With phone surveys, there's a significant cost increase compared to email or online.

Think about the number of hours that it would take a call team to dial through thousands of customer records and spend five or 10 minutes with them on the phone to collect that feedback.

That adds up really quickly.

Why Not a Mail Survey?

Mail is a little bit less personal. Respondents also don’t always answer all of the questions because there is less accountability.

If you have specific questions that you want to ask as a follow up based on how they answer a previous question, you can't really do that because there is little interaction.

Whereas in an online survey, a market research company can program a question to follow up. Even with a phone survey, the interviewer's going to be able to follow up based on a certain question.

Additionally, think about the time and cost of printing materials, assembling envelopes and stamps, offering a prepaid postage return envelope, etc.

There’s also added time for when the postage returns to the market research facility. Once they get the information back, someone has to manually enter all of the data.

Q: Do you have any tips to increase response rates for a customer survey?

There are probably quite a few things here that we can do to increase response rates.

Be respectful of the respondents’ time.

Keeping the survey short, keeping it quick. Our market research firm really likes to keep our surveys three to five minutes long. 15, 20 questions max.

The market research industry as a whole has abused the respondent relationship a little bit over the years.

That's why you hear horror stories about companies introducing the survey and saying it's only going to take two minutes. Boom! 40 minutes later and that respondent finds themselves still answering questions.

For the case of market research, if we don't have people willing to give feedback to us and to our clients, then our industry doesn't exist.

It's really important that there's a balance there between your needs and your objectives, and asking customers to take time out of their day to provide feedback – one can’t outweigh the other.

In other words, if you ask too much, you're not going to get many responses. If you ask too little, the feedback is not going to be as actionable for you. So you really need to find that balance.

Don’t misquote how long the survey will take.

When you quote the length of the survey in the email invitation, there’s a lot of trust there. If you say the survey should only take 5-minutes, the respondent will hold you to that. Anything past the time you’ve allotted and respondents will bounce.

Even if your survey is on the longer side, say it takes 20-minutes – be honest and prepare your customer for how long this will likely take.

The last thing you want is a customer being frustrated with your company as they are providing feedback on your brand, products, or services.

Here are four tips to help build a better email survey invite:

The survey should be easy to do.

When you start to create very advanced questions such as multiple open-ends, you'll start to see more drop-off in your survey.

Basically, any survey that Drive Research conducts, we always see some sort of drop off on the first open-ended question that we ask in that survey.

So really, we try to limit those open-ended questions.

Also try to limit any sort of difficult ranking question and really try to keep the survey simple.

Offer an incentive.

There are going to be some people that sit on the fence who are thinking about taking a few minutes to give feedback as part of a survey. By raffling off an Amazon gift card or something of that nature does help push people in the direction of completing a 5-minute survey.

If you have a budget for rewards, our market research team always recommends something there to help those people who are sitting on the fence.

Depending on the size of your audience, your choice in inventive might differ.

If you have a large audience and you really just want to get a nice little uptick in your response rate, a raffle type reward will certainly help.

If you have a smaller audience or a little bit more difficult to reach audience, you might want to think about offering individual rewards. For example, offering all respondents a $5 Starbucks gift card if they complete the survey.

Cash is king.

In terms of the incentives themselves, usually, cash is best. Something you also want to stay clear of is offering a gift card or discount offer for your particular brand, product, and service.

This will discourage respondents who are not satisfied with your organization to complete the survey because they are not interested in or going to use this incentive.

Offering a more generic incentive is definitely better to make sure you get a wide variety of responses.

Q: Why should businesses consider allotting a portion of their budget on research, if they have little to spend as is?

Really research in a way is an investment. What you spend on research, you will get back through ROI.

Drive Research often talks to ad agencies and other industries that advertise about using research. The conversation centers around refining campaigns and making sure every dollar they spend is a dollar well spent.

For example, Brand XYZ is launching a new widget and would like to run an advertising campaign to promote its launch. Brand XYZ decides to run all kinds of social ads, television commercials, programmatic ads on websites, etc. – spending $250,000 in total. As a result, they sell a million dollars worth of those widgets.

Breaking this down a bit, they're getting a 4X return on their advertising dollar, which generated a million in revenue. Most companies would think that's great.

They’ve earned $4 for every dollar spent on advertising – so it many ways the advertising campaign is a success.

However, they did no research.

Let’s look at this same scenario in a world where Brand XYZ completed research prior to launching their advertising campaign.

In their research, Brand XYZ uncovered that there is a very specific type of customer who buys this widget. They're females age 25 to 34.

The reason this female audience buys that widget is that they know the shipping time is very quick - that's the core feature of why they're ordering from you.

So in that other scenario, that's information they never knew. They targeted every single age group and every single gender.

In their advertising messaging, they didn't include anything about the fast shipping times and it was still successful.

If they used market research and refined that campaign to focus on their target audience, only spending $125,000 and earning a revenue of 2 million. So that return goes from 4X to 8X.

Even though Brand XYZ spent $25,000 to $50,000 on research your margin there is just so much greater than the return on that advertising.

This example highlights how we think about ROI and how research is an investment and not an expense.

The Power of Pre-testing vs. A/B Testing

Sometimes when you look at these advertising campaigns they're massive in terms of budget – especially in comparison to what research costs.

Conducting a customer survey for a couple of thousand dollars is really nothing compared to a couple of million-dollar advertising budget where you’re not sure if that campaign messaging is really resonating or even reaching the right audience.

As marketers, we hear the phrase “A/B testing” a lot. This technique focuses on spending money on different ads and seeing which outperforms the other. Then, putting more spend on the ad that is offering more of a return.

With an A/B test, you're making assumptions that the A and B that you're using is the right messaging or design.

Instead, use market research to pretest your marketing campaigns.

The insight from a research study will define:

  • Which audience you should be targeting
  • What messaging you should be featuring
  • Which design is most attractive

Plus plenty of other valuable insights - all for the same amount of money you are using to A/B test.

At the end of the day, you don't know what you don't know – and that's what research can fill in those gaps and tell you, you're going left at 38 degrees, but you should really be going right at 70 degrees.

Q: Are there examples where market research has both saved a company money plus increased revenue?

Example 1

Think about your website. Think about potential improvements that you can make to your website.

Our firm has done some usability user experience research in the past where we've worked on websites.

One example that sticks out in my mind is an eCommerce website where we made changes based on our usability research. As a result, the eCommerce website saw a huge increase in conversions that they were getting in terms of the orders.

This example is a little bit more measurable in terms of the impact and the ROI of that market research, compared to marketing campaigns.

What about just relying on website analytics?

The website analytics companies often rely on with Google Analytics does a really good job of telling you the what:

  • Here’s your bounce rate
  • Here’s the path to purchase
  • Here’s what pages people looked at  

You might know, 50% of users are bouncing on this page. As a result, you make assumptions as to why and make proper adjustments. Although, these adjustments may make the problem worse, or it may make it better.  

Whereas conducting UX interviews businesses can gain a full perspective on why customers are leaving any given page.

User experience research allows your team to bring some customers on, talk with them as they navigate through your website, have them think out loud, and ask them direct questions.

There’s an unbelievable amount of value from an ROI standpoint. Even if you can lift your conversion rate on any eCommerce website by a half percent, it could mean hundreds of thousands of dollars that you're gaining that you were losing before.

Example 2

Another great example we have for that is in the operations space.

A bank or credit union decides to do a customer survey where they want to reach out and ask how customers prefer to communicate with their financial provider when an issue arises.

Initially, they had a call center team of three people with staggered hours over the course of the day to try and make sure that they have full coverage when customers are calling in.

After conducting a customer survey they find out that, 95% of customers prefer email communication. And coupled with that, they find out that the expectation for a response when emailing customer service is within 24 hours.

The bank and credit union realized even though they're extending all these hours and adding more hours for their staff to cover those times, in reality, it is not necessary. Customers much prefer to communicate through email.  

As a result, the bank or credit union is able to shave a ton of money off of costs that they're allocating toward the call center and staff.

Example 3

Going along with the same industry, something else our market research company has found through the bank and credit unions we’ve worked with is that they are still using paper statements.

By conducting customer or member research, financial institutions can ask a little bit about communication preference. In a lot of cases, we’ve seen those paper statements aren't being read or they're being tossed in the trash.

Banks are spending a ton of money to mail those out and print them and assemble them. To help shave costs, an alternative solution is to give customers the options for electronic statements through email or through a digital banking app.

Aside from banks and credit unions, if your company is sending any sort of mailings – this would be a great thing to measure in a customer survey.

Contact Drive Research

Drive Research is a national full-service market research firm that was founded in 2016. Drive Research works within a variety of industries to address key business objectives by consulting with clients to design and execute qualitative and quantitative research projects.

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