For me, the word “homework” conjures up college memories of late nights, vending machine meals and stress. Maybe this is why most of us aren’t very eager to do our homework when we finally get to the “real world” of business. But, as much as I hated homework, I know that it ultimately helped prepare me to get an “A” on the test. Similarly, in the world of business, doing your homework leads to more growth and profit.
Perhaps the most common area that I see businesses (of all sizes) neglect, is conducting customer research. According to a recent CMO survey, only 41% of CMO’s include marketing research in their budget. And “failure to understand customer needs and wants” is cited as the #1 reason for product failures. Why are organizations failing at this? Many believe they already have the answers.
Customer research can be difficult, expensive, painful and confusing. So instead of tackling it head first, organizations skip it altogether and rush to get to market with their ideas, untested business models, useless products and irrelevant content. The result? 72% of all new products fail to meet revenue goals. And $958 million is wasted on ineffective marketing every year.
There have been millions of articles written on the importance of knowing your customers. But let’s say you disregard all of that and decide to go to market with your new marketing campaign anyway.
4 risks of neglecting customer research:
1)You will create something that nobody wants
It doesn’t matter how brilliant your marketing and advertising campaign is – if you create a product that nobody wants, or that solves a problem nobody has, you will not sell it. Just look at the top 10 product failures in the U.S. by some of the most well-known brands around (Google, McDonald’s, Microsoft). Their tunnel vision caused them to spend billions of dollars to promote something that ultimately missed the mark.
And while many of these organizations conducted customer research prior to launching their products, there is an art form to asking the right questions so that you get the “real” answer instead of validating your current biases. A topic which I will cover in a future blog post.
2)You will sound like everyone else
How many companies claim to be “the best solution” or “end-to-end” and “world-class”? Using the exact same phrases as your competitors only confuses your customer, forces them to tune you out and further commoditizes your product.
As hilariously pointed out by Bob Hoffman, The Ad Contrarian, if you aren’t going to do the upfront work of discovering what your customers care about and how your brand is differentiated, you might as well use the universal creative brief. Because, ultimately, your communications will sound just like every other company.
3)You will focus on communicating the wrong things
When organizations are too internally focused, the product or marketing organization convinces themselves that they know exactly what the customer cares about. But YOU are not your customer.
Take this research from McKinsey, which illustrates this point. When asked what themes B2B companies considered most important for their brand to communicate – many cited product sustainability, social responsibility and global reach as the top. Whereas customers considered open and honest dialogue as the most important (which no organization in the sample emphasized), followed by specialist expertise and responsibility across the supply chain.
It just goes to show that what you value internally may not be aligned with what your customers want to hear.
4)You won’t get results
No matter how good your execution is, if your marketing content fails to connect with your prospective buyers, you’ve wasted your time and resources. This often confuses organizations, as they pour hours into the backend execution (writing emails, posting on social media, sponsoring events), but don’t see an increase in sales. Ultimately, marketing communications are measured by how well they help potential buyers move along their journey and relationship with your organization.
Although doing your homework isn’t the most exciting exercise, it definitely prepares you and your business for future success.
“It’s not the will to win, but the will to prepare to win that makes the difference.” – Bear Bryant