Customer research matters more than you think. A story, some stats, and a few insights from working in the trenches learning what drives prospects to become customers and customers to become loyal fans.
Back in 2011, Ron Johnson took the helm of JC Penney.
It was an unmitigated disaster.
The retail executive who transformed stores into experiences at the likes of Target and Apple believed he could do the same for JC Penney. He launched a radical rebranding effort to make the tired company hip, cool, and designer-inspired.
From ditching the private-label clothing brands customers knew and loved to the constant coupons shoppers had come to expect, Johnson set into motion massive changes that led to $1 billion dollars in losses during his year as CEO.
JC Penney’s long-standing, core customers weren’t interested in the smaller, boutique stores within a store experience or “fair and square,” “everyday low-prices.” They enjoyed the hunt for bargains, the thrill of the sale, and lack of pretension.
An Apple version of JC Penney made about as much sense as a Victoria’s Secret version of Home Depot.
What happened? How could Johnson’s experiment fail so spectacularly?
Turns out it failed for the same reason many repositioning efforts fail: No one made customer research a priority.
In fact, it appears Johnson never stopped to listen to his customers until it was too late. He even admitted it.
“I thought people were just tired of coupons and all this stuff. The reality is all of the couponing we did, there was a certain part of the customers that loved that. They gravitated to stores that competed that way. So our core customer, I think, was much more dependent and enjoyed coupons more than I understood.”
To make matters worse, he refused to roll out changes incrementally. When asked to test pricing strategies on a limited basis, he responded by saying, “We didn’t test at Apple.”
And JC Penney suffered the consequences.
Why the grim cautionary tale? Because…
Customer research is still the kale nobody really wants to put in their marketing or product development smoothie.
As someone who spends her time obsessing about messaging strategy and customer-driven copywriting for clients, I’d love to say companies dedicated to learning what makes their customers tick is the norm these days.
Sadly, it’s not. And there are cold, hard, sad numbers to prove it.
The folks at ProfitWell reached out to SaaS and subscription executives along with product leaders to see if companies were doing more than merely extolling the virtues of customer research.
- 7 out of 10 companies speak to less than 10 prospects or customers a month in a non-sales, research capacity
- Almost half of these companies conduct ZERO tests a month (including marketing)
- Out of the last 5k features built, product leaders said the vast majority were differentiable and highly valuable while the 1.2 million customers surveyed indicated most were not
The problems don’t end with building products and features customers consider marginally valuable. According to Salesforce’s 2019 State of the Connected Customer report, 84% of customers say the experience a company provides is as important as its products and services.
And, that’s up from 80% the year before.
With the exponential growth of content online, potential customers have become better educated and savvier. They can do their own research, stake out the competition, and jump ship as soon as their expectations haven’t been met.
This means consistently and continuously learning as much as possible about your customers is more critical than ever.
So why are some companies continuing to struggle with customer research?
After working with both B2B and B2C clients over the years, I’ve noticed a few key reasons that businesses are talking the talk, but not walking the walk.
No leadership buy-in
Conducting research takes time, costs money, and can be difficult to tie to an immediate ROI.
Unless leaders in the organization have bought into the need and long-term payoff of investing in understanding their customers, customer research will always be a tough sell.
Sales, marketing, customer success, every department has its own priorities, ideas, and ways of doing things. Like anything in life, cross-department cooperation isn’t a problem until it’s a problem. For instance, when you’re trying to coordinate your messaging, streamline your onboarding process or get the most out of your customer research, you need to make sure your teams are all on the same page.
Nothing kills the joy of discovering breathtaking new insights about your customers faster than team members who don’t agree with the process, findings, or changes to be made.
Lack of internal resources
Not every company has the ability to keep someone on staff solely responsible for conducting interviews, designing surveys, or running user testing sessions. Without someone accountable, customer research can quickly take a back seat to just about anything else that seems more pressing or remotely more interesting (unless you love geeking out over data and spreadsheets.)
An expertise gap
Even if you’ve got a marketing or sales team member who digs running A/B tests or discovering where the hiccups are in generating new leads, they need to know what questions to ask, what data to look at, and how to synthesize the information in a way that can be accessible to everyone. Oftentimes, having someone on the team whose enthusiasm matches the necessary skillset can be a rare commodity.
Listening to your customers takes time, commitment, and patience. Not surprisingly, customer research tends to be the first item on the agenda to go and the last to be added back on when fires need to be put out or deadlines loom. Like any other aspect of growing a business that can be labor-intensive and have a long runway to benefits (think content marketing), it’s way easier to pay lip service to customer research than actually doing it.
Not to mention, there are different kinds of customer research…
And it can be tricky to know where to start. Because you need to have a clear idea of your goals and which types of research will help you get the job done.
Quantitative and qualitative… yes, you should be doing both.
Quantitative research tells us what’s happening and where. It includes things like analytics, behavior tracking and A/B testing. Whether you’re seeking to improve conversions on your website or customer acquisition costs, you need to know what your baseline is and where the stumbling blocks are.
If quantitative research informs the “what,” qualitative research helps us understand the “why.” Open-ended customer surveys, interviews, user testing are all tools in the qualitative toolbox. When implemented well, they can get straight to the heart of your customers’ motivations, desired outcomes, hesitations to purchase… and so much more.
Many times I’ve run into companies who boast about how much customer research they do. When I dig a little deeper, I find they focus almost entirely on quantitative research to the exclusion of the qualitative. You can’t get the kind of insights that drastically improve your overall messaging, copy, and positioning without talking to your customers.
What’s a customer-focused company to do?
The simple answer is: go outside and hire an expert. If you’ve been struggling to jumpstart your customer research to tackle anything from acquisition to retention problems, getting a pro on your team can make all the difference.
Why bring in an expert?
So glad you asked. Here’s why…
- Experts, consult with companies about understanding their customers and their marketing all day, every day. Not only do they ask the right questions but glean actionable insights – so their clients can make measurable improvements.
- When you bring on someone who knows how to implement a proven process with a well-honed skill set, you’re not endlessly trying to jury rig your own.
- You can keep your key people working on the jobs they’ve been tasked to get done. Stretching internal resources means pushing other priority work to the back burner. Then no one’s happy.
You get the picture.
If you’re one of the forward-thinking businesses that make customer research an ongoing priority, I applaud you. If not, you’ll want to think about upping your game. The research doesn’t lie.
Interested in working together?
I’ve had the opportunity to help some pretty amazing subscription businesses discover what makes their customers tick. You can find out more on my website here.