Market Research – It’s easier than you think to ask your customers what they want

Think of market research and you probably think of someone standing in the High Street with clipboards trying to accost you when you’re on your lunch break…. ‘Do you have a minute to answer some questions about butter/toothpaste/yoghurt, sir/madam?’ or similar.  Or perhaps you think of the MORI/IPSOS type surveys quoted on the news ‘Confidence in the government have dropped 3% in a poll of the public…’.   Both of these are very valid ways of getting and using market research data, but you may not see how they could be relevant to a busy small business owner or how you could ever use such techniques.

Don’t worry, you don’t have to. There are ways of getting really useful information and feedback from your customers that are simple, quick and cost effective.  There are of course also more complicated and expensive methods too, but let’s look at ‘horses for courses’ first.
 
Let’s dispel a myth to start with. You may be a little nervous to ask what customers think about your product or service, but almost always they like to be asked! People generally enjoy giving feedback about their experience of doing business with you and often want to tell you how you could do it better next time. They appreciate being asked. Just be prepared for honest feedback and be prepared to act on it – not everything you hear will be good, but that’s what it’s for isn’t it?
 
So how to ask them.  A simple questionnaire included in the invoice or handed over when you finish working with them is an easy way to start. It doesn’t have to be long – maybe five or six ‘golden ‘ questions are all you need.  Were they happy with the service/product? What suggestions would they make for improvements? Would they do business with you again? Would they recommend you?  This could either be completed face to face, or they could post it back to you. Bear in mind people may feel a little awkward giving their reply verbally directly to you so a written approach often elicits a more honest answer.
 
Asking the right questions is key. And deciding whether to use ‘closed’ or ‘open’ questions, or a mix of both. Closed are those that offer a ‘yes/no’ response or a tick box style approach, open questions allow the responder to elaborate in their answer eg. ‘What did you think of the service you received today?’.
There are broadly two types of research, qualitative and quantitative. The first seeks opinions and open feedback, the second is measurable numerically.
 
Here’s a similar question asked in the two different ways:
 
Can you make any suggestions to improve the service that you received today?

(Please add  your suggestions here) ……………………………………………………………………………………………………………………………………………………

 (qualitative)

 How would you rate the service that you received today on a scale of 1 – 6 (6 being excellent, 1 being poor)?  1  2  3  4  5  6   (Circle the number that applies).
 

(quantitative)

The next thing to consider is what channel you are going to use. The short postcard questionnaire approach is simple to produce, easy to hand out or mail, and reasonably cheap to print.
 
Another way is to call your customers after they have done business with you, but there are a few provisos here, including who is going to do it (they need the right approach), the time involved in the calls and compiling the information gathered. 
You also need to be aware of the Telephone Preference Service (TPS) and any data protection rules that may apply.  On line is another way to approach a customer, by emailing them the questionnaire to complete and return to you.
 
You may want to become more ambitious and hold a ‘focus group’ of your customers, inviting them along to a structured discussion where they can give their feedback. These usually need to be carefully facilitated by a market research professional, or at least someone familiar with how to run one effectively.
 
Also consider who you will be asking – existing recent customers, previous customers who haven’t come back to you (why didn’t they?) or potential new customers. Questions and methods will vary depending which group you ask.
So there’s some initial food for thought about how to gain valuable feedback from simple research. It’s important to invest some time in it on a regular basis if you decide to go ahead, and to be prepared to review and act on the findings, otherwise it will be a waste of time.
Hixsons blog 

Here at Hixsons we do some of the above and have found it really helpful, We can also advise clients on how to approach it; simply ask us. www.hixsons.co.uk

14 ways to charge more without losing customers

1 Offer guarantees - Customers will part with their money more readily, and pay a higher price, if they know that they can get their money back if something goes wrong. 

2 Provide sensational service - Study after study has shown that customers are willing to pay more if you give them great service. Research also suggests that companies providing great service grow twice as fast as those with bad service. 

3 Make the price seem insignificant - Perhaps by breaking it up into little bits and expressing it in terms of pence per day or pounds per usage. This “trick” is one of the keys to the success of the National Lottery – i.e. they have been able to persuade almost half the country to spend £100 a year by breaking the annual costs down into seemingly insignificant £1 tickets.

4 Reduce discounts - In many industries discounts off list prices are the largest single group of costs - and yet they are usually given with little or no senior management involvement or authorisation. Considerable savings can be usually be made by tightening up discount authorisation procedures. Savings that lead directly to higher net prices and profits. 

5 Use creative discounting - For example, replace flat rate discounts (e.g. “10% across the board”) with step discounts (e.g. “5% on the first £1,000, 15% on sales above £1,000”). Not only do they look more impressive and encourage people to buy more, but they often also work out cheaper. 

6 Describe as investments - Describing your price as an ‘investment’ rather than a cost can often go a long way towards persuading customers to buy. 

7 Less than expected - Repeatedly tell your customers that you may have to put up prices by, say, 20% - but then only actually increase them by less than 20%. (how far below 20% you pitch the eventual price rise should depend on your assessment of the true depth of their "horror" when you make the initial suggestion). By making the eventual price rise less painful than your customers were expecting, you can turn a potentially damaging increase into a triumphant success. 

8 Soften the blow - Try to reduce the prices of some items in your range at the same time as increasing the prices of most other items so that you soften the bad news with some good news, and make a point of dwelling on the latter. 

9 Explain why - Be prepared to explain why prices have risen, perhaps as a result of cost increases, and point out that, had it not been for improvements in your own productivity and efficiency, the increase would have been even higher. Better still, explain that the price has increased as a result of improvements to the quality of the product. Emphasise the enhanced features, improved packaging, increased reliability, enhanced customer support, faster and more convenient delivery and any other factors that make the product better and therefore worth paying more for.

 10 Justify your prices - It is vital to have a strong justification and defence for your high prices prepared in advance. This is likely to include knowing the prices of your most expensive competition, demonstrating the savings and benefits from your product and demonstrating that your product is hugely superior and therefore slightly more expensive because… Do you have a set of written scripts to help you overcome price objections? And has every aspect of those scripts been tested to make sure that they are giving you the best possible results?

11 Use "Non-price" increases - For example, consider charging extra for installation, delivery, insurance, handling, storage, urgent orders or rapid delivery. You could also try increasing your minimum order size and introducing a surcharge for any orders below that threshold, revising your discount structure, slimming down the specification of your product and stripping out any expensive features that are of only limited value to the customer, and charging interest on overdue accounts. 

12 Change the package - If a customer tries to knock you down on price, don’t change the price, change the package. In other words, never simply crumble on price. Always trade a price reduction for some concession from the customer e.g. a larger order or cash up-front. 

13 Trade for referrals - If all else fails, you can always trade a once off price cut for referrals. 

14 Top down pricing – Do you always show your customers the most expensive options first? Top down pricing is a simple but highly effective way of increasing the amount customers spend.

New marketing service - do accountants do that?

This one does...

Accountancy and marketing are not usually two words that sit comfortably together.  Marketeers spend money and are ‘creative’, accountants save money (usually) and focus on facts.  But they have a lot more in common than you think.  Good marketing is measurable and produces returns, just like investments.  Here at Hixsons we know that.  

So what we give is a 360 degree service that includes marketing support and guidance. Businesses are short on expertise and resources, and worry that marketing will be money wasted. Clients have told us they need input to show them what works and how to do it. 

We’ve listened, and so what we give you are the tools to support your marketing, or can take on elements of it or you. We believe in helping you to help yourself, but we will fill in the gaps where needed.  Whether it’s kickstarting your business, new product development or simply getting in front of the right people at the right time, we can help.

With the right tools (which we have) we quickly get to the root of what a client really needs to see marketing work for them, and find the best way to do it.

Focussing on exactly the kind of marketing your business needs with a straightforward and jargon-free approach achieves results. Investing time with us to take an objective look at how your business is marketed currently, what you are really getting for it and what you could be doing pays real dividends in the future and actually helps you to save money by reaching those customers that really matter.  

And it will be a common sense practical approach, as you would expect from us.

We look at all areas of the marketing mix, put together a comprehensive and practical marketing plan, and importantly help you to achieve it and measure its success. Good marketing is measurable, trackable and flexible. Getting the marketing right is vital for the future of your business. Our support will help you to stop looking at marketing as an expense and start seeing it as a real investment. And it’s easier than you think.

What does this mean for you? Cost effective leads and new customers through targeted marketing. You will know what it costs and what it produces. 

And you’ll see that fully rounded business advice naturally includes marketing too.

We’ll help to market your business cost-effectively and measure success. And perhaps get you to start thinking about marketing differently.

Pricing for maximum profit

Customers care about prices. But they are certainly not the only thing they care about - and your business and marketing strategy should mirror that fact.

In other words, you should never compete on price alone. Instead you should start by making sure that what you are offering exactly meets the needs of your customers. And then you should sell it to them on the basis of “best value” rather than “lowest price”.

What is “best value”? As we see it, “value” is the gap between the benefits a customer perceives he is getting and the price he perceives he is paying. So offering “best value” means offering a bigger gap than anyone else.

The three keys to offering best value are to make sure that:

1 Your products and services are exactly what your customers need and want – i.e. they offer the best and most appropriate combination of benefits;

2 Your customers fully understand those benefits – i.e. because unless they understand that what you have to offer is special, they will assume it is average, and that means that you’ll only be able to charge an average price; and

3 Your prices are presented in the best possible light.

Get these 3 things right and customers will happily pay you more than ever before.

Different prices

How do you cope with the fact that some customers are willing to pay more than others?

Economists tell us that the market price is set by supply and demand. We can show this graphically…

In the above graph, SP is your standard selling price. But the problem is that having only one selling price causes you to lose out in 2 different ways…

1. for some customers that price is too high – so they don’t buy, and you lose them as a customer, and

2. for other customers that price is too low – so you end up charging them less (and earning less profit) than they are willing to pay. Which means you lose again.

Economists call the amount by which you lose in this second scenario the “consumer surplus” – and it is shown by the shaded area on this graph.

The consumer surplus represents the individuals who are both willing and able to pay more for your product or service than you are charging them.

One of the keys to dramatically improving your profits is to claw back some of this consumer surplus by charging different customers different prices. This is often called ‘price discrimination’. And this is exactly what publishers do with hardcover and paperback books.

Many people believe that hardcover books are about twice the price of paperback books because it costs twice as much to print a hardcover book. In fact the difference in production costs are minimal. Publishers have recognised that some people are prepared to pay substantially more for a book in order to buy it as soon as it is published. But more price sensitive consumers are prepared to wait for the paperback version.

Pricing according to the value you give

Many businesses set their prices using a cost-plus method. For example, many service businesses use hourly rates to set price. Cost-plus methods, such as hourly billing, can seriously affect your profit potential. And these methods are not in the best interest of your customers.

Some of the many disadvantages of this method of pricing include…

i. the interests of you and your customers are incompatible

ii. you focus on costs – not the value to your customers

iii. the customer takes the risk of your inefficiencies

iv. creates a production mentality – not an entrepreneurial spirit

v. focuses on effort – not results

vi. penalises technological advances

vii. rates are set by your competitors

viii. does not differentiate you from your competition

ix. limits your potential income

x. creates a bureaucracy of recording costs

Traditional cost-plus pricing starts by finding out how much it costs to produce the product or service. A mark-up is then applied to set the price.

Value pricing starts by finding out how much the customer values the product or service. This determines the price. It is therefore fairer to the customer.

Next - 14 ways to charge more without losing customers