What is customer research?
Boiled down to the basics, customer research focuses on understanding your customers by focusing on exploring their attitudes, needs, motivations and behavior as it relates to your business.
This ultimately helps you better identify, understand, analyze and retain your customers. The more you understand your customer the better you’re able to market to them, create products and services that meet their needs, gain competitive intelligence, proactively identify shifts in purchasing intent and behavior, and increase your chances for success.
Well-crafted and actionable customer research can serve as a foundation for the voice of the customer (VoC) efforts within your organization. And it’s been proven to be a key to the performance of top companies today.
Primary vs. Secondary Customer Research
There are typically two types of customer market research: primary and secondary. They are complementary and can be used together to gain a more comprehensive understanding of your customer. Read on for more information on which one to use for your specific needs.
Primary Customer Research
Primary research is any type of research that you conduct directly with your target customers. Its greatest advantages are that you can target it to groups or segments of your customers and specifically tailor the content to your research needs. Primary customer research includes:
Online surveys. Increasingly popular and relatively low cost, online surveys are widely used by retailers to capture insights from existing and potential customers. They can be conducted using your own customer database, or you can use third-party consumer survey panels that include your customers. If you use a consumer research panel you will have to include a question to identify your shoppers.
Mail surveys. Once the gold standard, mail surveys have fallen out of favor for quicker, less expensive options. Printed surveys are mailed and sent back in a pre-paid envelope. Response rates (the proportion of people sending back a completed survey) are often very low and the turn-around time for mail surveys to be returned is long.
Telephone interviews. Although they provide faster feedback than mail surveys, the effectiveness will be limited by the available phone numbers, particularly since you can’t solicit to cell phone numbers without permission. In addition, potential customers are often wary of being called and may be reluctant to give anything other than short answers.
Face-to-face surveys (often store exit interviews). Personal interviews conducted face-to-face can be on the more expensive side, but they can also provide detailed insights from your customers. They require coordination with Store Operations, which might require more up-front time for planning.
Focus groups. Focus groups bring together a small group of consumers to discuss their opinions about products, brands, shopping and other relevant subjects. You might think of them as customer panel research. They’re a good way to get a sense of customer preferences and attitudes. However, because a focus group involves only a small number of customers, it can be challenging to apply the results to your entire customer base.
Online bulletin boards. For this research tool, customers opt into a three-day “group conversation” led by a professional moderator who poses questions to participants and probes answers for more details. This is an effective tool to drill down into specific issues, but is based on a small sample.
Ethnographic. This type of research involves observing customers in their actual environment, which might be their home, a store or online. Watching how consumers behave provides many insights, but can leave questions unanswered.
Sales data. You can analyze your transactional data to glean insights on customers. It’s a form of customer behavior research, and it can be conducted in conjunction with other types of customer market research to give you a comprehensive analysis of your customers. Learn more about customer analytics and analysis.
Customer quizzes. Another increasingly-popular survey tactic is to place a short pop-up survey on your website. This can help confirm a hypothesis you have about your target market or help define a product issue. Remember to keep it short — pop-up surveys are most successful when you stick to one question.
Secondary Customer Research
Secondary research is data that has been compiled and organized by a third party, typically data aggregators or large customer market research companies who focus on specific industries and types of data. This includes “syndicated research,” which is research that is independently conducted, published and sold by a market research firm.
Secondary research typically measures consumer attitudes, product and brand preferences, media consumption habits, and demographic and lifestyle characteristics. It’s usually based on large research projects conducted on a national level. The results aren’t limited to your customers, although you can select demographics and other data to help you mirror your customers as much as possible.
Since the same research results can be purchased by several companies, the cost of performing secondary research can be less expensive. These reports are useful for tracking consumer trends and providing comparisons. However, they don’t provide the same level of actionable insights on your customers as primary research, which is designed to find the “why” of a purchase and to project what could occur in the future.
Quantitative Customer Research
When conducting primary customer research, you can gather two basic types of information: qualitative or quantitative.
Quantitative research provides statistical information on your customers — for example, the age of your customers, where they shop and whether they are aware of your brand. The most common tool used for quantitative research today is online surveys. The goal is to reach enough customers to make the results statistically reliable so you can project them across your entire customer base and have confidence in the results.
For the success of any quantitative initiative, it’s critical that your customer research management team has experience and expertise. For example, when developing a quantitative survey, the questions must be crafted correctly and the right scales used or respondents can become confused. In addition, the number of customers who respond must be large enough to provide statistically valid results on individual answers.
A specialist in customer market research can help you with the wording of the questions, type of scales and other devices, length of the survey and other important attributes. They can also aid in determining the number of surveys to deploy based on expected response.
Success story: See how this retailer reaped the benefits of CCG’s proprietary methodology that ensures final customer research results can be used to help our retail clients quantify the impact of changes to their loyalty program strategies.
Qualitative Customer Research
Qualitative research examines people’s feelings and attitudes towards your product or service, and what motivates them. Focus groups are the most common tool used for qualitative research.
These are more-in-depth interviews that are open-ended and have a smaller number of participants than quantitative research. While the interviews provide in-depth information, the results should be used directionally since they aren’t broad enough to project across your entire customer base.
It’s wise to consider using a professional moderator for qualitative research. This person can help keep the conversation on track and help ensure that all participants have been heard, preventing the conversation from being dominated by a few.
It’s becoming more common for both qualitative and quantitative customer research to be used together to gain a better understanding of customers. It’s also possible to combine them into a single initiative.
For example, some customer research companies have the ability to “break in” when online respondents are completing surveys and incent them to have a brief live chat with the operator. Typically, respondents are selected based on how they have answered previous questions. This methodology provides qualitative insights backed by quantitative results — the best of both worlds.
Customer Retention Process
So, where to begin? Too often, retailers select the type of research tool before they’ve set their objectives. This can result in low confidence in the results and the inability to apply the results in a meaningful fashion. Instead, follow the three-step process outlined below for a solid customer research project and results you can trust.
Step 1: Set Objectives
The main objectives inform and steer the research team in the right direction throughout the project. Research objectives are essentially summary statements detailing the categories of data you want to acquire. Objectives should be tailored to each specific project. This may include:
- Brand awareness
- Brand attributes (value proposition)
- Customer attitudes on your brand and your competitors
- Customer attitudes on shopping your industry
- Customer awareness and participation in your loyalty program
- Buyer behavior
- Product satisfaction
- Customer experience (good and bad)
- Intent to purchase behavior
For example, many of our retail clients are interested in improving their marketing to customers. But that’s a broad area with many facets, so it works best to break down that overarching goal. At CCG, we deconstruct the big picture into five key levels that help our clients understand their target customers and extrapolate that knowledge into successful customer marketing.
Each of these areas can be addressed by customer research, but different methodologies work better for different objectives.
- Behavioral is analytically-based research using transactional data. This fact-based analysis can complement the other research methodologies.
- For demographic/lifestyle data, you can either ask your customers in a qualitiative survey, such as an online survey, or append third-party data.
- Motivational, attitudinal and aspirational objectives can be best met by using quantitative tools, such as online surveys, if your objectives include projecting the results across your customer base. If, however, you’re looking for more in-depth information, then using one-on-one interviews or focus groups will be the best choice.
You may want to incorporate both types of research and conduct a series of focus groups first to help determine what types of questions you want to ask, followed by a quantitative survey to quantify and project the results.
By gathering and integrating data derived from each of these levels, you can form a multi-dimensional picture of the customer to help guide decision-making. It’s also likely that you’ll discover multiple objectives for your customer market research. You may or may not be able to achieve them all with a single research initiative, so it’s wise to prioritize them. Or group them by similarities, such as brand awareness, brand attributes and customer attitudes on your brand and your competitors.
Step 2: Target Your Audience
Once you have defined your objectives and know the general information you want to obtain from the survey, you need to define the target audience that will provide the data you need. You also need to think about what comparisons between customer groups or segments you may want to use.
It is possible for a research project to target multiple populations to acquire the necessary data for a successful project. If you do this, ensure that the survey questions are tailored to those groups. For example, if your objective is to determine customer attitudes about a new product line, you don’t want to ask customers who have never purchased within the line.
In some cases, you may want to compare data from previous years, compare certain segments of a population to each other or benchmark data against existing market data.
Step 3: Determine Whether to Use an Incentive
To increase the response rate to your customer research, you may need to offer an incentive. If your customers are highly engaged in your brand, you may not need one. But since today’s consumers are being inundated with feedback requests, you may need to offer an incentive to cut through the noise.
The best way to determine whether to use an incentive is to review past responses. If you struggle with obtaining a response rate over 3 percent, consider using an incentive. If you don’t have historical data, try launching the customer research without an incentive. If you receive a poor response, then add an incentive for the remaining requests or the second wave of invites.
Incentives vary dramatically, but in retail a drawing for a gift card often works well. Just ensure it’s a high enough amount to attract attention and provide enough value to encourage participants to complete the research. Incentives to reward each individual who completes the survey, such as a Starbucks gift card, can also be used, but can be complex to fulfill for large research projects.
If you’re using a consumer panel, the incentive shouldn’t be an issue since most have their own incentives built in, such as points for free gifts.
Customer Research Best Practices
Each research project is unique, and what works for some may fail for others because of unique audiences, different incentives and distinct objectives.
When developing quantitative tools, there are some best practices to help ensure success:
- Leverage professionals. Customer research is a combination of art and science. Ensure statistically valid and actionable results by leveraging an internal resource or a third party with research experience.
- Combine techniques. Actionable customer insights don’t necessarily come from a single research tool, such as focus groups or a customer survey. They are usually compiled through a combination of information-gathering activities and combined with an analysis that provides texture and meaning.
- Use year-over-year benchmarks. Asking the same question year over year allows you to trend the answers and serves as an early indicator of changes in consumer perceptions, attitudes and understanding — good or bad.
- Collect respondents’ answers. When doing large, quantitative customer research projects, ensure that your respondents’ answers are being collected and added to your CRM or customer database. You can use this data for additional backend analysis.
- Optimize for mobile viewing. Remember that most of your respondents will be opening your online survey on their smartphones. Make sure it’s a positive experience by optimizing the tool for mobile and taking the time to thoroughly test it in a mobile environment.
- Limit open-ended responses. While it can be tempting to include free-form questions to gather more in-depth information, try to limit them, because they can bog down respondents and increase your abandonment rate. Leverage them when you want to know why your customers are feeling a certain way or when you have a specific question that is better answered in this format.