Research Your Market On A Budget: 8 Tips
 By R.K. Sparkman

The most successful companies peg their target markets most precisely. Here are low-cost tips to zero in on your target market.

Tip 1: Test and Track
You already advertise and sell, so put those operations to double duty. Learn what works by paying attention. Every time you note who bought, or which advertisement drew and which ad didn’t, you refine your market research. All you need is to write down what is happening.

Tip 2: Follow Up
Profitable marketing efforts are obvious after measuring gross receipts against direct expenses. But how much more – or less – successful would they have been if only X had been done instead of Y?

Follow up to learn the effectiveness of a marketing strategy by asking the experts – your customers. This can be as elementary as a brief, “Are you happy with your purchase and our service?” questionnaire included with every sale. (Don’t forget the postage free return envelope.) It also can be as sophisticated as follow-up telephone interviews.

Tip 3: Probe desires
The same old-fashion approach works to find out what customers want most. The secret is to ask in a way that the one answering understands there is some benefit to cooperating.

Focus groups of randomly selected customers can gauge what it is you are doing that pleases them, and what you aren’t doing that would please them more. Be sure to also ask what you are doing that displeases them. For the price of a free lunch and a bag of goodies, you can fill a conference room with willing participants.

One caveat: Such anecdotal results may not be representative. Nevertheless, they can be fodder for further questions on your mail-back surveys or telephone follow-ups, as well as ideas for product trials and service expansions.

Tip 4: Retrace their steps
If your staff doesn’t already ask customers what brought them to your store, you are missing out on a wealth of valuable information. Receptionists’ standard greeting should include, “How did you hear of us?”

When any of your personnel – and that includes you – call on a customer, be sure to ask how that customer originally came to your business. Indeed, every contact is an opportunity for recording such all-important data. When you know why and from whence they come, you can reinforce the reasons and go to the source again and again to harvest more like them.

Tip 5: Evaluate return on investment
It’s important not only to be able to identify what brought in the dollars, but also how cost-effective the effort was.

The revenue generated by a marketing campaign targeting baby boomers might return two dollars for everyone one you spend. But unless you’re evaluating sales by demographics, you may be unaware that senior citizens are far more profitable while costing you less. Don’t let pockets of profitability in your target market be obscured by gross data. Break down your market into segments that you can more specifically – and more profitably – market to.

Tip 6: Test one variable at a time
The temptation is to try a bunch of new stuff all at once. The problem is, if sales shoot up, how will you know which of the changes was responsible?

Be patient. Test marketing tactics’ effectiveness by testing one thing at a time. If you change the size of the carton, don’t simultaneously change the number of widgets inside. How will you know whether the attractive new packaging spurred the increase in sales, or if it was the greater number of widgets? Change variables one at a time, then measure each one’s effect to see how your market reacts.

Tip 7: Provide incentives
Reward customers with credit on future purchases for every friend they send you who buys something. In doing so, institute a tracking system that requires referred friends to either mention who referred them or to turn in some type of a referral card. By identifying referrers and those they refer, you capture valuable demographics of original customers and new ones.

Tip 8: Be patient
When tracking, testing and evaluating your marketing data, be sure to allow enough time for trends to develop. Tests have optimal sizes and durations. But it can be difficult to estimate those in advance. The tendency is to pull the plug too soon. It’s better to let the evaluation run too long than not give it enough time.

A questionnaire sampling only 10 of your 1,000 customers isn’t going be as reliable as one that captures 900 customers’ preferences. Over time, you will find when the law of diminishing returns kicks in and results level out. Then you can cut back on tracking and testing, rather than spending more time and money merely to get more of the same.

(Posted September 2005)

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