When you’re running a business, it’s important to watch your budget. If you don’t have money in the bank for payroll, to keep your stores open, your products coming or services available, you don’t have a business. It’s all too easy to go too far in the other direction though. An austerity budget at work is at a severe risk of falling for false economies. Don’t mistake a short term saving for a long term gain, as in some cases that short term saving can cost you far, far more when the consequences have a chance to make themselves known. Doing without a lawyer will save you on fees here and there, but the first contract that turns out to have penalty clauses you’ve missed will cost you all those savings and more.
One of the many areas that may be at risk of being cut back, or even away altogether is Market Research. You’ve got a lot of business experience, you know your market, don’t you?
If you don’t go in for market research, especially when you’re launching a new business or product, you’re setting yourself up for failure. Many businesses meet their end because they encounter an ‘out of context problem’ – a term coined by sci-fi writer Iain M Banks for an issue that it’s simply beyond the scope of person, organisation or civilisation to imagine. If you forgo market research, you’re intentionally closing off your context, your ability to predict problems and opportunities to a single person’s experience, which is insufficient for any business.
Market research companies work in two main ways, providing you with consumer intelligence and competitor intelligence.
Consumer intelligence is insight into your customers: how they think, what they want, what they value. This allows you to predict what will sell well, the right price point to place a new product at, when your customers are looking for bargains and when they’ll pay a premium price. In short, it tells you who your customers are, and allows you to mould the customer experience to them.
Competitor intelligence tells you what the competition is up to, using data from their publicly visible activities to build a picture of what’s going on behind the scenes, from where and how they’re spending their marketing money, to product launches they’re gearing up for, to the effect all this is having on the strength of their brand.
Between these two focusses, it’s clear that you shouldn’t be cutting your Customer Research budget without a lot of thought.