Profitability is a sexy word for anyone in business.
When it comes to understanding your customers, market research is essential to the success of any business, no matter if it's market research for B2B or B2C. After all, retaining existing customers is less costly than acquiring new ones.
But market research isn’t just about understanding your target market; it also provides valuable insights that can help you fine-tune your product or service offering, marketing strategy, and business model.
"The problem many companies have is 'any customer is a good customer policy,'" says Tom Herman, CEO at Veda Intell. "And you're going to bring in many people who aren't an ideal fit, increasing churn after a short time."
To understand your target customer, you must understand market and customer research.
What is Market Research for B2B?
Market research for B2B is the process of collecting and analyzing data about your customers, competition, market trends, and target market in a B2B context. The goal is to use this information to attract a better fit for customers.
There are two main types of market research: primary and secondary.
Primary market research is collected directly from your target market through surveys, interviews, focus groups, and market observation. Primary market research collects first-hand information about your target market’s needs, wants, and buying habits.
Secondary market research is already published data collected by another source, such as government agencies, trade associations, or market research firms. Secondary market research is used to supplement your primary market research.
We recommend a combination of both to get the most thorough information.
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Market Research for B2B Benefits
Did you know 80% of your revenues and profits come from 20% of your customers? If you can pinpoint commonalities between your current customers to attract future customers, you’re on your way to building a more efficient and effective marketing strategy.
Tom offers this nugget, "Identify the customers that are driving your business and then get to know them as well as you can. That way you can keep the ones that you have, and acquire ones that are most like them going forward. It's a hidden-in-plain-sight secret!"
Some of the market research benefits your business can experience include the following:
- Improved customer retention rates
- Increased market share
- Expanded geographic reach
- Identification of new market segments
- Improved product development and positioning
- Better pricing strategies
- Increased sales and profits
- Improved communication with customers
"You really need to understand where your business comes from," Tom says, "and ask the question, 'Who do you serve best?' These are high-value customers."
How to Conduct B2B Market Research
Now that we’ve seduced you with market research benefits, it’s time to get down to the nitty-gritty of how to conduct market research. Here are some steps to get you started:
Define your objectives.
What do you want to learn from your market research? This will help you determine the best market research methodology for your needs.
Identify your target market.
Who are you trying to reach with your product or service? Keep in mind your target market can be very specific (e.g., new moms in Atlanta) or broad (e.g., all American consumers).
Collect data about your current customers.
There are several ways to collect market research data, including surveys, focus groups, interviews, and analyzing data from social media platforms.
Tom suggests the answer is not doing a single survey; it's a combination of methods, so be sure to employ a variety of collection points.
He says, "it's not rocket science, but it does take a thoughtful approach."
Analyze your data.
Once you’ve collected your market research data, it’s time to analyze it and look for trends and patterns.
Make decisions based on your findings.
Use what you’ve learned from your market research to make informed decisions about your product or service offering, marketing strategy, and business model.
The Biggest Misconception about Market Research
There’s a common misconception that B2B market research isn't needed. We’ll argue that it’s needed now more than ever.
Organizations that have been around for many years think they know their customers, market, and competitors. Therefore, they don't spend the time or money to do the research.
Tom warns that this is a big mistake.
That tells him that all the decisions, strategies, and tactics they're pursuing are based on opinions, assumptions, and internal guesswork.
He says, "our world, especially now more than ever, it's changing rapidly, and a lot of competition is changing. The economic environment is changing; consumer behavior is changing. So to say that we know our customer because we've been in business for ten years is a ridiculous statement."
Developing a better understanding of your customers regularly will help you not only better serve them but also uncover commonalities to help fuel your marketing efforts.
Is Research Sexy?
The short answer is yes.
If you consider this, sexy is intelligence, knowledge, confidence, resilience, competitive advantage, and consistent results.
That's sexy in business.
Tom ends with this, "to the extent that research can help companies feel more confident, make more intelligent decisions, move forward in strategic ways that make sense to serve their customer better. If that's what research does, then that's pretty sexy in my world."
By understanding your customers better, you can improve your product or service offering and make more informed decisions about your marketing strategy and business model. Market research can also help you identify new market segments and expand your geographic reach.