Dare to Ignore Market Research and Trust Social Data

As marketers, we strive to listen to customers and put them at the center of every decision. So we spend billions on market research, focus groups, and business intelligence systems. But we still aren’t much closer to understanding what our customers really want. By holding tight to old ways of gathering customer data, companies dampen sales, hurt their brands, and make misguided business decisions.

These mistakes cost billions a year in lost sales. If your products aren’t resonating with consumers, they won’t buy them – or they’ll buy them and return them. Product returns in the U.S. cost a hundred billion dollars a year. What’s more, according to the Harvard Business Review, 35% of all new products fail on average, and 75% of consumer packaged goods and retail products fail to make even $7.5 million during their first year, the benchmark of a successful industry launch.

Where did we go wrong?
We’ve known for a long time that market research is flawed, yet we still use it to make critical marketing decisions. Market research attempts to collect authentic customer opinions, but a series of studies from the Stanford Graduate School of Business has shown that “measuring consumer expectations can backfire by producing misleading information.” The researchers found that some popular survey methods actually put consumers in a negative frame of mind. The more questions shoppers were asked in advance, the more negative they became. In addition, findings are often delivered too late to make an impact – and fail to help us respond to rapid changes in market demand.

To get to the ground truth about our customers, we’ve embraced technologies like business intelligence to tell us who is buying our products, what they have purchased, and when they return it – but business intelligence alone can’t tell us if they were satisfied or why they were unhappy with a specific product they bought. Most recently, social community and listening platforms promise to allow marketers to “listen in” on the conversations taking place about their brands online. They can be great to present a high-level snapshot of buzz and brand sentiment, but it is next to impossible to get insight into specific products and customer segments.

The path forward
Despite the shortcomings of social listening, the motivation behind making business more social is absolutely right. Now, for the first time in human history, word of mouth is a digitally archived, and therefore highly measurable, medium. Just a few years ago that word of mouth, the best representation of ground truth, would “vaporize” as soon as it was spoken (and how often did that get back to the manufacturer of the product or the retailer?). With this new digital reflection of ground truth, companies like 3M and Rubbermaid are now showing that they can use social data to improve products, delight customers, and slash go-to-market times. Here’s how organizations get it right:

• Structure social data in a format that can be integrated across the enterprise, working with CRM systems, sales data, market research, Web analytics, and other customer-related information to get the clearest picture of your customers.

• Tie sentiment to products. Social data empowers you to easily identify your promoters and detractors across categories and segments, provided that you link customer conversations back to specific products and services. Net Promoter Scores, as well as advocacy and influence scoring, can be combined with social data to uncover top influencers across all categories. Additionally, by connecting individual sentiment to specific products, you can run 24-7 focus groups, efficiently co-create new products, and execute highly targeted marketing campaigns.

• Make sure all of your social data is actionable. Authentic customer voice is valuable to everyone in your company – marketing, sales, business development, customer service, product development, merchandising, and beyond – so make sure anyone can view and act on reports via simple-to-use dashboards. With product-level and customer-level detail, your employees will become far more efficient by leveraging the social data specific to their job (e.g., the tablet category manager at Best Buy and Walmart can get the specific analytics they need to manage their category more efficiently

Brett Hurt is CEO of Bazaarvoice.