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Management Perspectives:
Making Better Decisions

Mar 1, 2006 12:00 PM, By Don Kreski

Even small companies can use market research techniques.


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Small businesses can take advantage of available data such as this analysis of user marketing opportunities from InfoComm International’s May 2004 AV Market Definition and Strategy Study to develop their marketing strategies.
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The AV industry has been in turmoil since 2001. We've seen our largest sources of revenue taken by Internet discounters and our largest dealership broken up in bankruptcy. Some would argue that our biggest problem is confusion. Many owners don't know where to take their companies. Many sales reps aren't sure what to sell.

The point of any market research project is to gather good information to help you make decisions. Big companies use research routinely and in a highly organized fashion. Small companies generally don't use research because either (a) they're overconfident, (b) they can't afford it, or (c) they don't know how.

I'm here to tell you that (b) and (c), at least, are solvable problems. You can do market research and it can help you enormously.

TACTICAL INFORMATION

“Dealers need tactical information,” says Fred Krazeise, former VP of marketing at Sharp and now an independent marketing consultant. Krazeise, whose accounts include research leader Pacific Media Associates, says the most critical thing to learn is how your customer prefers to buy. “Because you can be thinking, ‘Hey, our satisfaction survey said we were wonderful,’” he explains, “but your best customer is also buying from CDW because CDW can deliver faster or give them a little better pricing.”

Many dealers and contractors work hard on their sales forecast, yet even a great forecast will not help you understand key trends or what your customers want from you. “What is it that really drives the purchase decisions?” Krazeise asks. “How are those decisions really made? What's most important in the mind of the consumer? Just getting answers to simple questions about buying patterns, buying preferences, product preferences, and customer satisfaction is easy and can provide very useful insights into your business.”

The first step, if you have a research question, is to find out if someone has already figured out an answer.

At www.infocomm.org/marketresearch, for example, you can buy studies of market opportunities, average dealer financials, and other topics. The studies offer surprisingly detailed information, plus interpretations and strategic advice geared to dealers and contractors. InfoComm's annual Market Forecast Survey and Dealer Compensation and Financial Survey and semi-annual AV Market Definition and Strategy Study stand out as the most helpful reports it offers.

According to Eva Guterres, senior market research analyst at InfoComm, these reports can help you understand changes in the marketplace and how to take advantage of them. They can also help with specifics such as what your peers are spending on marketing and training, who the decision makers are within different market segments, and the criteria that are important to various customers when they purchase AV products and services. “If somebody takes their business seriously,” Guterres says, “I really think that they should take a look at these reports.”

MINING COMPANY DATA

Acquiring data from outside sources such as InfoComm, for all the detail it can offer, has limits. You will always have questions that no one else has researched, and conditions in your own slice of the market are not always the same as those in the nation.

“Dealers/integrators, especially those with CRM software or even good contact management systems, have a wealth of information they rarely use,” says Bill Sharer, president of Exxel Management and Marketing.

Sharer makes a valid point. Several years ago, I did a study of the customer base of Midwest Visual Equipment Company of Chicago (now a part of AVI Midwest). I started with a printout of its top 200 customers and the revenue from each. With a little digging, I was able to assign an organization type to each one and tabulate how much of the company's business came from government, universities, hospitals, and so on. The accounting system told me very little about who the sales reps were calling on, but, just by counting the titles of the various people in their address books, I was able to get a reasonably complete picture. Putting these results together went a long way toward answering the questions, “Where is the business coming from?” and, “Where would the company be most likely to find new customers?”

“Dealers see their database as project management, contact history, or account management information,” says Sharer, “but it could be much more: trends, service history, population data, purchase patterns, average order size, identification of their ‘sweet spot,’ customer profiles, industry concentration/distribution, client retention, and the like. I don't think many see it for what it could tell them about their business.”

NEW IDEAS AND FEEDBACK

Your salespeople can also be a great source of ideas, feedback, and customer information. Mike Alley, CEO of Carmel, Ind.-based Electronic Evolutions, says he brings his sales force together twice a year. “[At these meetings, we] brainstorm and throw out ideas on what we have been doing,” he says, adding that the last session produced, among other things, an incentive system to reward customer referrals and a digital signage application targeted to healthcare customers.

Krazeise says he took this approach a step further at Sharp, polling his reps and dealers on a variety of topics. “We needed feedback on our program's pricing and any range of topics — for example, what types of trends our dealers were seeing in the market,” he says. Krazeise found, however, that sending the reps out with specific questions yielded better results than just asking for opinions.

Focus groups and interviews are two additional methods to bring in ideas and feedback. For instance, three years ago Keith Urban, business development manager for Jelco, hired me to interview potential customers for their take on the company's new EZ-Lift plasma case. “We thought we had a product that would do well in a particular market, but talking to people just did not bear that out,” Urban says. The project prevented an expensive mistake and prompted Jelco to look at other markets. “The results were different from what we expected,” Urban says, “but they definitely were helpful.”

Krazeise notes that in any of these qualitative studies, the results are likely to be open to interpretation and difficult to quantify. “Yet, despite that, they're useful,” he says, “because they give you that directional kind of information.”

SIMPLE SURVEY RESEARCH

A lot of times, a good decision requires measurement of how many people have a given need or desire. In these cases, you need to do some kind of survey, whether by phone, the Web, or email. Krazeise says Sharp uses an outside firm for the most critical research, but he did a great deal of inhouse work, as well, to save time, cost, or both.

“We generally administered our surveys through email,” Krazeise says. “It was very easy for us to dash off a three- to five-question survey on simple topics: For instance, ‘We launched this product and here are some questions about it.’” Sharp uses a marketing automation package called Pivotal MarketFirst, which includes an online survey module that automatically tabulates results. It's an expensive package, but constructing a simple tabulation program is well within the skills of most web programmers.

BETTER DECISIONS

“[On the whole,] dealers are getting steadily more professional about the way they run their businesses — by necessity,” Sharer says. “But the use of research trails this trend. One would think that they would want to have and use better information, but I haven't seen a lot of it.”

Of course, no information source is ever perfect. But making critical decisions with imperfect information is always better than with no information at all. Sharer says there are seven steps dealers and integrators could take to improve their ability to gather and use good information:

“They could 1) mine, analyze, and interpret their own data better; 2) institutionalize the gathering and reporting of information by the sales force and make better use of it; 3) work harder at acquisition, study, and use of commercially available material; 4) lean harder on manufacturers to conduct and share studies with them; 5) create an intelligence-gathering system and mindset; 6) simply pay more attention to research; and 7) cooperate with others doing studies.”


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