Small Business Advice - Market Research Tips

Susan Wilson Solovic: Hello and welcome to SBTV.com. I’m Susan Wilson Solovic. Joining me today is Jaynie Smith. She is the President of Smart Advantage, a marketing and management consulting firm. Her clients include mid-sized and Fortune 500 companies and she consults and coaches CEOs around the world. She’s also a popular speaker and she’s the author of Competitive Advantage. Welcome Jaynie. Jaynie Smith: Thank you. Susan Wilson Solovic: Jaynie in your book Competitive Advantage you talked about the importance of understanding really what the customer wants not assuming that you know and you talked about that as a disparity risks. Tell us a little bit about that. Jaynie Smith: Well, there’s something a phrase I quoted and called “Dangers Disparity” and it’s based on this when I take a client. We find out their competitive advantages. We construct market research. We asked their customers and prospects, “What is the hierarchy of buying criteria when you want to buy from this company or from this industry? How do you choose somebody?” And we come back with the findings and then one day I just asked a client, guess which three things came up on top. And much to my surprised, the client and 25 of their employees cannot guess it, did not get them right. So I started doing that with client over the years and I found that not one client has ever guessed the three most important things to their customer, and I thought this is the danger of disparity. What that says is we’re after and we’re busy selling A, B and C. You should buy from us because the A, B and C and the customer cares about D, E and F. And so you’ve got this dangerous disparity about not selling what matters to them. Susan Wilson Solovic: And you used that example on the book about going into buy a car and it’s safety was one of your criteria, so share that with us. Jaynie Smith: It’s a true story and it really makes the point. A few years ago I was looking to buy another vehicle and I went to five dealerships and the first thing I said was, “What’s unique about this vehicle?” Of course, I live and breathe what’s unique, but I really was looking because I bought of Volvo before and the Volvo salesman have thrown up on the hood, open up the doors and showed me all the magnificent safety features, and I expected every dealer to do that. So when I asked that out of the five dealers, salespeople none of them could answer the question what was unique about this car. And they said, “Here are the keys take it for a ride you’ll love the way it drive.” Which I replied, “I lived in New York City for 20 years, a yellow cab is smooth to drive to me.” The man would tell me it smells nice. Well, that didn’t do it. So I gave him one more chance. I said, “Tell me what the safety features are? What’s the safety rating on this vehicle?” Not one salesman could answer that question. One said, “If you drive a Volvo we can’t compete.” So for me the point of the story and I tell my clients. The point of the story is I was truly looking to buy another that day, and the answers to those questions could have been a tie breaker even if the safety wasn’t equal to but if one would said, “We’re 90% on the way or pretty close to.” I would have bought a vehicle. It was a tie breaker. And this salesman had no tie breaker, so I said to my clients, “Do your sales people have tie breakers? Are they able to answer the questions with competitive advantages that ring the bell of the customer? Because if they're not armed with that, they won’t make the sale. Susan Wilson Solovic: Why do you think it is that companies fall prey to this level of disparity? Jaynie Smith: Because they don’t invest and fully understand the return on investment for market research. So a small company, let’s say they budget $5,000 a year to do some market research, and in doing so they are now selling what matters to the customer. And I closed 10, 20, 30% more sales. I tried to demonstrate over and over again, the ROI on that $5,000. I’ve never seen anything less than a 10 to one return on investment for a company because you closed a lot more business when you’re selling to the customer with the customer values not what you do well and not what you think they should value, but what matters to the customer. Susan Wilson Solovic: It seems like just common sense to me that you will take time. Now, one of businesses that we actually did a story on here at SBTV, the gentleman had a construction company. He created a customer advisory council, and on that council were people obviously his customers. There were some potential customers, but there were also customers that he brought in where he lost the bid. So what do you think about customer advisory council such as that? Jaynie Smith: I think customer advisory councils are good, but I like to point out the pros and cons. I think it’s very important to have on-going be talking to your customers and that the council is good for constant feedback. The only thing I want to caution is that there’s a big difference between customer service survey and customer advisory council versus blind market research. When it’s blind then anonymous and the client doesn’t know who’s asking the question, you get much more unbiased important data back. But when the company are asking, it’s somewhat slanted because they’re negotiating with you even on a saddle level. I know that because they will almost always talk about price being very important, but when we do market research, guess what price comes up? Susan Wilson Solovic: Is it low? Jaynie Smith: Five, six or seven not one, two, three or four. But it will always come at the top when you’re asking talking directly to the customer. So the answer is I believe in them. They’re valuable to always be getting the voice of the customer, understands it a little bit by us. The best research is blind market research. Susan Wilson Solovic: When you talked about independence research like the blind market research you were just talking about, is that expensive? Is that something a smaller company can afford to do? Jaynie Smith: Yes, small companies it depends in the size, and when I told the number of clients who are really small starting out on the growth curve. Talk to your local university, many marketing departments have interns looking to do this kind of work. Have them help you and many of them will do it for free or next to nothing and just across. That’s one thing. And the other thing is hire a market research firm if you have the budget of $5,000.00 to $6,000.00 because your return on investments is going to be terrific. Susan Wilson Solovic: And you were saying at least 10 times it’s amazing. Jaynie Smith: At least. I mean it’s just so incremental when you get an alignment with what they need and want versus what you’re selling them instead of your best guess. Susan Wilson Solovic: What about if you don’t really have a budget right now and you can’t find to someone a college student that you can get to do the research for you? What about just going to your customers and asking them? Jaynie Smith: Lacking the first two yes. In fact, we’ve done some work with companies like that. We teach to salespeople how to question in the sales encounter to find out. We all know this course and course of sales training and all kinds of techniques for interviewing, but to think in terms of identifying which deliverables matter to you so I can give you competitive advantages based on the ones that matter. So with your few questions, I can find out what’s the most important thing to you? Is it on time delivery? Is it responsiveness? Is it communication? Is it the quality? Once I discerned from you that then I can hit you with the competitive advantage statements relative the things you value. Susan Wilson Solovic: Now I remember studying years ago when I was a young woman and I just out of college. I took a course called, Professional Selling Skills PSS. Xerox I think was the one who started that program that they talked about features, advantages and benefits, and so many companies focused on the feature and the advantage, but then the benefit is watching it for me the customer. And is that basically firming it up? Jaynie Smith: It’s you know that’s something it happens in so many ways. It sums it up and the only key thing is yes, what’s the benefit? And do we quantify it, so it’s believable. So you don’t want to say, “We have more trucks so we can deliver. We bought more trucks so that we can deliver more on time.” That sounds good, that tells you the benefit, but more specifically quantify it so that we can deliver within 24 hours. Be very specific 99% on time delivery. Go to the next level with the quantification of it. Susan Wilson Solovic: Great. Well, this is very interesting and I think we all have our homework cut out for us here Jaynie. Jaynie Smith: I hope so. Susan Wilson Solovic: Well, thank you very much for being here and once again you can get more tips in Jaynie’s book Competitive Advantage. Thanks to all of you for watching us on SBTV.com. Remember, small business is our only business.