Market Research

Knowing your customers lets you target marketing efforts

written by Tim Berry of Palo Alto Software


Unless you are a new business without a customer base at all, your market research should begin with learning as much as possible about your present customers.

  • Who are they?
  • How did they find you?
  • What do they like about you?
  • What don’t they like?

Use customer surveys, random interviews, feedback sheets, and a lot of common sense to acquire this information.

Start by classifying your customers into useful groups, or segments. Market segmentation can lead you to better marketing. Classifying customers can help you understand their needs, channels, and differences.

More is not necessarily better when it comes to customer data. If your company sells three products a year, the crucial data will come from these key customers. After collecting some demographic information, your company will be able to focus on the best way to get customer feedback. For example, if your company sells home and garden tools, your best target might presumably be the married, dual income, weekend shopper. As soon you have qualified the customer, move on to the surveys and complaint responses to build on this information.

Look at complaints and problems as a valuable source of customer market information. Studies show that 2-4% of dissatisfied customers complain, which leaves 96-98% unaccounted for. Can you identify these other unhappy customers? By contacting them you may learn of a product problem, discover a solution to a problem, and/or repair and save customer relationship. Remember, if they are not talking to you, they may be complaining to your next potential customer.

User Satisfaction Surveys

Consider using customer survey information to find out more about your customers. The obvious information includes general characteristics that help divide the customers into segments. Do your customers divide into groups by age, income, or gender? By profession or educational level? By type of company or industry? This information can be extremely useful. However, you may need to filter information from questions that might encourage customers to give incorrect answers, such as questions about age, income level, and intent to buy.

The following material is taken from the book Inc.’s “How to Really Deliver Superior Customer Service,” published by Inc. Magazine:

After systematically gathering targeted expectation data, consider using the following information to design a quantitative survey. Here are some guidelines for that survey. These were provided by Tom Carnes, of PDQ Printing in Las Vegas, NV:

  1. Obtain inside agreement as to the purpose of the survey. Too many have eight purposes, none of which is served very well by a short survey. Firms need to ask all critical stakeholders: How do you think we should use the satisfaction data? Then consensus should be reached before the survey is designed.
  2. Keep the survey fairly short. The response rate drops significantly when a survey starts to take more than 10 to 15 minutes to complete. At 10 or 15 minutes, though, you can achieve an average response of 65% to 75%.

  3. Send the survey to more than one contact within the account. If this is not done, you run the risk of getting high levels of satisfaction and then having the relationship ended by a dissatisfied and unsurveyed account contact.

  4. All responses need to be confidential. The rule of research is that unless confidentiality is guaranteed, you are probably not going to get the whole truth.

  5. Use the appropriate scale to generate actionable data: account-prioritized improvement areas. A comparison of performance data with expectations provides comparison of the most robust improvement data.

Focus Groups

Consider using focus groups to find out more about your customers and what they think of your products and services. Most people know the focus-group technique, where customers are brought together and asked their opinion by a professional facilitator. In initial business-to-business satisfaction focus groups, we usually ask key account contacts a number of pointed questions about their expectations and how well the supplier is meeting them.

Focus groups may take more time and effort than surveys, but the interaction with the group may provide clearer feedback.

Many companies use focus groups to look at new products, or focus on identifying solutions to problems. Software publisher Intuit used focus groups to assemble people who hadn’t purchased its software but were considered potential customers. It asked them why they weren’t customers, what problems they had in related areas, how software could help them.

This case study was included in Inc.’s “How to Really Deliver Superior Customer Service.” The following is an excerpt from that case study:

Phelps County Bank of Rolla, Missouri, whose case is included in the same Inc. book, turned to focus groups to ask senior citizens what they liked and didn’t like about the bank. The bank invited 80 seniors from among its customers, and was surprised when 60 people, instead of the 20 it expected, showed up for a discussion. The facilitators broke the group into three separate groups, and ran three focus groups. Among the important discoveries was that seniors wanted special treatment, but didn’t like most existing programs in competing banks. Eventually the bank created a seniors group, called “PC-Bees,” that became very successful.

At PDQ Printing from Las Vegas, NV, focus group discussions with customers are videotaped and used for several related purposes. With the tapes, there is an edited record of customer responses whose uses are limited only by the firm’s creativity. Such tapes can be used to:

  1. Tighten and align the questions on satisfaction surveys.

  2. Bring the “voice of the customer” into internal training programs.

  3. Help determine which internal delivery systems are out of alignment with customer expectations.

  4. Develop quicker employee buy-in for any process or system improvement.

Video focus groups are among the most powerful ways to create a sense of urgency about service quality. Employees tend to listen to customers more than they listen to their own supervisors. At the same time, video focus groups are a powerful way to capture targeted customer expectations systematically. There’s no better way to leverage a research investment.


Tim Berry

about the author

Tim Berry

Founder and President of Palo Alto Software and a renowned planning expert. He is listed in the index of "Fire in the Valley", by Swaine and Freiberger, the history of the personal computer industry. Tim contributes regularly to the bplans blog, the as well as his own blog, Planning, Startups, Stories. His full biography is available at Follow Tim onGoogle +


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