Consider research to boost customer retention, innovation

Money is tight and innovation seems risky. But is playing it safe the smartest thing to do? There are ways to position your company to gain market share and emerge stronger when the recession ends, backed by solid market research data.

The status quo is not a good strategy right now. Your focus should be on two areas: customer retention and innovation.

If you don’t take care of your customers, someone else will. Don’t gloss over this just because you’ve heard it before: It costs 5 to 20 times more to acquire a customer than to retain one. There is a strong financial link between high levels of customer satisfaction and your company’s bottom line.

1. Know your customers’ “make or break” points. We all have breaking points when even the best excuse no longer matters. Your challenge is to create a no-excuse culture by rewarding your staff for caring for your customers.

2. Make your customers feel important. Show your commitment to the health of their businesses by demonstrating that you hear and understand their needs, expectations and requirements.

3. Know your risk of losing customers. Review the touch points and proactively think of ways to create positive interactions.

4. Create a sense of urgency. This is about retaining your client base. It’s the foundation of your business.

In 2011, you will also have to consider your product. If you aren’t spending some of your time on innovation, your company’s bottom line will suffer.  The challenge is determining which moves you need to make and how to do so with the least amount of financial risk.

For example, will a new product or service cannibalize your market share or provide you with a new revenue stream? A well-structured market research plan can provide you with the data to substantiate the financial risk, and give you some peace of mind in your decision-making.

I have identified three areas on which most business owners should concentrate their 2011 market research dollars:

1. Focus on gaining understanding of your primary market segments. Who are your most prolific or high-dollar purchasers? Who are your most profitable customers? What are their demographics? You don’t want to spend your marketing dollars trying to reach everyone at once. Focusing on the market segments that best match your core capabilities will give you the best return on your dollar.

2. Analyze what makes your business different from your competition. Market research often reveals differentiators that aren’t immediately obvious. If you don’t want to compete on price, you need to determine what makes you stand out. What criteria go into your customers’ buying decision and how do you perform in those areas? Your research should be structured so that you gain empirical data that can be supported statically.

3. Evaluate how much of your business should be focused on growth versus retaining and deepening your relationships with your current customers. Organizations must have a mix of products and services that attract new customers while helping them retain current customers. Otherwise, you will be standing still. What you want to avoid is simply bringing a product into the marketplace and hoping it will stick.

You should be able to trust your market research firm to guide you in terms of where you should invest in risk. Because you are probably being forced to be more frugal, you may want to focus on highly targeted analytics to support your investment in growth.

You also should consider tapping into guidance from business colleagues. I recently established at my company a comprehensive advisory board of top professionals representing a variety of industries from financial services to marketing. It’s a move intended to further enhance the quality of our services and mitigate risk.

These pros give me a deeper understanding in specific areas commonly used by our clients, so that I can help them see how their growth strategies fit into the bigger picture.

In the end, businesses need to know how to leverage market research so that it has the greatest positive impact on sales and profitability. Once you understand your value proposition (how customers view you and your products and what motivates them to buy from you instead of your competition) it will be clearer how you should position your company for growth.