Three of the most common uses for quantitative research are market sizing, concept testing, and measuring customer loyalty through Net Promoter Score. In this post, we unpack how marketers can leverage quantitative studies for marketing growth.
"Build it and they will come!"
Once a business has a concept they think they can make profitably, there is often a belief from within, that suggests there is a large market ready and waiting. But this is an overambitious mis-judgement and it can be a costly mistake. In any case you need to have clear information on your market to talk to the board, potential partners, financiers, licensing or acquisition partners.
To successfully bring any idea to market, what is required is an estimate of the potential market size. Ideas that could only appeal to a small population is a risky investment. Similarly, those that seem to appeal to a mass market, may not, because we may have missed a critical insight fact or feature, or gone to market too early. These days consumers seem to be leaping ahead in their sophistication and expectations, so at the very least we need to understand the available and potential market prior to shaping or building on the idea.
Or are you going for a niche that is worth pursuing? You may find there is a greater market potential than originally thought.
You need to understand the size, shape and characteristics of your target audience. From spending habits through to desires and needs, and importantly how they appraise value, will all be important to the success and survival of your launch.
How do these factor in alongside your consumer measurements?
"There's no such thing as a bad idea." Right? Wrong?
Can't be sure? How do you know whether your new product ideas are worth pursuing and which audience will be most receptive? Sometimes a 'bad' idea is not working simply because it's talking to the wrong audience, before its time, or not well articulated. Sometimes, simply a tweak to a 'good' idea can change it into a 'great' idea or change your tone entirely.
Ruby believes that great research is a fundamental part of the new product development process. The New Product Development (NPD) cycle should consider the marketer's gut instinct; the multiple viewpoints within the organisation and the voice of the consumer.
Working with key stakeholders to drum up a long list of new ideas via semiotic workshops – where our illustrator draws up ideas as you progress. Or maybe it's getting the team back on the shop-floor through NPD Safaris; or it's talking to influencers in your category to understand what the Next Big Thing could be.
Innovative quantitative techniques can provide a focus on the idea's raw ingredients. For example, you may have a long list of features and need guidance on which ones to prioritise for a creative brief or NPD brief. Or you need to develop the ultimate creative briefing statement for your agency partners or MD.
You may have ideas which you feel are winners, but you need to figure out what refinements to make to them. Workshopping or co creating ideas with your core audience to turn them from a 'good' idea into a 'great' idea is an important step and really help you find the needs gaps which require answers.
Once you have a short list of refined concepts, you should quantitatively test. Depending on your objective we may apply a shelf test, a monadic test, sequential monadic test or a comparative test.
"You shouldn't do product design without product testing."
While there are multiple things to keep in mind when planning and conducting a concept test, the following list can help you focus:
There are many ways to put a concept test together. The following example of a concept test demonstrates one way. Importantly the questions should be simple and easy to understand. The concept itself should be clear and consumer friendly for the best changes of comprehension. A scale is provided for consumers to rank or rate the concept, product or idea.
Concept testing can be an investment, but it needs to be done well. Industry benchmarks are not necessarily the best way to compare results as you are often comparing apples with oranges. There are better ways to ensure you have robust results that can go all the way up to the board.
A Net Promoter Score is an alternative to customer satisfaction and loyalty. Basically, it's a customer loyalty metric correlated with revenue growth. Net Promoter Score is used to determine the likelihood that the customer will buy again. Based on their affinity with the company and resistance to defecting to a competitor. It also measures advocacy.
Net Promoter score is done based on a single question around the likelihood of recommending your company/product/service to a friend or colleague using a scale from 0 to 10 which will help to split answers between Detractors, Passives and Promoters. Many big corporations use NPS as a key metric that guides and directs the entire business. There are many opinions on the validity of a single score and we suggest you read more deeply on the topic if you are considering NPS for your business. Or you can simply pick up the phone and talk to one of our NPS experts.
Considered likely to exhibit value-creating behaviours, such as buying more, remaining customers for longer, and making more positive referrals to other potential customers.
Their behaviour falls in the middle of Promoters and Detractors.
Believed to be less likely to exhibit value-creating behaviours.
Measuring loyalty can be done in several ways, and researchers have asserted that there are better predictors of actual recommendations than asking "likelihood to recommend". However, the purpose of the Net Promoter Score is not to predict actual recommendations alone, but to predict the full suite of financially-advantageous behaviours.
Companies are encouraged to follow the "likelihood to recommend" question with an open-ended request for elaboration, soliciting the reasons for a customer's rating of that company or product. These reasons can then be provided to front-line employees and management teams for follow-up action.
The "Why?" question provides information with context and depth needed to reference customer needs and identify improvement opportunities. Additional questions can be included to assist with understanding the perception of various products, services, and lines of business. These additional questions help a company rate the relative importance of these other parts of the business in the overall score. This is especially helpful in targeting resources to address issues that most impact the Net Promoter Score.
With the use of social recommendation tools increasing every day, recommendations have an even more critical role to play. Managed properly, your Net Promoter program can ensure you have a suite of recommendations helping to drive your business growth.
If you want to know more or are looking for some assistance with market sizing, drop us a line at info@rubychacha.com.au or get in touch.
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