FACT: One in five Irish Enterprises fail according to the Irish Small and Medium Enterprises Association. In many instances they fail due to a lack of understanding of their customers and market place.
Post-recession shoppers are a completely different breed when compared to what has gone before. They’ve been profoundly impacted by a feeling of deprivation the recession caused and the way in which they’ve coped with it. Now they are more demanding than ever and their expectations are increasingly high. We all know shoppers are fickle and the days of being completely loyal to one brand or company are gone. Shoppers have been conditioned to search out the best price and value during these recessionary times yet they can be swayed at the point of purchase to make very different decisions. Other factors like emotions also come into play, hence the contradiction in terms, when you hear that more than one in two customers claim to be cutting down on treats but sales of premium products such as ice cream and chocolates are on the rise. How can that be?
A Paradigm Shift
Business consultancy Deloitte released an interesting research report just this week in New York where they talked about a ‘paradigm shift’ in consumer purchasing habits in the US. It found that a whopping 84% of households were examining their spending in every category to try and save money while 79% believed they were ‘smarter’ shoppers than they were two years ago. But it also found that 75% believed that the financial crisis had caused them to realise ‘which brands I really care about and which ones are less important to me’ and that there were only two or three brands which they ‘could not live without’.
So how does all of this impact on business and brand owners moving forward? It means that now more than ever businesses no matter how large or small need to work smarter and harder to retain and win new customers. They need to understand their customers inside and out as well as having a good gauge on what competitors are doing. Essentially they need to understand the tangible and intangible factors that drive their customers to their product and business and how the customer journey and buying process actually works.
If you look at high street retailing as an example: before a businesses competition was very often the guy down the street, now he’s the guy on Amazon, Twitter or Facebook. Did people running book stores in the US ever think they would be competing with eReaders? With the advent of the iPhone we now have apps where people can scan a bar code on any product and within a few seconds compare prices of that item across multiple online stores!
And how do you get at or communicate to your market and customers nowadays with so much clutter in the media? Gone are the days when all communication was through the traditional channels of TV, press and radio, now brands and companies are active across all elements of social media, Is social media on your radar or does your business have a social media plan? If you don’t control your product and businesses reputation online then chances are somebody else will. Are your competitors in that space? If they are what are they doing and saying? Now more than ever consumers want to be part of the conversation and they want to engage with brands and businesses, they no longer want to be dictated to.
So how much do you know about your customers?
Too often businesses know ‘what’ customers buy from them but not ‘why’ they buy from them. Understanding the why piece is at the very core of marketing and market research and is key to success – successful businesses understand clearly what is happening trend wise in their marketplace and what motivates customers to buy their products or services. This understanding and insight enables them to differentiate themselves from competitors and ensures they spend their time, money and resources talking to customers about what is really important to them when it comes to their product and service. There’s no point in spending your hard pressed marketing and promotional budgets telling people the same thing as everybody else. So what’s unique or different about your product or service? Now that’s more interesting and engaging isn’t it?
Peter Jones, serial entrepreneur and infamous Dragon recently said, ‘The biggest cause of business failure at the moment isn’t that they’re struggling for cash and working capital, it’s a lack of research. With this in mind the research unit at ThinkTank sat down to map out 5 key points that could help local businesses navigate the new post recessionary landscape.
1. Do a State of the Nation Analysis
Research 101, a SWOT analysis – what better way to start then understanding your strengths, weaknesses, opportunities and threats. As somebody once said ‘If you don’t know where you’re going any bus will take you there!’
2. Do some Market & Trend Analysis
Understand the macro view and what is happening within your market currently. What are the trends that are dictating what is happening out there? Are these new to your business or had you already been aware of them? What are you going to do to acknowledge them and what if anything are you going to do now to address them? Where’s the headroom for growth within the marketplace and where are the opportunities to drive revenue growth in the future?
3. Do some Customer Analysis
Who are your customers? How many of them are out there? If you’re targeting a specific age group – are they in growth or decline within the population at large? What’s important to them? How do they engage with your brand and business currently? If you’ve a database of customers when did you last look at it to see if it had changed? If you’ve lost customers have you asked them why they’ve left – was it better service, more competitive prices or what? Have you ever walked in your customer’s shoes? If you own a store have you actually shopped it? If you were to what do you think you’d find, would you come back? If not, why not?
4. Investigate your Competitors
Who are your competitors and where are they promoting and marketing themselves – are you there too? What are they talking about and what USPs (unique selling propositions) are they trying to sell? What could yours be or how do yours compare – better or worse?
If you ‘Googled’ your product or business right now what products or businesses would come up – are you there? Who else is there? Why aren’t you there? Do you know how people search for your product or service currently – what key words do they use and have you those on your web site and related links? Are who you think are your competitors the same people that your customers think are your competitors?
If I’d a penny for every time I’ve asked retail clients in particular whether they had visited their competition to suss them out I’d be very rich by now. I’ve always been intrigued by how they think they can possibly try to compete if they don’t know what they’re competing against? Mystery shopping your competition is vital for service providers too even if it’s just making one or two calls to get a feel for the service that is being provided and what’s on offer etc.
5. Internal Company Analysis
This stage is all about understanding what is unique about the business that gives it a sustainable advantage versus other businesses in the marketplace and also understanding what it is that the business stands for. It’s about copper fastening what business the business is actually in and what markets it operates in. It’s also about examining employee views of the business and where it is going with that of the management team so everybody is working off the same hymn sheet and everybody is clear about where the business is going and what activities it needs to prioritise and give focus to in order to get so there is a clear vision for the business moving forward.
Finally, post recessionary times will be very different, but keeping things simple and keeping the customer at the forefront will mean that smart companies will be best positioned to ride out the recession and capture market share gains when the economy gets back on track.