Nothing can replace direct insight from customers. Traditional market research methodologies were developed simply because it was almost impossible to get insight directly from customers on an ongoing basis.
Demographic research is an example of traditional approach
Demographics provide a limited understanding of correlations between customers’ characteristics and buying behaviors. Today, collecting info on customers’ intent should be the primary focus of a business. Customer intent matters a lot more than demographics. Recent research by Google indicated that “40% of baby product purchasers live in households without children”. This example clearly demonstrates the limitations of relying solely on demographics.
Market Research and The Drawbacks of Demographics.
Ask yourself the following questions:
- Do all 33-year-olds have the same needs?
- Do people who make $80K a year spend their money on the same things?
- Do consumers who live in the same neighborhood have the same needs?
The answer is no.
So why have marketers and market researches been conducting demographic research all these years? Simply put, they didn’t have a better way. Previously it was a choice between having no information at all or gathering data that is limited in use. Let me use an analogy: if I were to navigate through a long and dark cave and had the option of carrying a torch or going without one, what would be my likely choice? Now, what if I had a choice between carrying a torch or having lights installed all along plus a Google map of the cave? Relying on demographic data resembles walking through a dark long cave with a torch; you would only get to see the little bright area around you. In short, demographics have little to do with understanding consumers themselves and are more about correlations. In times they can be very weak or indeed spurious (check out this cool HBR article on Spurious Correlations).
Correlations and False Relations
Correlations do not equate to relationships. Oftentimes entrepreneurs have a tendency to relate two or more factors, things or phenomena due to spurious correlations. Then, based on these unsubstantiated relationships they conclude that there is a big “market opportunity”. That is often influenced by the desire to see a big and growing opportunity.
Customer Intent and New Research
If demographics are proving less reliable, then what should be researched? The answer: customers’ intent. Today there are more streams of data than at any point in history: The internet, computers, smartphones, tablets, Google, twitter, Facebook, YouTube and etc.
Before these technological advancements, if a customer wanted to purchase something he or she had to visit some sort of a physical space; whether it be purchasing a ticket at the airport or buying a pair of shoes from the store. Businesses were no different either; buying a service or an enterprise solution (B2B) meant having numerous face to face meetings as there was no teleconferencing. Bottom line: a customer’s first interaction to his last one would happen in a physical space.
Now let’s compare how people buy an airplane ticket or a pair of shoes:
- It probably starts with a Google search (Google flights included)
- That search takes you to a website
- On that website you do or don’t do a bunch of things such as view, click, compare, sign up, don’t sign up, leave the site, read the reviews, put in your credit card info, buy, decide not to buy and so many other things that you’d do subconsciously
- Let’s say for the sake argument you buy the ticket or order that pair of shoes
Those interactions create the possibility to research customer intent. While customers are searching for or talking about things online, Google along with Facebook, Apple, Amazon and your own website connected to bunch of analytics are tracking them. This is why you can dig into customer intent.
The Value of Micro-Moments
Knowing customer intent is basically knowing what, when, where and how customers are looking. This offers the possibility to be present when a customer’s want or need arises. Micro-moments are need-to-know, want-to-go, need-to-do, and want-to-buy moments. The reason why micro-moments are so important is because “Intent beats identity. Immediacy trumps loyalty”. Therefore, if your business is present in those moments, chances are customers are going to engage.
There are a good number of customer intent data tools out there but not all of them are meant for an early-stage startup. Ideally, a startup would want to tap into some of the free or least expensive tools.
Think with Google is a good place to start with a free, yet very handy collection of insights plus tools based on search data. Within this, Google Trends helps understand what customers are looking for based on location and categories such as business, technology, entertainment and etc. If you want to know about Canadian micro-moments read Canadian Micro-Moments.
Although social media and related marketing efforts are now ubiquitous, they are still valuable tools for engaging consumers and gaining insight into their behaviors. There are many free social media monitoring tools available these days. There is a great blog by Kevan Lee , a well-known thought leader on social media, which includes a list of 19 free social media monitoring tools (I suggest you follow Kevan on twitter). In addition, within Think with Google tools, there is YouTube Dashboard. This gives you the ability to track what’s being viewed and shared around the world and compare trending videos by age, gender and location so you can discover viewers’ passions, whatever their demographic. There you will also find great insights on KPIs for online videos.
HootSuite, one of the most mature social media monitoring tools and dashboards in the market, is another tool to add to your customer insight workshop and is well liked among many companies.
Another great tool for real-time market intelligence, news, government, media monitoring and sentiment analysis is Gnowit. Gnowit is an emerging Ottawa-based startup that helps companies sift through the noise of Internet data in order to find actionable intelligence. When I had to brief our executive team on emerging headlines and sentiments on the 2016 Ontario budget, I personally used the tool and it was simply great; what would have taken me days to complete was done in a matter of minutes. The tool even has a free tier to get your feet wet and to determine if the platform is right for you. Check it out!
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Vahid is a Market Analyst for Invest Ottawa. In his role on the Business Analysis team, he is responsible for (and assists) portfolio clients in their commercialization effort through: technology validation, opportunity analysis, market analysis, competitor analysis and business intelligence support. Contact him at [email protected]