We live in a time where information quite literally lives at our fingertips. Now, more than ever, data is used to determine victory and defeat, yet we still see brands fall when it comes to understanding their consumer. Custom market research can help brands make better choices – it is a simple fact. Yet, time and again, we see companies make assumptions-based decisions resulting in serious repercussions.
Don’t Be That Guy: Market Research Could Have Helped
Take Netflix for example. CEO, Reed Hastings, made a decision to move forward with the business plan of splitting its unlimited streaming and unlimited DVD-by-mail into two separate plans, and the cost for a customer to maintain both would come at a 60% increase in price. Customers were outraged - so much so that 800,000 subscribers decided to take their business elsewhere and who knows how many potential customers they lost. When questioned on the data supporting this business decision, Hastings was uncertain as to whether or not market research had been conducted. It was reported that Netflix lost $9 million that quarter.
For Sale: The Shopper Experience
What about J.C. Penney? One of my colleagues wrote an excellent blog post recounting the JCP strategy and included some interesting market research conducted by The Pert Group. However, the point is, CEO Ron Johnson’s overhaul of the business has cost JCP a 26.1% decline in sales and a loss of $123 million during a three month period. Johnson chose not to invest in market research and instead opted to put the company’s resources towards “getting on with their future.”
Picture This. Or Maybe Not
How about Instagram’s new terms of service? The company modified its policy and used confusing language. Customers were outraged by the understanding that the company would have the right to sell their photos to third party advertisers. This vague language cost the company thousands of suspended or deleted accounts. Why didn’t Instagram reach out to their most loyal customers to obtain feedback before implementing such a high-impact change?
The decisions come at a high price. Fortunately, market research provides the tools that enable decision-makers to make sound choices. A well-designed market research study could have shown that customers would have rejected the Netflix 60% price increase, but it would have also provided alternative solutions for profit and saved the company hundreds of thousands of customers and $9 million. Had Ron Johnson invested in market research, he might have understood that the emotional experience is just as important as the shopping experience. And finally, if Instagram would have taken the time to do study groups with their most loyal customers, they could have avoided a fiasco and learned how to best convey their message to their audience.
Custom market research can provide solutions to your biggest challenges. Every day we bring confidence to decision making for profitable growth on behalf of our clients. If you want to ensure your brand hits the mark, let’s talk.