The mind of your prospect holds the key

Editor’s note: Del Williams is a technical writer based in Torrance, Calif.

For CEOs and executives who are experiencing frustratingly low sales interest and are struggling with expansion in the midst of what is still a sluggish economy, one problem might not be what you know about your target audience, but what you think you know. While this may appear to be a minor distinction, the difference between assuming what the market needs and wants and knowing with absolute certainty can make a startling difference in marketing responses.

“Unfortunately, successful marketing isn’t based solely on the latest bright idea,” says Bruce Wiseman, founder and chairman of On Target Research, Glendale, Calif. “Imagination is a critical ingredient to entrepreneurship. But businesses beyond number have charged into unsurveyed markets only to find their product or marketing message lacked any resonance with potential customers. The cold, hard truth is that there is only one way to find out what potential customers want and will pay for. That’s to get the information directly from the source - the prospect himself. There are no shortcuts, only the vitally important business resource that’s quietly used by the most successful: the market survey.”

Look no further than the recent dot-bomb era to see a landscape littered with unsurveyed ideas. CEOs and executives developing new products and services, flush with investor cash, generated countless profit-promising spreadsheets based on market assumptions without the necessary, objectively gathered market research.

But the dot-bombs aren’t the only firms to have failed to conduct primary research. The business landscape is littered with the corporate corpses of those who didn’t survey their markets. These are not just mom-and-pop start-ups either. Both AT&T’s and RCA’s failed ventures into the highly competitive computer market are dwarfed only by the launch of the infamous Edsel. Nevertheless, perhaps no industry sector in history was subject to as much wasted capital due to unsurveyed bright ideas as the early dot-com ventures. “Most dot-com startups never adequately surveyed,” says Wiseman. “Most never found out what was needed and wanted, let alone the prices prospects would be willing to pay. If those questions were worked out up front, the result would’ve been a lot more viable companies in the long run.

“In the IT field especially, product life cycles are so short and the resources to produce them so great, that companies don’t want to misfire by not reading the market and customer needs correctly. Maybe the IT industry changes faster than others, but no industry sits still.”

Research was critical

For successful branding and positioning in the competitive information technology marketplace, a Dallas-based IT consulting firm turned to On Target Research when it was purchased by Hitachi several years ago. Management decided to reintroduce the firm with a new name, brand, and positioning in short order. Along with other top executives, Mike Driessen, executive vice president at the firm, decided that accurate market research was critical to the endeavor.

“If we hadn’t done the research,” says Driessen, “we would’ve done what many companies do: gather a bunch of execs in a room and ask, ‘What does the company mean to you, and what do you think it means to customers?’ But if you want a successful, effective market position, you’ve got to find out what’s in the mind of customers and prospects. Pick the wrong market position and you’re in big trouble. Fail to pick one, and you’ll acquire an ineffective or dismissible one by default. It’s far better and more cost-effective to position a company, brand or product correctly from the beginning.”

On Target Research did extensive one-on-one interviews, both in person and on the phone. Initially, the firm surveyed the company’s employees to ascertain their view of its perceived strengths. They then surveyed prospects and customers to discover their needs and wants, and crosstabulated the results with the employee survey to see if the company’s perceived strengths were, indeed, what prospects and customers wanted in the IT consulting marketplace.

“We found the main buttons in the IT consulting market are knowledge and experience and that our core strengths were in alignment with this,” says Driessen, whose firm settled on the name Experio Solutions. “None of our competitors had grabbed this key positioning. On Target Research’s work to help us get into the minds of our customers and prospects really pinpointed what our brand should represent. And the rest fell in place from there.

“The independent survey process, with open-ended questioning, gave us clear, practical guidance for our branding and positioning. We picked a winner based on what the market told us, and haven’t lost a single customer in the transition to the new company. In this down economy, we’ve continued to do much better than our competitors, who we benchmark ourselves against.”

According to Driessen, many companies get complacent, failing to re-survey as products or the selling environment changes. “Either competitors come along and create a better product, or the customer base changes and the product isn’t needed anymore,” he says. “If you look at the downfall of any company, at some point they’ve failed to survey to find out what’s needed and wanted. As a consequence, they failed in the marketplace.”

Driessen plans to do periodic surveying with On Target Research, since he realizes how quickly market conditions and customer hot buttons can change. “We’re constantly trying to keep abreast of what’s needed, new and going to be needed,” says Driessen.

Dispel conventional wisdom

While surveying can be used to position and brand, it’s perhaps most useful when it dispels conventional wisdom to reveal hidden opportunities. Such was the case when Robert Cefail started his own company marketing telecom systems to correctional facilities (pay phones for inmate use).

The prevailing belief among industry salespeople was that wardens bought the phone system offering the largest commission. Though the industry segment wasn’t well known at the time, it was big business: over a billion dollars a year, with a portion of the revenue from calls usually going into an inmate welfare fund.

Determined to understand the needs of his customer, Cefail departed from the norm. He commissioned On Target Research to do a thorough survey of U.S. wardens and sheriffs to confirm their views on inmate telecom systems. “Prior to the survey, our focus was the same as our competitors: how much could we pay each facility in commissions to get the contract?” says Cefail. “It was a vortex of upping commission rates to get business. To beat competitors, we would have kept raising commissions and decreasing our own profitability. This was the prevalent wisdom in the industry.”

However, the surveys revealed something unexpected: Commission size wasn’t the No. 1 reason wardens chose a certain telephone system. Or the second-, third- or fourth-most important factor in the buying decision. Commissions ranked eighth - way down toward the bottom of the list.

“The surveys found that the sheriffs and wardens who ran jails and prisons had their attention fixed on one thing: tension,” says On Target’s Bruce Wiseman. “It came up again and again. They didn’t want tension in their prisons because it led to fights, riots, bad publicity and the potential loss of job, position or pension.”

“We had been competing in the marketplace and giving away our profits on a non-issue - but didn’t know it until we surveyed,” says Cefail. “Our customer base of sheriffs and wardens cared less about inmate pay phone commission rates than about reducing tension in their facilities. This meant making sure the phones were indestructible and stayed in service, so inmates could talk with their families and didn’t take out their anger out on guards or other inmates.”

Consequently, Cefail’s company positioned its phone system as indestructible, something that would reduce tension in correctional facilities. Further, as a provider of preventive rather than reactive maintenance, his company would continually monitor the phones and initiate repairs before problems could escalate. He also incorporated built-in security features such as number-blocking and duration control.

The result: Cefail’s company grew from zero to $30 million a year in just three years, to become the No. 1 independent provider of inmate telecom systems in the country. Why? Because it surveyed its public before engaging in a marketing campaign based on what “everybody knew.”

“Due to surveying, we saved at least $10 million in commission payments over five years on total revenue of about $120 million,” says Cefail. “With a true understanding of our customers’ needs, we were able to zero in on their hot buttons and re-sign their contracts years in advance. Our competitors had no idea how we did it.

“Since we no longer competed on commission, we paid about half the commissions our competitors were paying,” continues Cefail. “This provided 10 percent greater margins than we otherwise would’ve realized, and enabled us to sell the company for an extra $6 million when we decided to sell it. Our main advantage was simply understanding our customers better than the competition and marketing to their true needs. Our secret was accurate surveying.”