Market research and analytics must be used not to endlessly annoy customers but to drive sales, margins and EBITDA.
According to the 2017 AMA Gold Top 50 Report, the top 50 U.S.-based market research firms exceeded $11.5 billion in revenue in 2016. Market research activities cover customer surveys, social media monitoring, CRM, transaction monitoring, analytics and data visualization through dashboards. Each of these is a costly endeavor. Yet, executives wonder: Do market research and analytics really improve sales, margins and EBITDA? The answer is yes, in three different ways.
1. Market Research Directly Increases Sales
Market research often takes the form of customer satisfaction surveys, which indicate how satisfied customers are with a brand’s value proposition. But do they boost sales? Or, do they just annoy customers? The answer is both. Customers like satisfaction surveys but only if the surveys are conducted infrequently.
A 2017 study of 7,513 customers of a large North American automotive dealership examined the financial benefits of customer satisfaction surveys. Two findings stood out: First, customers who completed a satisfaction survey purchased more than those who did not, even after accounting for the satisfaction rating. On average, sales per visit were $12.18 greater among those who filled out the satisfaction survey. With an average of seven visits per customer, this amounts to roughly $85 per customer. Even if a relatively high average cost of $10 per customer is assumed for the survey, there is a 750% return on the survey investment. For B-to-B companies, the return should be even higher given the dollar volume of sales per customer.