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Market leaders know how important it is to understand the wants, needs and
habits of their own company’s customers. They know which segments purchase
which products. They also understand how satisfaction and loyalty differ, needs
and wants vary, and revenue, profit and market size change among the various
segments.
True leading-edge marketers also regularly take the pulse of their competitors’
customers. They strive to understand:
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What customer segment(s) does each competitor serve?
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How do needs and behaviors differ among segments?
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What is the average revenue per competitor’s customer for each competitor?
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What is the average revenue per customer, by segment, for each competitor?
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What are the satisfaction and loyalty scores per competitor customer segment?
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Best of all, you don’t need to stand outside your competitors’ stores and quiz customers
as they emerge. By using that latest survey tools and technologies, you can glean
valuable information about potential opportunities.
Survey your competitors’ customers—as well as your own.
Some companies think the best way to gauge consumer satisfaction with competitors
is to ask their own customers what they think of these other companies. This
is not a valid strategic approach; it can lead to seriously skewed data. Typically,
if a customer is regularly using your products, they’re NOT using a competitor’s—so
they usually have no valid base on which to offer perceptions. Also, sometimes it’s
just human nature for a customer to tell you what they think you want to hear vs.
a more objective opinion.
There are at least four valid approaches to learning more about competitors’ customers:
- You can compare your customers' satisfaction with your company vs. your competition's
customers' satisfaction with their companies. One key difference: you survey your
competitors' customers for the data—not your own. The biggest challenge
here may be obtaining a list of your competitors' customers.
- Alternately, you can compare your own survey results to those of similar companies—even
if they’re not direct competitors. For example, an application software company
can compare survey results to those of other application software companies. While
this method enables you to develop a benchmark and understand how you compare, it
isn’t as effective as the previous method.
- You can compare customers’ satisfaction versus their expectations to understand
how important particular factors are to your customers and how satisfied they are
with your performance. You can then focus on the differences between expectations
and ultimate satisfaction. Viewing the results in this way allows you to see which
factors are most likely to affect the customer's loyalty, which can help you prioritize
your efforts.
- Finally, you can ask your customers to compare your company’s performance with providers
of other product or service providers in related areas. For the reasons listed above,
they may not be able to compare you to your direct competitors. Still, for example,
a customer of a software company may be able to compare them with providers of other
IT solutions, such as hardware or service components.
Case Study Example: ABC Software
ABC Software creates software for doctors’ offices. After analyzing and surveying
its customers over the years, it has gained a fairly good understanding of the different
types of customer segments it serves, how the needs and behaviors of each segment
differ, and how satisfaction and loyalty levels differ by segment. It also has an
exact understanding of what the average revenue per customer is in each segment.
To identify market opportunities, ABC is looking to attract customers from competitors,
but it has no information on where to begin. It follows these steps:
- ABC purchases customer lists from two marketing companies of all doctors’ offices
in the US(from a marketing company such as InfoUSA).
- ABC then matches the lists up against its own customer list, removing its current
customers. ABC now has a list of its competitors’ customers. It’s time to “dig deep.”
- ABC randomly picks 2000 prospects from the industry list.
- ABC surveys these 2000 offices:
- Which competitor’s software do they use?
- How much do they spend per year on this and other software?
- How do they use the software (to understand needs and behavior)?
- How satisfied are they with the software they currently use?
- How likely are they to recommend their current software provider to another doctor’s
office?
As a result, ABC develops a deep understanding of:
- Its competitor’s customers
- Its competitor’s satisfaction and loyalty levels (deep, by segment)
- Market size of each segment: number of customers by segment, average revenue by
segment and average revenue by segment by competitor
- Segments least satisfied with their software providers (data on which they can begin
formulating a growth strategy)
You can see where this is going. Most companies never set out to develop such a
deep understanding of their customers, competitor’s customers, and markets—but many
of the few who do end up in industry leadership positions.
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What specifically should you ask competitors’ customers?
Naturally, each business can list different factors that make up customer satisfaction
and perceptions. Start by listing all the factors that make up a customer’s experience
in learning about the product, going through the sales and marketing process, the
purchasing process, setup of the product if relevant and, finally, questions about
using the product. Also, make sure you include questions on satisfaction, loyalty,
average revenue, needs and behavior. Again, if you’re a software company, you might
compare the opinions of your customers vs. competitors’ customers on pricing, ease
of use, value for the money, availability of all needed features, ease of training,
etc.
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With this data in hand, you’ll be able to:
- Understand the market’s different customer segments
- Understand how each segment differs
- Understand the size of each segment, the average revenue per customer in each segment
and, finally, how big each segment is in terms of revenue
- Understand competitors’ weak points that can be leveraged it in all kinds of ways—marketing,
training, sales presentations and more.
You can also pull data by segment to drill down and make more important discoveries
about how you can improve your products, services and overall customer satisfaction
with your company. Keep in mind that this is not an easy exercise, but once you
do it, and do it right, you’ll be way ahead of your competition
in growing your business.
The bottom line: more than ever, you’ll be keeping your customers, luring them away
from your competitors and increasing revenue (and profits!).
Consider seeking an expert for assistance.
Of course, working with a specialized survey partner might cost more than doing
the survey in-house, but the results are much more likely to be based on proven,
scientific methodologies.<> SurveyMethods.com is a pioneer in providing simple,
cost-efficient online survey technologies to companies of all sizes.
SUMMARY
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