For the majority of businesses, customer feedback represents a company’s biggest asset. Pick up any marketing or business textbook and I guarantee that within five minutes you will have read that the customer is always right, that a two-way dialogue is a healthy dialogue, and that businesses should be doing more to listen to their customers’ opinions. It’s market research 101.
The only problem with these statements is that they don’t seem to account for all those occasions when the customer wasn’t right. They don’t explain the fact that, despite ever-increasing market research budgets, up to 80% of all new product launches still fail within the first 12 months. Perhaps then, customers can’t actually tell us what they want, because they don’t know themselves.
As much as we all like to tell ourselves that we’re rational consumers who undertake sensible and carefully considered decision making, the truth is that at our very core, most of us are inherently irrational beings – especially when it comes to opening up our wallets.
Consider, as an example, the following list of factors that have all been shown to influence consumer decision making.
- Sensory information – Research from the Journal of Psychology & Marketing has shown that altering the smell of a casino can increase gambling by up to 45%.
- Ease of access – Studies into the US stock market have shown that people are more likely to invest in stocks with simple names than those that are difficult to pronounce.
- Pricing – According to the California Institute of Technology, when consumers are provided with two identical wines under different price tags, the majority will prefer the taste of the more expensive (yet identical) option.
- Music – Research from the American Marketing Association has shown that playing slow music in supermarkets can increase sales by up to 39%. Similarly, consumers have been found to spend up to three times more on a bottle of wine if classical music is played in the store.
- Environment – Multiple studies have linked purchasing levels to environmental factors. These include the weather, store temperature and lighting.
These studies do little to support the notion that we are all innately rational consumers, let alone that we could ever hope to justify our own decision making processes. When a company asks its customers why they bought a product, how many people will honestly look up and say “because of the smell in the store” or “because classical music happened to be playing”. If a customer doesn’t know their own mind, then why ask them about their decision making in the first place?
This is a trap that many organisations have fallen into over the years. Take the example of Google. A few years ago the search giant approached its users to ask how many results they would like to see per page. Being rational individuals, the users decided that maximum choice would be the best possible option. Unfortunately, when Google came to roll out the new results pages they noticed a dramatic decrease in the site’s traffic, eventually forcing them to return to their original model. The truth was that Google’s users had tried to rationalise their behaviour, and had ended up telling Google what they logically should have wanted rather than what they irrationally preferred.
So what’s the solution? Ditch market research? Ignore your customers and do your own thing? Well no. Market research will always have its place, but we need to get smarter at how we undertake it. Rather than merely asking consumers what they want, market researchers should be looking to monitor their customers’ behaviour within the environment where a purchase is actually being made. While the use of A/B testing has made this process increasingly realistic for online retailers, when it comes to traditional market research, most companies still have a long way to go.
Photo credit: nkashirin