Leveraging Market Insight in Difficult Economic Times

By Sims Hulings
  
Even in the worst economic environment, there is little debate among business executives about the importance of market insight in realizing business goals.Market Strategy Group research has shown that among firms that financially outperform their peers, fresh market insight is a top driver of success.Losing sight of its value hinders financial performance, especially in difficult economic conditions.

Market insight means understanding the customer in a differentiated way, but beyond that it resists a clean definition. It is easier to explain what it produces –namely, programs that successfully unlock untapped opportunities.As one CEO put it, market insight is the key to getting “more juice from the orange.”

At Market Strategy Group we encourage clients to cultivate three distinct types of market insights, each of which requires a different set of practices:

Opportunities to penetrate existing customers more deeply.While not revolutionary, this type of insight can be cheap to exploit (since the customer is already acquired) and can produce very attractive returns. As an example, an electrical equipment salesperson noticed that his customers preferred to use a competitor’s catalog because it had an upfront section with items that were ordered most frequently.He pushed for a similar upfront section in his company’s catalog.After the new catalog came out the following year, sales were about 1% higher.That may not sound like much until you factor in the cost, which was little more than a few hours of staff time. Over time, seemingly small insights like this can add up to big paybacks.

Opportunities to exploit near-in opportunities like adjacent markets. This type of insight finds a new use for an existing core product or capability. Consider the example of a bar code printer company. This company expanded its sales into the health care sector based on the insight that, like boxes of goods, hospital patients need reliable identification, albeit for a different reason. Patients in a hospital need their safety protected and their progress tracked from admission to discharge. While wristbands historically had been used to identify a patient by name, those wristbands are far more effective if they contain a small bar code that can be scanned as the person is tested, medicated and treated. This insight opened an important new market for the company.

Opportunities that can trigger radical business transformations. These types of insights require a complete re-thinking of the customer’s experience with the product, identifying trade-offs that they have to make (but do not want to), and often times, creating a new ideal to which they can aspire.These insights often have the biggest pay-offs, but also require the most investment and involve the most risk.

Organizations need a steady stream of all three types of market insights, in order to protect (and ultimately expand) their revenue lines.

How to Generate Market Insight

Generating and applying real market insight isn’t easy. Over the years, however, we have found a few key principles to be useful:

1. Recognize that Market Insight is Much More than “Market Research.” Market insight is not simply market facts or market research. Plenty of firms have ample market research and yet have little market insight. However, it is unlikely that a firm that is not intimate with its customers will systematically generate fresh market insights.The key is not your market research budget, but the amount of time your people spend “walking a mile” in the customer’s shoes, so that they really, deeply understand the customer’s problems and concerns.

2. Don’t Downplay Its Importance. Market insight is of little use if it is ignored.Far too often, decision-makers focus too much on the financials or on “big” ideas – M&A, new products that can add 10% to the top line – and not on the market insight that should inform these decisions.The result is that executives as a group do not have a cohesive picture of the market, and thus do not agree on where to invest in order to protect or grow sales.

3. Triangulate Multiple Sources from Multiple Angles. Really powerful insight involves ingenious triangulation of many variables – not just naïvely listening to the “voice of the customer.”The best insights come not from great research techniques (great survey design, respondent recruiting, etc.) but from marrying different sources of data (including the company’s own sales data and sales rep opinions) with publicly-available data (including purchased data) and/or privately-commissioned research.As a rule, companies need to give more recognition to the crucial importance of information diversity… plus the integration, interpretation, and exploration of the data from a multitude of different the angles.Volume is NOT the key, looking at the customer from different angles is.

4. Focus on What You Really Need to Know. Great insight requires understanding the category very well, so that the right questions can be asked, and so that the right conclusions can be drawn.One key step is to make sure that you know what you want to know.Too often, research and data-gathering is not designed in a disciplined way.In order to get approval a project has to answer all of everyone’s questions, which is not possible.Figure out what you really need to know, go out and get it quickly, and do more research later to answer the other questions.

Improving Market Insight – What Executives Can Do

Here are some steps that we recommend executives consider to improve their ability to hear, process and create value from market insight:  

1. Perform a reality check 
   
• Is insight part of every day life – or a quarterly event? Events don’t produce results.
   
• When you lay out a new strategy or execution plan, do you ask “what’s new here”?
   
2. Ensure fresh external perspectives are engaged and heard
          
• Do you have sufficient, informed outside perspectives – either experts or advisors – to supplement and challenge conventional wisdom in constructive ways? How are they engaged?
   
• Do you regularly bring external views into the dialogue or does this only happen to solve a specific performance problem?
   
3. Challenge your comfort zone Push your team by asking:
     
• Are we managing for insight or simply accepting extrapolation of the present day understandings that are safe and clearly understandable?
   
• Are we really taking enough time to explore the seemingly unworthy before judging it? Or are the pressures we face suspending the needed freedom of open-minded dialogue about insight-based possibilities?     

For more information, contact sims.hulings@mkt-strat.com.
   
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