Market research is a critical activity to win in the marketplace. It provides a deep understanding of the market, industry, competitors and customers. It should also include a deep analysis and understanding of your accounts, buyers and users. This understanding will help you differentiate your strategy from your competition. It will also help you prioritize your accounts, align your strategy with buyer needs and address user problems. The net result of this type of market research is strategic alignment with the external marketplace.
The 4 Steps of Market Research
- The first step is market segmentation. This is defined by how you divide the broad target market into subsets of buyers. These buyers should have common needs, priorities and solution options.
- The second step is account segmentation. This is about understanding which accounts inside your market are going to generate the most revenue in the least amount of time. In this step you should understand things like:
- Propensity to buy
- Potential spend
- Lifetime value
- Ideal customer profile
- The third step is buyer segmentation. This is about understanding how buyers in your accounts make purchase decisions. The output of this step are tools like buyer personas. The entire organization should be invested in understanding how your buyers buy. And how it changes over time.
- The final step is user segmentation. This is defined as understanding the market problems that exist for users inside of your accounts.
Once you’ve taken these steps, what do you do with this information? It’s invaluable to both sales and marketing leaders. For example, it allows the marketing team to direct their marketing campaigns, and dollars, towards the accounts with the most potential. It also influences the sales strategy. It will govern the allocation of sales resources. It will help determine which accounts to pursue and territories to define. And it defines the process used to engage buyers.
Who Owns Market Research?
This is a commonly asked question. Who should own the process? And how should the information be dispersed across the organization?
Ultimately the owner is the CEO. When push comes to shove, the CEO must direct the market research effort. Why? Because at the end of the day, the CEO is responsible for setting the strategy of the company. This means allocating people, money and time. Market research enables strategy planning and helps the organization make better decisions in order to hit the revenue growth goal. It should be the primary input into the corporate strategy.
The information market research provides must make its way through the entire organization. It should inform the other functional strategies. How do you make sure this information doesn’t end up in a silo?
To prevent this, a regular cadence of communication should be in place. It’s in this communication where the output of market research needs to be shared and updated consistently. Typically this includes a weekly, monthly and quarterly cadence of pushing information to your team. Insights should be shared, and not just at the executive level. It should be shared throughout the organization.
Companies that use market research have a better chance to succeed. It brings you into strategic alignment internally and with the external marketplace. It’s the first step to hitting your revenue goal and cannot be skipped. Begin with the four steps in this article to gain a complete understanding of your market, accounts, buyers and users.