Using Consumer Research to Develop a Growth Strategy

November 24, 2015


As every business owner knows, this is the age of big data. Several years ago, consulting firm McKinsey & Company posited that data analysis would lay the foundation for bolstering business’ ability to compete, innovate and most importantly, grow. As McKinsey and Company argued, collecting and thoroughly understanding the “implications” data has for a business is no longer the domain of individuals whose job title includes the word “analyst.” The information generated by a firm’s business activities must be understood by everyone, particularly those who have been given the responsibility of leading its growth or marketing initiatives. Perhaps the most important information that a company and its leadership can use to inform its growth strategies is consumer research.

Knowing why customers choose to spend their time and money on a product or with a business is critical to mapping out any plan that seeks to enable a business to maximize its potential in the marketplace. Here are several growth strategies that are made more effective when implemented alongside attentive consumer research.

Don’t Underestimate The Power of Developing a Clear Value Proposition

A firm must be very clear on the tangible value it offers existing and potential consumers if it is to reach its full potential. At Rob Biederman writes that firms must be able pinpoint customers’ reasons for choosing them specifically. The most apparent way to do so is through making efforts to collect solid, reliable customer data. That information must then be communicated across an organization’s various departments in a clear way. Failure to do so may lead to disastrous results.

Consider the recent dilemma of the online streaming music service Tidal. As Tidal sought to enter a streaming music marketplace dominated by Spotify and YouTube, it failed to communicate a value proposition strong enough to compel new customers. Tidal’s leadership focused their public relations efforts on talking points about sound quality and musicians’ rights, issues that are important, but arguably were not salient enough to command potential consumer’s loyalty. As a result, the streaming service may find that itself unable to compete with formidable rivals like newcomer Apple Music. If Tidal’s leadership had gathered data about customers’ needs, wants and attitudes towards existing streaming music services it could have used that information to shape both its product and its talking points. Not doing so may have created a gap between itself and its competitors that it may find difficult to close.

Acquire Established Businesses In Your Target Industry

Consider Bain Capital’s recent purchase of a cybersecurity firm. According to Reuters, Blue Coat Systems was a smaller company with expertise in cybersecurity. With threats against cybersecurity looming in headlines every few months demand for the services of a cybersecurity firms provides is increasing among lucrative customer demographics like governments and sprawling multinational corporations. Bain Capital’s acquisition of the cybersecurity firm is a case study in growth because the purchase allows Bain entry into a marketplace that may have been more costly for it to develop from the ground up.

Bain has continued to execute this strategy since expanding into the cybersecurity space by acquiring Elastica, a cloud security start-up based in Silicon Valley. For a smaller company like Elastica, being acquired is also a growth strategy of sorts because it may allow it access to the resources of a larger company. Being acquired may enable the firm to develop new technologies or make hires it previously might not have been able to afford. For smaller companies, acquiring the expertise of an experienced professional can also represent a growth strategy as that person’s abilities can enable the firm to respond to customer needs in a way it could not before.

When In Doubt, Use Market Penetration

It is widely known that this growth strategy carries the least risk. This strategy essentially requires a company to optimize its current efforts among the customers it has already acquired. The most straightforward way of enhancing penetration is of course learning more about the consumers who have already made the decision to patronize your firm. Arguably penetrating the market may be best implemented as part of an on-going, reflexive strategy for a firm when a market has not yet been saturated. A business’s leadership should always be looking for ways to find new customer feedback loops (i.e. social media) and incorporating that feedback into product development, sales efforts and marketing message.
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