Fast-growing companies rely heavily on marketing to generate awareness and drive leads and conversions. It’s easy to fall into the “get it done quick” mindset when you don’t have enough hands, time, or cash to execute on your marketing in the way you want, especially when it comes time to invest in market research and customer insight.
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It’s tempting to search for a silver bullet “hack” solution that gets you to your goals today, but more often than not, these kinds of short term solutions wind up sacrificing your goals tomorrow.
Signs It's Time to Refresh the Customer Data You're Using to Make Marketing Decisions
- Flat or declining conversions - Marketing is humming along, your posting on social regularly, have an email list going, but your conversions seem to be flat despite all the traffic you've paid to push to your website.
- Skyrocketing Customer Acquisition Cost (CAC) Payback - You monitor marketing channel performance, and there's one channel that's experiencing rising costs, and possibly another that was a solid performer that's just not pulling it's weight anymore. Extending your payback timeline is not going to fly, and something needs to change.
- Increasing Customer Churn and Conversion Abandonment - You've noticed a change in churn rates and even possibly discovered holes in your online conversion funnels that are leaking potential customers.
- You start questioning the hypothesis of your A/B tests - the hypotheses of your A/B tests increasingly feel like they don't match other sources of customer data. You and your team are starting to question whether you're testing the right things or chasing ghosts.
- Big marketing efforts, smaller and smaller returns - You and your team may be feeling the effects of lowered ROI on marketing campaigns, sales promotions, and it seems like you have to work twice as hard for half the return.
- Rising marketing burn rate - Sales and marketing spend are a SaaS company's most substantial areas of spend after they hit $2.5M of ARR Making every marketing dollar work as hard as it can make or break many B2B SaaS companies.
Solution - The Marketing “Magic Wand”
Everyone hopes for a single marketing hack that will solve every conversion and retention problem.
It doesn’t exist. No amount of “growth hacking gurus” can ever throw enough tactics into the mix to fix misaligned customer targeting.
Improving your deep understanding of your most profitable customers is the only shortcut when you’re creating and growing a market for your products and optimizing your conversion and retention rates.
If you don’t know who your most profitable customers are, what their pain points are and how your product solves those pain points, you’ll waste a ton of time and money achieving your goals.
Beyond customer demographics and internal assumptions, deep customer understanding includes:
- The values, attitudes, and beliefs potential customers hold.
- How customers make purchase decisions and how long it takes them to make a decision.
- How customers pay (and can they pay) for your product.
- How customers use your product.
- The words and phrases they use - this may be a surprise, but this is essential information.
- Understanding customer pain points or problems they’re trying to solve and how your product can help them better than your competition can.
Why You Need Updated Customer Research Data
Just like your business and the market change, your customers change as well. Their needs change, how they use your product changes, their ability to pay for your product changes, and your customer insight data and understanding should change and evolve as well.
You should consider updating your customer market data when the following happen in your business landscape:
- The company has grown substantially. This is especially true for companies during their initial scale when you may still be relying on information from your initial market validation to guide your marketing decisions. “Move fast and break things” isn’t a motivational poster, it’s a warning of what could be if you’re not keeping your customers front and center.
- You have a new crop of competitors that popped up overnight, or there is a big, recent consolidation of competitors.
- Your customers just got a whole lot more sophisticated through knowledge or available tools. Changes in the market or technology could indicate your customers may be looking and evaluating their switching costs to get a bigger overall bang for their buck. This is especially true if your support requests have spiked or feature requests from customers are rising and mirror the features your competitors offer and that your product doesn’t.
Your customer market data should be able to tell you why your customers continue to buy, and what encourages them to stay, help identify behavioral patterns and purchase objections.
Most importantly, updated market research data can help you stay ahead of your competition, help you more accurately predict what your customers need from you in the future, and give you the time you need to adapt your product to meet their increasingly sophisticated needs (which in turn, increases your Customer Lifetime Value and Annual Recurring Revenue).
Turn Market Research Into Customer Personas
But a big list of problems and a big chunk of customer data doesn’t help if the data isn’t usable. It takes effort to translate chunks of data into something meaningful, but based on the possible rewards, it’s effort well spent.
Creating usable market data does take time, and many companies feel like they don’t have the time to spend (or “waste”) when they have real revenue problems to solve.
But isn’t it the cash from your customers that ultimately keeps the lights on*?
You also have budgets and burn rates to watch, and advertising isn’t getting any cheaper or easier. PPC costs are rising , organic search visibility is shrinking, social noise is rising and reach is dropping , channel selection is hard.
You have to make every marketing dollar work as hard as it possibly can, and that means getting smart, fast, about your ideal customer and how to speak directly to them - at the right time and in the right place, using the words that make conversion irresistible.
Having, knowing, and using, data-based, updated personas are critical for everyone on your team and in your company. The two-year-old customer personas your creative director or ad agency pulled together based on feedback from your executive team about who you “think” your ideal customer is, could lead you to make poor decisions and waste precious resources.
If you’re sending out customer surveys or participating in NPS monitoring, you’re on the path - but these two tactics are only one piece of the customer intelligence pie.
Detailed Customer Insight Is One Chunk of Data You Can’t Afford to Get Wrong.
- 42% of startups failed because there was no market need
- 29% of startups failed because they ran out of cash
- 19% failed because they were out maneuvered by their competition
- 14% failed due to poor marketing
If these companies had invested in understanding their customers, do you think all of them would have failed? I don’t.
Marketing can’t fix a poor business model, but understanding at a deep level who your most profitable customers are, what they need and how they make purchasing decisions, can go a long way towards helping make smarter, faster marketing decisions.
How to Start a Customer Insight Research Project (or refresh)
Great customer research begins with asking the right questions at the right time to the right people.
Internal company politics and personal assumptions can influence the research and skew the outcome making your data worthless and allowing you to make decisions based on bad data. A customer research project is, ideally, handled by a neutral third party vendor.
At the end of the project, you should have a small stack of easy-to-understand customer personas. Usually, no more than five personas, any more and the personas become increasingly unusable.
These personas should encapsulate data from surveys, reviews, interviews, observations, and quantitatively represent qualitative data. These personas should give you insight into purchase journeys, timelines, positioning, and objections at a minimum.
Think about,
- How much time you would save
- How much easier everything would be if you could use your marketing like a surgical scalpel and not a shotgun
- How much stress could be lifted off of you and your team
If you had a reliable picture of who your most profitable customers are and what it takes to get them to open their wallets.
I know first-hand what it’s like to work in a high-pressure environment when you don’t have enough hands, never have enough time, and when you definitely don’t have the cash to execute your marketing the way you want.
Are you interested in learning more about the framework I use to gather customer insight data fast and produce personas that, when used, increase conversion rates? Let’s chat.