Companies work hard to give customers what they want. While this seems straightforward, it's more complex than it appears. Thankfully, you can use many different research methods to understand customers.
Why research customer preferences?
There's often a gap between what people say they prefer and how they actually behave when making choices.
That’s because customers don't always know what they want. Even when they do, they might have trouble putting it into words. This makes it hard for companies to get accurate information.
For example, a customer might say they want an eco-friendly product. But when it comes time to buy, they choose a cheaper, less environmentally friendly option.
Consider your own shopping experiences. You may start with a clear idea of what you want, only to change your mind when presented with different options. Or you might make an impulse purchase you hadn't planned on.
This gap between stated preferences and actual behavior is a big challenge for businesses.
The importance of understanding customer preferences
Uncovering customer preferences is like piecing together a complex puzzle. Companies must gather and combine pieces of information to see the full picture. Different research methods each provide a unique piece of the puzzle.
When done right, this process allows companies to create products and services that customers love. However, getting it wrong can result in wasted resources on unwanted offerings.
When companies understand what customers want, they can create better products. By focusing on the features customers value most and eliminating unnecessary ones, businesses can develop products that people genuinely want to buy and use.
This understanding also helps companies price their offerings better. They can strike a balance that satisfies customers while staying profitable.
This data also enables more effective marketing. Companies can use research data to craft messages that resonate with their target audience, attracting new customers and fostering loyalty among existing ones. This knowledge also gives businesses a competitive edge, allowing them to spot trends before their rivals.
Understanding customer preferences is an ongoing process that requires continuous attention. Preferences can shift due to technological advancements, cultural changes, or economic factors.
Companies that stay alert to these changes are better positioned for long-term success. Losing touch with changing customer desires leads to a decline in market standing.
So, how can companies understand what their customers truly want? A variety of research methods and techniques can shed light.
Customer surveys and interviews
One straightforward research method is simply asking customers directly about their needs, wants, likes, and dislikes through surveys and interviews. This can uncover self-stated preferences and priorities.
However, this method is limited because customers often lack full self-awareness and context about their behaviors. The preferences they state may not match their actual decisions.
Focus groups
Having more open-ended discussions in a moderated focus group setting allows customers to expand on the reasons behind their preferences. The back-and-forth can surface motivations and pain points that may not come out in surveys.
The downside is that group dynamics can cause some preferences to be amplified or minimized based on peer influences. Anonymity is also lost compared to other methods.
Observational and ethnographic research
By observing and studying customers' actual behaviors and choices in their natural settings, researchers can often identify preference patterns that contradict what customers self-reported.
This provides a more objective view, but it's also harder to get deep insights into the "why" behind behaviors through observation alone.
Trade-off modeling and analytics techniques
The most effective research methods for uncovering these different influences depend on where a company is in the product development lifecycle.
In the early stages, techniques like maximum difference scaling (maxdiff) or best-worst scaling can be useful for narrowing down a long list of potential ideas to the most important ones.
As the product takes shape, conjoint analysis can provide better insights into customer preferences. Conjoint forces respondents to make trade-offs between factors like brand and price. This reveals what they truly prioritize when they have to choose.
Companies can uncover preference models that predict ideal product and pricing mixes by analyzing these trade-offs using statistics like Hierarchical Bayesian estimation.
While complex, these methods get to the heart of the difficult trade-offs customers grapple with in the real world between factors like quality, price, convenience, and more.
Integrating research methods
The most effective way for companies to deeply understand customer preferences is through a multi-method approach that combines different techniques.
For example, you might start with a survey. Focus groups could dig into the reasoning behind the survey preferences. Observational research could validate if behaviors match or contradict what was said. And trade-off modeling could quantify and predict ideal product configurations based on preferences.
Companies can understand customer preferences better by using insights from multiple methods. This creates a cohesive customer strategy that accounts for different factors affecting preference.
Overcoming common pitfalls in preference research
Sometimes, companies make a few big mistakes when researching customer preferences. These include:
Using biased questions that lead people to certain answers
Relying on samples that don't represent all customers
Misinterpreting data or drawing conclusions that go beyond what the research actually shows
Failing to create a plan to fend off survey bots
Companies must void these mistakes in their research to get accurate data.
Data is the key to understanding customers
Understanding customer preferences is an ongoing process. Preferences can change over time due to new technologies, cultural shifts, or economic factors. Companies need to keep researching to stay up-to-date.
When businesses turn these research insights into action, they start to see real results. Companies can innovate products and services that meet customer needs by learning about customer preferences.