If the life-blood of most businesses is money, then data is the heartbeat. Or, at least, it should be. Obviously your profit and loss statement tells an important story, but it’s largely about the past — a poor indicator of future trends. Businesses tend not to grow if they spend too much time looking backwards.
The role of data in being market-oriented
As the reverse of creating products then finding an audience for them (product orientation), being market-oriented means identifying the needs and wants of your customers, then creating a mix of products and services to match.
Market orientation relies on good data to inform the direction you should take with your proposition. This can make all the difference if you’re trying to stand out in a crowded marketplace. Good customer data can reveal trends and patterns that your competitors haven’t noticed, and which you can exploit to get ahead of the pack.
For example, hotel chain Hilton leveraged customer data and feedback that told them that people would pay extra for greater flexibility with their bookings. This, combined with data-driven adjustments to their already-successful loyalty scheme, lead to a 20% increase in bookings for Q1 2018. Tactics like raising prices is risky if it isn’t backed up by research, but you don’t want to be undercharging either.
Many business decisions you need to make can be dangerous moves if informed by nothing more than gut instinct.
Understanding the competitive landscape
Perhaps you think competition for your customers’ money or attention is a little too fierce. Often an overcrowded marketplace means a race to the bottom. Reducing quality to cut costs may increase your market share, but also bring razor thin margins.
Of course, there are prominent examples where companies have achieved phenomenal success buy eschewing that approach. Apple Is famous for avoiding the lower-end of the market, successfully differentiating themselves by charging a premium for higher-quality products.
As this approach isn’t always possible, you may consider finding a quieter niche—sometimes referred to as a Blue Ocean strategy. Why compete with all the other metaphorical sharks for a rapidly shrinking source of sustenance (Red Ocean), if you can find a relatively un-fished stretch of water (Blue Ocean)?
Either way, there is some business intelligence you should gather to help to define where you sit:
- What do your competitors offer?
- What is your share of the market?
- What are customers’ attitudes towards you and your competitors?
- What are the relevant overall consumer trends?
- What are the relevant overall industry/sector trends?
Do you know your Total Addressable Market?
Market share is an important measure of success, as it allows you to see how you’re faring against your competition. However, don’t assume that the size of your market is fixed, or that you understand it fully in the first place.
We know that customers latch onto new ideas and products at different speeds, from early adopters to laggards, so are you sure that the people you aim at are still the only ones who might be interested? Conversely, could an update to your product range also open the door to a previously untapped market? Regular market research—surveys, interviews, analytics, competitor analysis—may help you identify Blue Ocean, either because your current products and services can meet the needs of a new group of customers, or that that you can tailor your offering accordingly.
Using behaviour trends to predict the future
Customer behaviour tends to change more quickly than businesses can adapt. Short term fads are only truly exploited by the most nimble organisations, while evolving long term habits usually tend to favour those who identify the opportunity early (see Chapter 6).
Organisations such as Forrester and Gartner commission and publish studies into, amongst other things, customer and technology trends.
But you can give yourself a competitive advantage by using your own data to find patterns that help you take a different direction before everyone else. For example, you can monitor:
- Social media
- Competitor behaviour
- Keyword searches via Google Analytics
- Technology trends
The latter can be important if your products are technology related, or if the way you do business is impacted by technology. An interesting way of looking at technology usage is the Technology Adoption S Curve, which describes the phases different innovation go through from their inception to becoming widely adopted.
Often an otherwise promising idea withers on the vine unless someone comes up with the killer application or implementation that propels that technology from being a clever idea, to achieving mass market popularity.
The commonly-used example of this killer application, included in the linked article above, was the cassette tape. Philips invented the compact cassette as an alternative to vinyl and 8-tracks, but it wasn’t until Sony’s introduction of the Walkman that cassettes finally took off.
A simpler example of exploiting new technologies is adoption of contactless payment, which make it easier for any kind of business, from market traders, to street fundraisers, to complete financial transactions. Keeping an eye on technology adoption could give you the advantage you seek in either your current marketplace, or your Blue Ocean.
Marketing for success
Building something doesn’t necessarily mean people will come. Marketing is as crucial today as it has always been, but times have changed.
Whereas traditional media offers limited opportunities to target your marketing spend, digital marketing can be much more relevant and personal.
As long as you understand your target market, you can buy ad views in places you know they will see them, and the message can be tailored towards them. While more people might see your TV spot if its placed during an episode of Coronation Street, a well-targeted Facebook ad may reach more of the right people, for far less expense.
As a bonus, digital marketing also allows you to understand the success of your spend much more accurately, as well implemented attribution can track a customer all the way to purchase, and beyond.
Delivering for customer satisfaction
Finally, and perhaps most importantly, the success of your business relies on how satisfied your customers are with your products and services.
This loops us back round to being market oriented. An understanding of your audiences’ needs and behaviour contributes to how you design your entire customer experience.
Customer surveys carried out by follow-up email, and consumer review services such as Trust Pilot not only help you understand satisfaction with your products, but also generate positive influence for new customers choosing their next purchase.