You Know What They Say About Assumptions…

You Know What They Say About Assumptions…

 Most companies think they have a pretty good handle on their marketplace, who their customers are, and why they buy from them. And, up to a point, they are probably right.

 But customers are a surprising group, and often even successful companies can be missing some vital information about why their customers buy; and it sometimes even results in leaving money on the table.

 One of our clients, for example, was a major player in its market space. It sold a key component in the booming PC server market. It sold it through a two-tier, indirect channel, and it was enjoying strong growth doing so.

 Management was quite confident that their success was due to its products’ technical wizardry, that speed and ease of use were driving sales. Product management was designing what the engineers said could be built, and marketing designed its strategy around the value proposition of “can do,” and “can do better” than the competition.

 But the company had never actually tested its assumptions. It had never talked to the channel, the people who were closest to the customer, and certainly not the customer himself. The company’s success led to the false assumption that checking marketing assumptions was redundant and unnecessary. In fact, the company had never done any market research in its seven year history.

 Marketing was getting uneasy about their lack of hard data about their specific market space.  They needed a new, more objective perspective on the issue.  We were called in to help get a firmer fix on why the product was selling as well as it was, where there was potential leverage to increase market share, and how to maximize the company’s perceived competitive advantages. Our recommendation was: “Let’s ask the customers.”

 We suggested, and the company agreed, that only good could come from talking to the people who actually bought, and re-sold, and provided support for the product, doing a reality check on why people were buying, and mining for the perception of the company’s strengths and weaknesses.

 The results surprised us all.

 Customers were less interested in technical wizardry than in reliability and global compatibility. The performance message on which the company had spent so much time and resources was not really as compelling to the customer as the concept of diminished risk of hard drive failure. As one company executive put it, they learned that “IT managers were more concerned with getting fired if a server failed, than they believed they might get promoted for building a faster PC server.”

 Once the company understood why customers were really buying their products, it shifted its product development strategy, changed its branding messages, developed new programs – and raised its price. And the result was a higher market share, a market share that rose to an astonishing 88% of its market.

 Practical Marketing Rule # 2: There is a significant difference between thinking you know your customers and actually knowing your customers. If you do not regularly check your assumptions, you could be leaving money – and market share – to the competition.

3 thoughts on “You Know What They Say About Assumptions…

  1. Thanks Emily. This is a great example of why research is best considered as an investment – one which can either help to increase ROI, or prevent mistakes made due to false assumptions.

    Joy Levin

  2. Found your article incredibly fascinating in fact. I seriously enjoyed reading through it and you make very some excellent factors. I will bookmark this internet site for the long run! Relly excellent short article.

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