Good stories often start in the middle of the action. That’s where the good research you can use to build sales starts, too. Getting data on your current customers always starts with one primary activity: their shopping habits in your store. With that information you can validate your hunches and learn many things you didn’t know about your customers.
As retailers look at ways to increase the bottom line in a tough economy, customer research is invaluable. It is a cost-effective way to help you make smarter decisions that will ensure your marketing and promotions dollars are well spent. You gain insights into one of the most prized and elusive aspects of retailing—customer loyalty—and learn how your operation stacks up against the competition.
There are many different ways to look at using data to help with business decisions, but it’s important to distinguish up front what you want and need to know, and how commissioning a survey can assist your efforts. “Customer” research is defined as what you do to learn more about your current customers’ shopping habits and attitudes. “Consumer” research is what you do when you want to know more about those who are not currently your customers and find out why.
Debbie Suassuna is a location and site analysis consultant for CDSConsulting Co-op, and she advises that a key step before undertaking more in-depth customer or consumer research is to do a Customer Address and Transaction (CAT) survey. This survey is conducted by asking store customers where they live and how much they spent on their particular shopping trip. It sounds quite simple, but the data gathered from those two questions can tell you a lot about your business, and give you different views into your co-op’s performance in a number of areas.
The information gathered from a CAT survey can determine your store’s sales distribution and your current trade area. By defining your geographic trade area, you can then map out how many competitors are in your trade area. With this information you can determine if you are drawing customers past your competitors, or if your competitor is drawing people away from yours.
Suassuna said that with geographic trade area information, you can further investigate lifestyle or demographic characteristics of the customers in your trade area, and become better equipped to reach them. The CAT survey can also add on other questions; for example, whether the shopper is a member or not, or where they are coming from. “I’d especially ask this if my business was near downtown or a university. Are they coming to shop from home, an office or a school? Are they shopping because they are maximizing trips with another business nearby? All this CAT data represents an opportunity for retailers to do sales promotions that will be most effective,” she said.
Additionally, one of the most invaluable pieces of information from a CAT survey is finding gaps or pockets of underperforming sales in your trade area, and this is often something you can’t learn by intuition, nor make assumptions about. “This is the one thing that often surprises general managers. Sometimes there isn’t an obvious reason for why one area is underperforming,” Suassuna said. “Once you have that info it will weigh heavily on the promotions you choose, either to put more dollars into existing strong customer areas, or reach out to new ones.”
Most food co-ops also do some kind of customer research in the form of member surveys. Suassuna believes doing them every other year is important, although she pointed out that the results of member surveys are often biased positively because the respondents are usually people who already like your store.
It’s the underperforming pockets in a trade area that generally encourage retailers to take the next step in their data-gathering. You’ll want to find out from consumers at-large why they are not shopping in your store, especially if your trade area seems to have the right demographic, but is not reaching maximum sales performance levels in certain areas.
There are lots of methods for conducting this sort of consumer research: telephone surveys, mailings, focus groups, etc. and depending on your budget and the scope of your approach, retailers can do some of it themselves. For example, getting household phone numbers in a zip code or trade area and calling to find out general perceptions of the food co-op. Although Suassuna said reasons stores underperform in certain areas may vary, they are generally related to these four things:
The co-op is suffering from a lack of consumer awareness. Most consumer research shows the vast majority of people find out about a retailer by driving or walking by. A co-op may not be visible enough, either through its geographic location and/or outreach efforts.
The consumer doesn’t understand “co-op.” Misinformation can hold people back from shopping at the co-op. “This would be a case where you’d want educate people about the services and values of the co-op,” Suassuna said.
Perception of high prices. It’s important to correct any misperceptions and promote the value of shopping at the co-op (i.e. emphasize your competitive advantage) with that group of people, Suassuna noted.
Already familiar with a different store. “Sometimes it’s just human nature. People don’t want to change or switch,” Suassuna said, “You’ll have to find ways to entice them to try shopping your store.”
With consumer research results, you gain knowledge of how your store is perceived by noncustomers and why they shop competitors. “Perceptions shape consumer shopping habits and management can respond to that. You can change something if it’s negative and tout it if it’s positive,” Suassuna said.
On every account, all the tools of research justify the investment in a food co-op’s continued development, and are embraced by successful businesses as a best-practice. In the grocery industry who can afford not to? Competitors, especially chains, are doing whatever it takes to build sales and shape customer perceptions by doing ongoing customer and consumer research. “What management sees isn’t necessarily a customer’s reality. Being more enlightened about that will give you an advantage in your market area,” Suassuna said.
Board leadership development consultant Marilyn Scholl also said that efforts to build sales and reach out to the community are part and parcel of delivering on the co-op’s ends or mission. “Doing these types of surveys help you find a story to tell about your co-op that resonates with consumers,” she said. “Otherwise how do you know who is not getting the message? Customers need to know why it matters that they shop at the co-op. Having data and making good decisions with it helps your co-op communicate its cooperative advantage.”
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