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Reading the Minds of Customers
Use "derived importance" to find out what matters most.
Posted Aug 19, 2008
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Your customers don't always have a keen awareness of what motivates their purchasing decisions -- but you should. When you understand your customers' hidden desires, you establish a key competitive advantage that should guide the strategy for marketing your products and services -- a key to building revenue in today's competitive business environment.

Derived importance is the discipline of examining trends in customer behavior to gain insight into the attitudes and perceptions that influence customer action. Derived importance looks to find the correlation between independent variables (such as cost, pricing, product quality, and customer service) and dependent variables (such as new or repeat purchases, brand loyalty, and market share).

For example, you can ask your customers a question such as, "On a scale of 1 to 5, how important is product packaging in your purchasing decision?" Customers may score packaging as a low factor in their decision-making process. But when your customers are presented with product images and details, you might discover that most customers will choose a product with attractive packaging over another product, even when all other factors are the same. The point is, your customers are not always in tune with the factors that drive them to make a purchase. In these cases, it is necessary to interpret the importance of these variables through action rather than opinion alone.

To get at the core of what is influencing your customers' attitudes, behavior, and decisions, there are two useful analysis methods that deliver unique insights to each type of specialized business challenge: product moment correlation and regression analysis.

Define Decision Drivers through Product Moment Correlation
Product moment correlation identifies the biggest motivators in a customer's thought process -- and the biggest drivers that can grow your business. It builds perspective by answering essential questions such as:

  • Are consumers' perceptions of quality and price related?
  • How strongly are sales related to the current advertising campaign?
  • Is there any association between market share and the size of the sales force?
  • What bearing does customer support have on customer loyalty?

Product moment correlation looks to determine covariance -- a systematic relationship where a change in one variable implies a corresponding change in another. It's the "a-ha" moment that reveals what factors are the true key players in attracting and retaining customers.

Build a Deeper Understanding of the Customer through Regression Analysis
Regression analysis will typically identify the same consumer drivers as product moment correlation does, but it's more useful in determining the degree of influence each independent variable holds. It answers questions such as:

  • Can a variation in sales be explained by a variation in advertising expenditures? If so, what is the structure and depth of this relationship?
  • Can a specific variation in market share be accounted for by the size of the sales force?
  • How are consumers' perceptions of quality determined by their perceptions of price (as opposed to just discovering if a relationship exists)?

Faster and More Affordable -- Online Research
When performing a regression or correlation analysis, the latest online tools are more compelling than traditional paper or phone methods for one simple reason: Online tools can perform regression and correlation analyses with ease.

When you execute a survey online, the creation, distribution, validation, and tabulation tasks are typically handled with the push of a button. Additionally, online survey systems can perform the analysis and present the information through intuitive charts and graphs in real time -- reducing researcher workload and enabling marketers to make the most-informed judgments as quickly as possible. In short, you see faster return on your marketing investment.

Derived Importance -- the Looking Glass into Customer Behavior
Derived importance can be your crystal ball to see what makes customers want to buy -- and what will make your product or service something they can't live without. If you select the right method of analysis to help you make your data sing, you'll be amazed at how targeted and precise your strategic business decisions will become. Derived importance is the divining rod you need to balance the customer equation with the right programs and offers to keep them coming back for more.


About the author
Jared Heyman is the founder and CEO of Infosurv (www.infosurv.com)
, a full-service research firm established in Atlanta in 1998. Heyman, who holds a B.B.A. from the University of Texas at Austin in business honors and marketing research, has overseen employee and customer satisfaction surveys for a long list of Fortune 500 corporations, major government agencies, smaller companies, and nonprofit organizations.


Please note that the Viewpoints listed in CRM magazine and appearing on destinationCRM.com represent the perspective of the authors, and not necessarily those of the magazine or its editors. If you would like to submit a Viewpoint for consideration, please email viewpoints@destinationCRM.com.

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