Taking the Guesswork Out of Marketing

Research in marketing is the study of behaviors – why people do what they do. This is precisely why there will always be research: it is impossible to tell why people do what they do and then predict with any consistency what they will do (but don’t tell researchers this!). Of course, there is a certain amount of truth to research. That is, research can help narrow the choices. But, complete accuracy?

Research is a way to help make better marketing decisions because it gives some insight. It takes some of the guesswork out, and helps ensure success (not guarantee it). For instance, direct marketers are great users of research. For example, researchers may mail 100 surveys and get ten responses back. Next, they would figure out why the ten replied and then test different offers to see if they can get 11 back.

One of the techniques they use is called Recency, Frequency and Monetary value research, known and RFM. This is a way of looking at a set of data in order to understand customer behaviors better. Recency looks at the customer file in terms of those who have purchased more recently. Frequency looks at customers who purchase the most often. Monetary value looks at customers who buy “the most.” When you do this kind of research, additional questions come out, such as: why are the most frequent customers not on the same list as the Monetary list? Or why the most recent customers purchase now, rather than a week ago?

You should be doing research ALL the time to find out why your customers do business with you AND why they don’t do business with you. Any “Yes” or “No” answer should be followed up with a “Why?” in order to understand the consumer better. While you probably do not need RFM analysis, it’s good to know about it because it applies to you in a very important way (telling you which customers are recent, frequent and give you monetary value more than others; understanding those will help you find more of them!).