June 26, 2012

by Mike Karst, Entira

Blockbuster Video was one of the most talked about business implosions of 2010-2011. As the company moved from bankruptcy to being acquired by Dish Network, business media pondered why the once king of video rentals fell so far, so fast.

Blockbuster lost big to the more customer-centric model of Netflix—a company founded by a former Blockbuster customer after having a bad experience in a Blockbuster store. But fast-forward a few months, and suddenly Netflix is in the spotlight after grossly underestimating its customers’ response to a price increase. Customers reacted negatively to the 60 percent price hike, and Netflix not only lost 800,000 customers virtually overnight, its satisfaction rating tanked by 14 points in the last quarter of 2011, according to the American Consumer Satisfaction Index.

Netflix dropped the price increase and is showing signs of recovery. But other pressures are forcing the company to rethink its model or face more alienation of its customer following. Customer expectations change quickly. Case in point: Blockbuster started as a successful response to changes in how consumers wanted to view movies—at home. That evolved to the Netflix model—movies at home, but with no penalty of late fees. The home entertainment environment and customer expectations continue to progress, today seeing growing popularity of the Redbox kiosk market and on-demand style of Hulu.

The lesson here? No matter how innovative your idea or how successful your business has been, you must continually keep in tune with what your customers are needing, wanting and expecting. It may be changing faster than you realize. And, if you’re failing to meet your customers’ expectations, the best case scenario is that they’ll tell you about it. More than likely, however, they’ll tell everyone else about it—whether at the local coffee shop or on Facebook and Twitter—then they’ll leave you for a competitor.

Agribusinesses are faced with the most celebrated period of change since the introduction of synthetic fertilizers. What’s on your customers’ minds these days, and how will your business respond?

There is no shortage of customer disconnect examples in agriculture.  In fact, Entira partners and associates have had our own challenges in dealing with ag companies, from an equipment company that is unresponsive to customer issues to a lender that is adding to the challenges of rebuilding after a natural disaster. Who among your customers might be quietly growing frustrated and looking to your competitors for new options?

This isn’t the first time we’ve encouraged you to get a better understanding of your customers. Remember “Talk to a Farmer Day”? If you’re not sure what they’re thinking these days, it might be time to give your relationship a check-up. Talking to your customers is a good start, but it takes a disciplined and comprehensive process to truly understand and address any disconnect between your company’s brand promise and your customers’ real experiences.

Our perspective at Entira is that this process has several parts:

  • First is the research process to identify and quantify the disconnect between customers and a brand.
  • Next, you need to analyze your touchpoints with customers.
  • The final phase is to design and implement solutions to solidify your customer relationships.

In this article we’ll dig in to the first step: Research. Begin with qualitative research, tapping into a representative sample of key audiences, including customers, retailers or distributors, and employees.  You cannot overlook the value of hearing from your employees. Companies often skip their employees when conducting research, but at Entira we believe they are a critical foundation. Your employees and sales force are your direct connection to customers, and how employees view the company is how they represent it.

As the name suggests, the goal of qualitative research is “quality, not quantity.” A 5-minute phone survey will not suffice. Qualitative research can include in-depth interviews or focus groups led by an experienced facilitator. A good facilitator understands agriculture and the participants’ business. He or she follows a discussion guide, but gives a customer the opportunity to drive the conversation and highlight their needs, decision-making process and impressions of both your company and your competitors. Qualitative interviews often last well over an hour, and feedback from some interviewees also helps them think about their business in a new way.

The feedback from the qualitative interviews can be consolidated into a number of top findings: the themes that facilitators heard again and again. These insights are valuable, but must be tested on a broader scale through a quantitative research study.

Well-designed quantitative research can test everything from a company’s product performance to how well its customer service and pricing matches up with competitors and exactly where a customer disconnect is occurring. By distributing research across geographic areas and customer segments, you’ll also be able to see whether issues are present across the country, or in specific markets.

Quantitative research can be conducted with a variety of survey tools: online, phone, or in person at company or industry events. The goal is to keep the survey as focused and simple as possible, while still including enough questions to validate findings.

At Entira, we know that cookie cutter programs don’t work. Our experienced team works with clients to design research programs specific to each company’s product portfolio and customer base.

In an upcoming issue, we’ll delve into that second step in the process of identifying and addressing customer disconnects, which is to analyze all the ways your messages are delivered to customers. In the meantime, contact me at 901.753.0470 or mkarst@entira.net if you’d like to talk about research programs that fit your customer base.

This article appeared in the March 2012 issue of Strategic Agribusiness Review.