Editor's Note

MR Perspectives is a twice-monthly newsletter that provides perspectives on market research topics of interest, best practices tips, emerging trends, quick case studies, and other useful information.

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June 9-11, 2004 Boston

MRA Annual Conference

The Marketing Research Association will hold its annual conference and symposium at the Sheraton Boston Hotel. The theme is Absolute Impact.

June 13-18, 2004

South Bend, IN

School of Marketing Research

The American Marketing Association is hosting a five-day course on in marketing research aimed at first-level research managers new to the field. The course will be held at Notre Dame University.

June 17-18, 2004

New York

Technology Conference

The Council of American Survey Research Organizations (CASRO) is holding its annual two-day conference on technology in the research industry at the Roosevelt Hotel in New York.

June 17-18, 218, 2004

Atlanta-AMA Officer

Cameron Cramer, Polaris' director of sales and marketing, has been reelected to a one-year term as chairman of the Atlanta chapter of the American Marketing Association's Market Research Special Interest Group. Cramer was involved in founding the SIG last year and served as its initial chair. The group includes about 100 Atlanta area marketing research professionals who meet bimonthly to discuss issues of interest to the industry. Chris Evertt, the AMA's national vice president, said the success of Atlanta's marketing research SIG is rare among the national organization's chapters.

Creating a Customer Retention/ Churn Research Program

Following up on our earlier discussion (issue #8), customer churn rate is a measure adopted by many service industries to describe the percentage of deactivated customers divided by total customers. A two percent change in churn rate realistically translates into six months of service per customer, so measuring churn rate and the factors that lead to customer churn can be critical to the health of a company.

If you are like most companies, you have a good understanding of what your churn rate is, but do you know which key factors are affecting customer churn and to what degree? 

If your company is truly dedicated to customer retention and decreasing customer churn, what are the logical steps you should take? Below is a quick list of action items that you can take in helping to improve. Many larger service oriented companies take each of the steps below, but other companies can clearly benefit from a scaled down program. 

• Company Data -- Calculate and baseline churn rate by dividing lost customers by total customers.
• Marketing Research -- Benchmark survey of lost customers about why they left, where they went, etc.
• Marketing Research -- Create a vulnerable "lost customer" profile and map that profile to your current customer database in order to flag vulnerable segments.
• Marketing Research -- Create a monthly/quarterly ongoing tracking survey program with lost customers to track performance on key measures over time.
• Marketing -- Develop special marketing programs targeted to vulnerable customer segments.
• Company Data -- Track performance and retention rates for total and vulnerable customers over time.
• Marketing Research -- Survey vulnerable customers well before they become lost customers about their satisfaction, to find out what makes them stay and what makes them go.
• Marketing -- Take all of the knowledge you've developed and make changes.
• Marketing Research/Marketing -- Revise and refresh survey programs with lost customers (and vulnerable customers if applicable), and continue to re-segment and recreate new marketing to help in customer retention efforts.

Cheap Collection Not Always A Bargain

How important is low cost in selecting a data collection supplier? You might expect it to be a relatively important selection factor, but a recent survey of marketing research industry professionals who purchase data collection services found that lowest price was not even one of the top ten factors they considered. 

Pioneer Marketing Research, DialTek, LP, and BayaSoft sponsored the 2004 Research Industry Trends Study among organizations involved with the data collection side of the marketing research industry. In findings similar to last year's survey, they found that researchers who manage the data collection process look mostly for high quality work, keeping on schedule, having knowledgeable staff, rapid response to requests and a good reputation in the industry. Rounding out the top ten were flexibility, familiarity with their needs, breadth of experience and length of time in the business, as well as use of sophisticated technologies.

So, if researchers have to pass along data collection costs to their clients or take those dollars directly from their budgets, why do they rank lowest price only 13th among the 14 selection factors? Simple: they realize the knowledge and intelligence that comes out of a particular research project is completely contingent upon the quality of the data. 

Poor quality data is completely unusable, leading to incorrect and uninformed strategic business decisions. And high-quality data collection often costs more to provide. With telephone surveys, for example, the cost-per-complete must include not only interviewer time but also quality driven costs such as training, monitoring, error checking and supervising. 

All things being equal, lower price is a great way to make a selection, especially when it is hard to compare companies on such top ten factors as whether they stay on schedule or provide rapid response to requests. Do your homework, ask lots of questions, check references and, remember, with the lowest cost, sometimes you get what you pay for.

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