Market leaders know how important it is to understand the wants, needs and habits of their own company’s customers. They know which segments purchase which products. They also understand how satisfaction and loyalty differ, needs and wants vary, and revenue, profit and market size change among the various segments.

True leading-edge marketers also regularly take the pulse of their competitors’ customers. They strive to understand:

• What customer segment(s) does each competitor serve?
• How do needs and behaviors differ among segments?
• What is the average revenue per customer for each competitor?
• What is the average revenue per customer, by segment, for each competitor?
• What are the satisfaction and loyalty scores per competitor customer segment?

Best of all, you don’t need to stand outside your competitors’ stores and quiz customers as they emerge. By using the latest survey tools and technologies, you can glean valuable information about potential opportunities.

Survey Your Competitors’ Customers As Well As Your Own

Some companies think the best way to gauge consumer satisfaction with competitors is to ask their own customers what they think of these other companies. This is not a valid strategic approach as it can lead to seriously skewed data. After all, these are already your loyal customers and they have their reasons for choosing you. But you want to know why other consumers did not choose you. Additionally, typically if a customer is regularly using your products, they’re NOT using a competitor’s, so they usually have no valid base on which to offer feedback. Finally, sometimes it’s just human nature for a customer to tell you what they think you want to hear vs. a more objective opinion.

Four Approaches to Learning More about Competitors’ Customers

1. You can compare your customers’ satisfaction with your company vs. your competition’s customers’ satisfaction with their companies. One key difference: you survey your competitors’ customers for their data — not your own. The biggest challenge here may be obtaining a list of your competitors’ customers.
2. Alternatively, you can compare your own survey results to those of similar companies—even if they’re not direct competitors. For example, an application software company can compare survey results to those of other application software companies. While this method enables you to develop a benchmark and understand how you compare, it isn’t as effective as the previous method.
3. You can compare customers’ satisfaction versus their expectations to understand how important particular factors are to your customers and how satisfied they are with your performance. You can then focus on the differences between expectations and ultimate satisfaction. Viewing the results in this way allows you to see which factors are most likely to affect the customer’s loyalty, which can help you prioritize your efforts.
4. Finally, you can ask your customers to compare your company’s performance with providers of other product or service providers in related areas. For the reasons listed above, they may not be able to compare you to your direct competitors. Still, for example, a customer of a software company may be able to compare them with providers of other IT solutions, such as hardware or service components.

Case Study Example: ABC Software

ABC Software creates software for doctors’ offices. After analyzing and surveying its customers over the years, it has gained a fairly good understanding of the different types of customer segments it serves, how the needs and behaviors of each segment differ, and how satisfaction and loyalty levels differ by segment. It also has an exact understanding of what the average revenue per customer is in each segment.

To identify market opportunities, ABC is looking to attract customers from competitors, but it has no information on where to begin. It follows these steps:

1. ABC purchases customer lists from two marketing companies of all doctors’ offices in the US.
2. ABC then matches the lists up against its own customer list, removing its current customers. ABC now has a list of its competitors’ customers. It’s time to “dig deep.”
3. ABC randomly picks 2000 prospects from the industry list.
4. ABC surveys these 2000 offices:

• Which competitor’s software do they use?
• How much do they spend per year on this and other software?
• How do they use the software (to understand needs and behavior)?
• How satisfied are they with the software they currently use?
• How likely are they to recommend their current software provider to another doctor’s office?

As a result, ABC develops a deep understanding of:

• Its competitor’s customers
• Its competitor’s satisfaction and loyalty levels by segment
• Market size of each segment: number of customers by segment, average revenue by segment and average revenue by segment by competitor
• Segments least satisfied with their software providers (data on which they can begin formulating a growth strategy)

You can see where this is going. Most companies never set out to develop such a deep understanding of their customers, competitor’s customers, and markets — but many of those who do end up in industry leadership positions.

What Specifically Should You Ask Competitors’ Customers

Naturally, each business can list different factors that make up customer satisfaction and perceptions. Start by listing all the factors that make up a customer’s experience in learning about the product, going through the sales and marketing process, the purchasing process, setup of the product if relevant and, finally, questions about using the product. Also, make sure you include questions on satisfaction, loyalty, average revenue, needs and behavior. Again, if you’re a software company, you might compare the opinions of your customers vs. competitors’ customers on pricing, ease of use, value for the money, availability of all needed features, ease of training, etc.

With this data in hand, you’ll be able to:

• Understand the market’s different customer segments
• Understand how each segment differs
• Understand the size of each segment, the average revenue per customer in each segment and, finally, how big each segment is in terms of revenue
• Understand competitors’ weak points that can be leveraged it in all kinds of ways—marketing, training, sales presentations and more.

You can also pull data by segment to drill down and make more important discoveries about how you can improve your products, services and overall customer satisfaction with your company. Keep in mind that this is not an easy exercise, but once you do it, and do it right, you’ll be way ahead of your competition in growing your business.

Consider Seeking an Expert for Assistance

Of course, working with a specialized survey partner might cost more than doing the survey in-house, but the results are much more likely to be based on proven, scientific methodologies. SurveyMethods is a pioneer in providing simple, cost-efficient online survey technologies to companies of all sizes. If you need help in creating and implementing your research strategy, contact us today!