Good Data Is Everything!

The strongest criticism against GoI is that the data once sacrosanct seems to be “modified” to suit the government’s political agenda. A government should never be revising the independent data collection and dissemination to suit its motives as all stakeholders including businesses and individuals rely on this data for all planning.

The importance of good data in business can never be over-emphasised. The current controversy on employment data that GoI didn’t publish over six months is a case in point.

Access to the right data is critical for businesses, perhaps not for policymakers and politicians. In the last decade in India and across the world, customers have gained extraordinary power in the buyer-seller relationship. Yet, many strategy-level executives are reluctant to use marketing research to help gain an understanding of that power, because they have not found such research useful in the past. That reluctance must be overcome, because in the new political regime where PR and imagery are everything, it is all the more important for businesses to find proper data that are not churned out by partisan agencies. There is no substitute for collecting important strategic information directly from the marketplace.

A combination of events over the last few years have made it more difficult than ever to compete: As the world became flatter and more businesses viewed their markets as without borders, more competitors were attracted to the more lucrative markets across the world be it USA, Europe or China. Many companies have entered India too as trade barriers broke down and investments have become easier. Many domestic companies found new competitors in previously stable markets, and the retail revolution consolidated the major players into a few giants, moving the power in the supply chain toward the end customer. The implications of this shift reverberated all the way back up the supply chain and even to the B2B arena. On its heels, the Internet made information about product specifications, prices, inventories, suppliers and everything else a buyer needs to know to wield power over sellers readily available. The result is many more “perfect” markets and customers who know more about what they want to buy than most individual suppliers do.

Knowledge is power, as the saying goes, and knowing more about what customers want is the basis of competitive advantage for suppliers in this new marketplace. One would expect, then, that marketing and planning executives would be hungry for more information about what customers are thinking. Unfortunately, many of them have taken marketing research off their action lists because of poor previous experiences, full of impressive statistics and fancy diagrams but sorely lacking in useful information. Having found no better alternative to bad marketing research, many of these executives have chosen to believe that “I know what my customers want.” That’s dangerous, because the information they are working with is probably faulty for several reasons:

· The information is not raw and probably filtered. Rarely do top executives gather a representative quantity of data directly from customers, relying instead on the information provided by their salespeople, marketing managers, and, at best, front-line service delivery people. The problem is that such sources may be filtering the information that reaches the decision maker. Each of those employee groups operates on its own agenda, which may include such matters as sales quotas, job security and incentive compensation. The information employees provide is important to top-level, but it may not include what they need to know about customers.

· The information may be biased. When they do receive information directly from customers, it is too often clouded by confusing messages being sent to the executives. In some cases, customers believe that every communication with a supplier is a part of a larger negotiation process; they would never intentionally let their guard down and admit that the supplier is doing a pretty good job at a reasonable price. Or, on the flip side, many customers don't want to hurt anybody’s feelings. Even as much as most suppliers want customers to complain to them first so that they can fix problems before competitors do, some customers would rather take what they view as the easier path and look elsewhere for something better.

· The information is based only on facts. This doesn't sound like a problem, but it can be disastrous to a seller, because customers don't always make decisions based on facts. For example, an executive may base his decisions on the fact that the number of product defects being shipped from his plant is low, which would be irrelevant information if customers think those products aren’t working quite right. The objective for any company is to benefit from customer purchasing decisions, and executives must remember that those decisions are based on the customers’ perceptions, not the facts as they're being reported by the supplier’s internal accounting or production systems.

Bad inferences are made from good data. For example, customers typically want lower prices. When customers communicate that to suppliers, however, it doesn’t necessarily mean that the only appropriate response is to reduce prices. When customers say they want a lower price, in addition to the negotiation gesture, it usually means that they don’t perceive the value of the offer justifies the price, and there are many ways to respond to that problem. Executives who haven't used good marketing research for a while often have mentally moved from the original data “There is a problem with value perception.” to a bad inference “They won’t be happy until we cut prices.”

Conducting and using good marketing research is more important now than ever.

Customers have unprecedented power in the buyer-seller relationship and, through that, have earned the right to define value the way they wish.

(The author spearheads execution and innovation for clients @CustomerLab)