Todd Lebo

Marketing Research: Cold, hard cash versus focus groups

December 9th, 2010

“The best research is when individuals pull out their wallet and vote with cold, hard cash.” – my first boss

My first experience in marketing was working with a specialized publishing company. I had the privilege to work on exciting products with sexy topics such as “human resource compliance regulations.” Trust me when I tell you there is no better ice-breaker at a party than talking about a ground-breaking court ruling that will change how your company meets compliance of the Fair Labor Standards Act (FLSA).

As a publisher, we used direct-response marketing to drive sales, with an aggressive program of direct-mail, email and telemarketing. And when it came to new product development, we were big believers in research. From customer surveys to industry research to focus groups, we used it all to make the best possible decision. At least, that was the general assumption…

Out of focus

You always have to test because many research tactics just help you achieve a best guess. And while a best guess is often closer to the truth than a random guess, it’s sometimes widely off the mark. In fact, I learned a valuable lesson one day when our company performed a focus group.

The members of this particular focus group were subscribers of a paid newsletter, and we knew that each person had subscribed by responding to a specific direct mail piece. That mail piece was extremely effective, with a powerful but somewhat provocative subject line and letter. Many people loved that direct-mail piece, but many hated it, so we wanted to get the opinion of the focus group members. When we showed the group the direct-mail piece and asked them if they would respond to that piece, 40 percent said they would never respond (if they only knew what we knew). Wow, we were shocked!

So, should we conclude that those 40% were bold-faced liars? Not necessarily. What we can conclude is that what people say they will do and what they actually do may be totally different. That is why research is only part of the equation, but if you want to sleep well at night, you have to take the next step…

Voting with their wallets

At the end of the day, the best research was when we tested the product and let the customers in the marketplace determine with their wallet if it was a viable product. We would test critical elements, like book title and price, and very quickly we would know if we had a winner or not.

Yes, all of the surveys and research were necessary to get started, but the most critical research was in our testing program. Testing is an amazing research tool. Regardless of the conversion you are trying to achieve, when your prospect takes (or doesn’t take) an action, you a have a valuable piece of information. Your conversion goal may be an event ticket sale, a white paper download, an email newsletter signup, or hundreds of other possible actions, but one thing never changes – the action you are seeking to drive can be tracked.

And if you’re ready to measure when your prospect engages with you, that is when the learning begins.

So, I’m thankful for that boss early in my career telling me repeatedly that the best research is when individuals pull out their wallet and vote with cold-hard cash. Over the years, I’ve had many experiences when individuals tell me they are going to do something but until they actually do it, I’m a little skeptical. (Editor’s Note: It’s true. Todd told me he was going to write a blog post for quite awhile. Now, I believe it.)

So gather as much research as possible, but always remember that cold, hard cash is a pretty sweet piece of research.

Related resources

Are Surveys Misleading? 7 Questions for Better Market Research (Members Library)

Marketing Research and Surveys: There are no secrets to online marketing success in this blog post

Focus Groups Vs. Reality: Would you buy a product that doesn’t exist with pretend money you don’t have?

Never Pull Sofa Duty Again: Stop guessing what your audience wants and start asking

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Research And Measurement



  1. December 9th, 2010 at 09:40 | #1

    Great thought leadership, Todd. I’ve also found that the integration of online/offline campaigns creates a second layer of testing. Namely, what does it take for the consumer to fill in the fields of information for a conversion (sale) and when does the consumer abandon the landing page! My company, Thor Associates (www.thorassociates.com) works every day to increase ROI for our clients based on conversions, or as you say, taking out the wallet and committing cold hard cash!

    Happy Holidays,
    Fern Lee

  2. December 10th, 2010 at 09:21 | #2

    Todd:
    Very motivational! Tell it like it is.

  3. December 10th, 2010 at 11:00 | #3

    Fern, you bring up an excellent point on the power of optimizing your landing pages and forms. Testing allows marketers to “raise the bar” on all of your conversion goals. There is a great article and audio presentation from MarketingExperiments on the compounding ROI of sequential conversion testing. http://www.marketingexperiments.com/marketing-optimization/compounding-roi-sequential-conversion-increases.html

  4. February 19th, 2011 at 03:21 | #4

    It is often necessary to commission marketing research to estimate total market size and calculate a company’s market share. Share often is associated with profitability…..

  1. December 10th, 2010 at 10:26 | #1
  2. February 25th, 2011 at 03:03 | #2