Why Didn't I Do This Earlier? The Importance of Customer Surveys

 In a previous post, I spoke about the importance of having a vision when establishing a business, and I explained why it was important. I said that it motivates you to stay the course when the going gets tough and serves as a reminder every day of why you have chosen the path you are on. 

But, a vision can also be a double edged sword, in the sense that it is very easy to assume that your views and attitudes match that of your customers, or to believe that your views are shared by most of the participants of the markertplace in which you are operating. Conversely, it is easy, when the going gets tough to pivot away from a solid idea because you have become convinced that the market is not interested in it, when in fact you were right to pursue your vision all along. 

I have always heard about the importance of surveying customers and explicitly asking for their feedback, and yet it is only just this week that I sent my first customer survey. So, why did it take me so long? More importantly, what have I learned so far? The answer to those two questions are the subject of this post.

One reason I didn't send a survey out was that I wasn't confident that customers would complete it. Another was that I didn't feel confident that I would craft the right questions to elicit the information I needed, and yet another was that I felt that because I had started a weekly auction, that the auction results and loyalty or attrition of customers would tell me how well I was serving their needs. My thinking was simple: if I was getting high realizations and doing well then I must be doing the right things. 

But I believe now that there was a much stronger reason behind my failure to survey my customers, if I am being 100% honest with myself: I was afraid that their answers would indicate that they wanted me to change what I was doing and to become more like my competitors, and that doing so would require me to abandon my vision, which had become my very reason for being in business, and I didn't want to change. A lot of us start businesses because we want to call the shots, want to do things our way. If we allow our customers to tell us how to run our businesses, then aren't we really working for them and not ourselves? I think that is a very natural way to view things and I'll bet that it is probably the true reason holding a lot of entrepreneurs from surveying their client base. 

In following my vision to offer weekly themed auctions, I have achieved some measure of success, but it has come at great cost:

• I often don't finish the week until 4:00am on Friday, which is really Saturday, and hence not sustainable, for a number of reasons.
• I have neglected most aspects of my business that do not have to do with the auction, and while the auction is imortant, so are all these other aspects of the business. 
• There are other potential money making ideas and ideas to solidify my presence as a leader in Canadian philately, such as producing my own catalogue or deluxe line of stamp albums, that are not moving forward.
• I am running out of higher value inventory and have to start buying more inventory.
• The retail section of the website is a mess, with old listings cluttering up the site and driving people away. 
• I wanted to start producing stamp videos for a Youtube channel that would discuss all manner of stamp related topics, but have had literally no time. 

So, it started to become apparent that running 2 themes a week for a 300 lot weekly auction is not sustainable, at least not unless we schedule some breaks in the schedule to allow us to catch up on other important tasks. Immediately, that realization set in motion a panic: what will my customers think? I can't scale back! I have an expectation that I must meet every week. Surely my customers have gotten used to my themes and will come to expect them. 

But all the above has made clear that for the business to survive and thrive and for me to find the right work-life balance, it would be essential to make some decisions around:

• Whether taking a break in the themes would be advisable.
• Whether or not to even have a retail section on the website.
• Whether or not to maintain the blogs, and other information resources.
• Whether or not to pursue the production of a catalogue or stamp albums. 
• Whether or not to produce videos. 
• Which inventory to buy. 

And so forth. 

Up until now I made all those decisions based on what I felt I knew about the market, and my customers. However doing that led me here. I pivoted away from retail after leaving E-bay because my retail inventory had so few sales, and the auction was the only way to jumpstart the business, engage the customers and make a level of sales that would make the business viable. I had started to conclude that maybe online retail just wasn't viable anymore. Maybe most collectors simply wanted to buy from e-Bay. I had assumed that my themes were what set me apart from my competition and that under no circumstances could I have minimum bids in my auctions, lest I drive all the customers away. Finally, because my sales have levelled off, I assumed that introducing higher value material was the only way to increase revenue.

I was also beginning to despair, because buying high value material is very expensive and highly competitive at auction these days and because of this, it is not really possible to buy at auction for say 10-15% of catlalogue, in bulk, anymore. COVID has increased demand for stamps so much that competition is pushing what used to be available for 10-15%, up to 25-35%. You can't buy at that percentage with a 20% buyer's premium and then put the material in an unreserved auction and expect to make money. For one thing, that 25-30% becomes 30-36% after the buyer's premium, 31-37% after adding shipping, and if it is a US auction, it becomes 40.3-48.1% after exchange. At this level, the bidding in an unreserved auction is unlikely to result in an overall profit, but instead a break-even on the purchase cost, in the best case scenario. Given other overhead, like wages and the like and you are looking at a financial loss overall. So, I started thinking that I wasn't going to be able to grow the auction once my better inventory ran out. 

But what if I was wrong?

Wasn't it time to go to my customers, the ones I have a relationship with and ask them? If they would all answer me honestly, then I could get definitive answers to some very key questions that would allow me to make the right decisions. Questions like:

• Do most of my customers actually prefer to buy their stamps at auction?
• Do they care about the information resources on the website and do they actually use them?
• If they do use the information resources are they happy with them?
• Are the themes really that important to customers? or just to me?
• Do customers only pay a fixed percentage of catalogue, or will they consider other factors?
• Do my customers actually want more high value material in the auction?

So, yesterday I sent an e-mail telling my most loyal, regular customers that I would be putting the themes on hold for 6 weeks in June and that I would be sending out a short survey and would offer them 10% off their next order if they would take the time to complete it. 

I went about designing a 16 question survey that was all multiple choice and tick the box style. I avoided any written questions, as I trust my loyal customers to not just pick random answers and to actually answer it honestly. But I wanted to respect their time and come up with something that a customer could complete in under 5 minutes. 

It took a couple of hours to design the right questions, but then I was done and I sent it out using my e-mail program as a live survey page. Within 15 minutes the results started to come in. As I write I have 35 responses out of the 70 names on my loyal customer list. Not bad at all. But what is most important are what the answers reveal and whether they comport with what I would have thought my customers would say:

• 90% use the website the most for the auction - no surprises there.
• 30% of respondents make regular use of the blog articles and other information resources - that is higher than what I thought.
• More than 50% of respondents named the selection of material as the thing they liked most about the auction, followed by another 20% that liked the lot descriptions best. Only 30% named price related considerations like a lack of reserves, $1 minimums and so forth as the thing they liked most - this was a huge surprise, as I had assumed that my no reserve $1 minimum bid was the key to keeping customers loyal.
• One third of the 70% above said that while it wasn't the most important thing, favourable bidding terms like no reserves and $1 increments were still important to them - this is not surprising.
• 65% of respondents were happy with the current size of the auction, with the remainder being evenly split between more lots and fewer lots. I didn't have any idea what to expect here. 
• 92% or respondents said that my current mix of high and low value material was perfect and did not need to be altered - this was a huge surprise, as I was convinced they were all wanting more high value material.
• Just under 50% of respondents said they wanted more pre-1950 VFNH Canada. The majority actually indicated they wanted to see more VF to superb used Canada. While twice as many wanted this material to be pre-1950, just under 20% of respondents want to see more VF used modern Canada.  - this was a surprise too as I would have expected VFNH to beat out VF used by a large margin and yet it used was in just as much demand as mint NH.
• 2/3rds of respondents want to see more Canada, but it doesn't matter what period it is from. In addition almost 50% want to see more pre-1952 British Commonwealth, and then about 1/3rd want to see more Western Europe and Elizabethan Commonwealth. These were massive surprises coming from a client base that I thought of as mostly experienced Canada collectors. First of all, they aren't wanting just earlier Canada, and secondly they have interests all over the world. Every region that I specified in the question was chosen by at least 2 people. This tells me that for many areas I will have to attract more bidders in order to have a successful auction, but that the potential market is there.
• Only 13% care strongly about the themes. The majority like them, but would still view the auction if there were no themes and almost a third don't care about them at all - this was a huge surprise again, as I could have sworn that the themes are a critical differentiating point. 
• Only 13% buy exclusively at auction. The remanider have indicated that they will buy at either auction or retail - another shock, as I had thought that retail for stamps was dead for any dealer that didn't already have a long-established customer base. 
• Only 23% determine a stamp's value based on a percentage of catalogue. The rest consider other factors, such as eye appeal, condition, budget etc. This was also a shock - I knew there were some collectors who considered other factors, but I honestly expected 80% to tell me that a percentage of catalogue was how they determined their bids. 
• 91% were happy with the depth of coverage in the blog articles and 65% would be happy with one article a month, with another 24% being fine with biweekly posts. This was not a surprise, in terms of the depth of coverage, but it was surprising that most were not expecting weekly articles.
• 75% didn't even know the community discussion forum exists, but those who did all found it useful. There wasn't a single respondent who said they didn't like the forum, or find it useful. Here I wasn't sure what to expect, but I thought most had seen it and just didn't find it useful. I was wrong. 
• 81% are very likely or somewhat likely to watch stamp videos if we were to offer them. No surprises here. 
• 57% are completely happy with the albums they have and would not consider buying a better one. This was a surprise, as I expected this figure to be much lower. 
• Only 1/3rd are completely happy with Unitrade as a catalogue. The rest are either very willing, or at least open to the idea of buying an alternate catalogue to Unitrade. Not a surprise really, but I did think that the percentage happy with Unitrade would be higher, like 55% or 2/3rds, rather than just 1/3rd. 

So, while some responses yielded no surprises, and validated my vision, there were some genuine surprises, which will prove invaluable in helping shape my future business decisions. Of course, all this assumes that the customers possess perfect self-awareness - that is to say that their behavior actually does match their beliefs. 

So what does all this mean for my business? Several things:

• The auction clearly is the core of the business, but customers have indicated that they would like to see the retail section of the website developed further. So, it will be important for us to carve time out of our schedule to do this. 
• While bidders like the fact that the bidding starts at $1 and progresses in $1 increments, this is clearly not the most important factor to them, and so it paves the way for me to begin phasing in minimum bids and stepped increments on at least selected items, without too much danger of driving people away. 
• There is clear demand for us to publish our own catalogue, which when combined with the other responses indicating that the most valued aspect to the auction is the descriptions, indicates that our KNOWLEDGE about stamps, and the willingness to disseminate it IS our core product, and this is what people are willing to pay a premium for. Up until now, we have given it all away for free. But we need to look for ways to monetize our knowledge, while giving away some of it for free. 

There are other things that will emerge, but we now have a basis on which to follow up with questions to further probe our customer's interests. Also, we can share the overall findings with our customer base, which will further strengthen our community.

So, there you have it. The reason why surveying your customers is so critical.