Value creation research for private equity and consulting: What can customers tell you?

There’s no shortage of ideas for increasing revenue, gaining market share, and improving profitability. The challenge is knowing which of those ideas present opportunities that deserve your time and attention.

Financial, operational, and secondary market data tell part of the story. Market research completes that story by asking both customers and non-customers what they think, want, and plan to do today or in the future.

That information can help business leaders and strategy teams decide where to focus efforts and resources for value creation. It is especially important in private equity, where operating teams have a limited timeframe to increase a portfolio company’s value and deliver returns. It is also important in consulting, where teams are called upon to advise private equity firms and help design value-creation strategies.

Survey-based research provides direct customer and market evidence at scale. It can help answer questions about pricing, market expansion, competitive positioning, product development, and other opportunities for value creation.‍

Here are some of the questions survey research can help answer:

Is there an opportunity to change pricing?

Raising prices can increase revenue by improving margins, but go too high and customers may buy less or switch to a competitor. On the other hand, lowering prices can spur demand, but the additional sales may not be enough to offset lower margins.

Pricing surveys can measure willingness to pay, price sensitivity, and the tradeoffs customers are willing to make between price, features, and benefits. They can also reveal how customers may react to different bundles of features and service tiers.

What value-creation opportunities exist for expansion?

Exploring new geographies and customer segments offers opportunities to create value, but even the largest potential markets may not have customers willing to buy or switch.

Survey-based research can measure demand, identify unmet needs, and uncover barriers. It can also show how needs and behaviors differ among markets or groups. The survey findings can help evaluate different expansion options before committing resources.

How can the company strengthen its competitive position?

Sales and market-share data can show which companies are winning business, but they may not explain why. Surveys can ask customers directly how they choose between competitors, which alternatives they consider, what might cause them to switch, and how they perceive different brands and companies.

The findings may reveal existing advantages that can be strengthened, weaknesses that need attention, and gaps between how a company wants to be seen and how customers actually see it.

What should the company offer next?

A new product, service, or feature can create another source of revenue or differentiate a company from its competitors. It can also consume a lot of time and money without solving a problem that customers actually have.

Primary research can uncover unmet needs and gaps in existing offerings, then help evaluate potential concepts, features, or extensions. When several options are under consideration, survey results can also show which needs are most important and which ideas can generate the most interest.

Did the change actually create value?

A single survey is a snapshot of what customers think at a certain moment. Two or more show how those views change over time.

Use surveys:

• Before making a change to set a baseline
• While the change is underway to monitor progress and flag issues that may require an adjustment in strategy or execution
• Afterward to measure results

These surveys, combined with financial results, help leaders and teams understand the impact of the change. They also provide valuation information that can help with future value-creation efforts: what worked, what to do differently, and what to repeat.