The ringing of the till

Years ago Marks & Spencer used to brag that the only market research they did was to listen to the sound of the ringing of the till. It told them all they needed to know about quality, product popularity and customer needs. It sounded arrogant, complacent and short sighted then, and it was, but it was hard to knock the most successful retailer on the high street.

Things are different now. They are losing sales, the share price has tumbled, their reputation is in tatters, senior management have been cleared out and commentators are asking if the new Chief Executive Stuart Rose can turn it round or if more drastic treatment is needed from Philip Green and his takeover team. Employees are demoralised, customers are despairing. It could all end in tears.

Sure they listened to the sound of the till, and analysed it in mind numbing detail. What they didn't hear was the sound of what wasn't there - customers defecting to rival stores. Those who defected because they couldn't find the clothes they wanted stayed away and bought their food and furniture elsewhere too. It was a costly exodus.

It's a classic example of tunnel vision. So long as profits held up they measured what was under their noses, but ignored what they couldn't see. Ex-customers were invisible. They also overlooked the progress rival stores were making, some of whom they barely classed as competition. They did not see what was happening until too late, while those who did their research have taken them to the cleaners.

The parallels with building supplies are clear. Mention research to most builders' merchants and you get one of two responses. Either they say they listen to the ringing of the till and know all about their customers and their preferences. Or they see it as the supplier's job to research the market and provide it free of charge. This is short sighted. Their interests and yours do not necessarily coincide. It might save pennies now, but in the long run it could cost you your business. In fact it is costing you your business as several valuable markets slip through merchants' fingers and customers defect.

Your rivals aren't asleep. They are doing their research into your customers to find out what they need to do to win. They are growing, and you are in their sights. Now they are listening to the ringing of the till, but they are hungry for more so the research goes on. If it can happen to the most admired retailer in Britain it could happen to you. Will you, won't you take up the challenge?