Market Research Needs An Overhaul
May 13, 2011 5 Comments
Companies spend a lot of money on market research; millions or tens of millions of dollars annually for large organizations. What do most companies get for those vast investments? Lots of data, a handful of insights, a glimmer of actionable insights, and woefully few people taking action and making decisions based on good customer insights.
One of the worst culprits are corporate satisfaction and relationship tracking studies. Companies get charts delivered either quarterly or annually about how customers rate them, they review those results at the executive level, they make some pronouncements about what it all means, and then they go back to doing exactly what they were doing — hoping for better results when the next set of Powerpoint slides are delivered. Does this sound familiar?
Something’s broken!
Market research processes and practices (used by both vendors and internal organizations) operate based on several outdated assumptions of the world including these:
- Data and insights provide value
They don’t. What provides value is having people make more customer-insightful decisions and take more customer-insightful actions. - Companies have limited access to information about customers
They don’t. There’s a wealth of information available about customers beyond periodic surveys from sources like call center records, interaction data, employee feedback, and social media. - There’s no easy way to analyze unstructured data
There is. The primary tools of market research organizations have been multiple choice survey questions. Why? Because that was all they could easily analyze. Text analytics tools are making it easier to mine sentiment, topics, and other key data from the rich vein of unstructured data. - Meaningful insights require deep analysis
They don’t. If you don’t understand the business, then you need a lot of data and statistically significant results to draw conclusion. People across the company have context for interpreting and using much less data. That’s why I introduced the term “contextual insight” in a post last year called Market Research Needs Less Statistical Analysis.
In a recent Temkin Group report, we identified 20 best practices for voice of the customer programs. Most of these practices are based on a changing set of assumptions around market research. The report ends with a section called “Market Research Organizations Need An Overhaul” which outlines these four areas that market research organizations need to focus on to keep from becoming obsolete:
- More focus on actions and less focus on data. Market research organizations often viewed their deliverables as reports or analysis. But VoC programs show that the focus needs to be more on actionable insights. Making this transition will require a deeper understanding of the business needs of the organization.
- More ongoing support and less discrete projects. Leading VoC programs deliver continuous insights throughout the company. So market research groups will need to provide an ongoing level of support to business partners/clients and adjust their staffing and funding models away from project-based work.
- More consulting advice and less generic presentations. Successful VoC programs require consulting to help business partners understand how to use the insights. Traditional market research analysts don’t often have the required skill sets for this effort.
- More distributed access and less centralized control. Market research organizations have traditionally controlled all of the data; sharing periodic outputs. But VoC programs will increasingly distribute information and insights across the organization. So market research groups must learn to give up control and embrace and facilitate this distributed model.
The bottom line: Customer insights are an under-tapped asset
About Bruce Temkin, CCXP
Customer Experience Matters® 
Bruce,
I like this reasoning a lot, and independently have come to very similar conclusions in my area of expertise – HR and employees.
My take on the statistical significance part is that there are some problems that need SS but the vast majority probably don’t. What is needed is to understand the likely cost (all, including other consequences) and benefits for ‘fixing’ an issue. Often the cost of the change is small and benefit sufficient that you should just make the change. Others (like implementing a new system, or where making a change might have a negative consequence to others) might have a high cost and you’d want to understand the likely benefits in a more robust manner.
What you say about market research can equally apply to current employee research. Our approach is rooted in the idea of the employee as a customer. We therefore use customer-type approaches to help HR understand and manage employees. Central to this is an active management of the employee experience, and ‘measurement’ of those experiences. Our business model is pretty much defined by your 4 recommendations.
As an aside, I feel that the usually adopted measure of employee engagement is too woolly (and I’ve rarely seen an engagement survey really drive change inside a firm). Engagement is a construct of different things to different people or firms. The simpler measure of advocacy is probably a more useful one for many uses. It’s also hugely beneficial to use the same measure for both employees and customers.
Bruce – Great post! This is a topic that needs to be discussed. Market research for the sake of market research is worthless. I have seen many market research projects that fill a large binder, but do not change the way a company operates or how it deals with its customers. The research is used in executive presentations, but is forgotten when they leave the conference room.
More focus on actions and less on data should be every company’s operating philosophy. Based on our customer satisfaction engagements, we see more success when we are working directly with line management rather than the market research department. Line management doesn’t get hung up on statistical significance or the nuances of the data, but instead care about how they can improve the business. By providing them ongoing actionable data, and distributing it widely throughout the organization, they can make a real difference rather than just having an interesting slide in their next PowerPoint presentation.
Jim S Miller – President, Prime Performance
Hey Bruce,
Interesting research and I think your conclusions are right on. I think another problem is that typically the market research function is buried in the marketing department which may often present a barrier to other channels and functions. Not having exposure and an understanding of all parts of the business will limit market researchers’ ability to have a deeper understanding of the busines, as you point out. Perhaps internal market research functions should be freed of marketing and report into the chief customer officer or stand alone. Your thoughts?
Mark
My take on the statistical significance part is that there are some problems that need SS but the vast majority probably don’t. What is needed is to understand the likely cost (all, including other consequences) and benefits for ‘fixing’ an issue. Often the cost of the change is small and benefit sufficient that you should just make the change. Others (like implementing a new system, or where making a change might have a negative consequence to others) might have a high cost and you’d want to understand the likely benefits in a more robust manner.
Great topic for you to post Bruce, how I wish every company truly focus on actions. To give market researchers a wider exposure to the business will help them understand more.