visioncritical.com THE SMARTER RESEARCHER How to Survive in the Changing Market Research Landscape by Ray Poynter Director, Vision Critical University
OVERVIEW Today s empowered customers have greater choice, are less loyal to brands, and expect more from the companies they choose to support. The need for meaningful customer feedback and insight is greater than ever; yet paradoxically market researchers the profession historically tasked with understanding what drives customer behavior have not been able to provide the customer intelligence companies desperately need at the speed and scale required. Researchers need to become more agile and resourceful, and move beyond traditional research, ad-hoc surveys and sample panels. It s a choice between survival and irrelevance. This paper examines the major trends that are reshaping the market research and insight field and provides recommendations on how to adapt and thrive in this new landscape. 01
Table of CONTENTS Overview 01 p. Introduction p. 02 The New Rules of Market Research p. 06 About the Author 16 p.
INTRODUCTION The insight that companies require has changed. Major brands used to be national or even regional. Today, the agenda is typically being set by global brands, a reflection of globalization and the winner-takes-all evolution of markets. Massive retailers like Walmart determine what is sold, and at what price. Retailers have also expanded to embrace digital, with brands like Amazon eroding the advantages of bricks-and-mortar stores. As a consequence, research needs to be global, based on experiences and emotions, and capable of convincing retailers to give brands a better deal. Research is more complex because markets are more complex customers have more choices, and purchase decisions are not based on rational differences between products. As brands multiply and diversify, the reach of advertising and marketing campaigns diminishes. Media has become more personal, more narrowcast and more social. At the same time, the amount of information available to marketers about customers the big data gathered through customer relationship management software and social media is greater than ever. 02
Between 2008 and 2013, the average amount of channels received by viewers increased by 60, but the average amount of channels actually tuned in remained constant at about 17, illustrating that competition for viewers attention is growing steeper. Nielsen, State of the Media, May 2014 The fragmentation of traditional media has made audiences smaller, meaning research sample sizes need to be larger (or better targeted) to have the same chance of finding people who have been exposed to ads or messages. It means there are more messages, with more variations, making the insight process more complex. It has never been quicker or easier to conduct surveys, but surveys have never been held in such low esteem by decision makers and ordinary customers. The old model of research conducted via interviewers, mostly in face-to-face situations had advantages and disadvantages. Interviewers helped motivate respondents to take part and complete surveys, they clarified and probed and fed back queries to the researchers. However, interviewers were expensive and in a few cases they had been known to cheat or create biases in responses. Today, most surveys are completed online, usually via online panels or customer lists. Respondents complete online surveys on their own, with only the survey tool for clarification and motivation. This has led to a situation where most research is conducted with a small fraction of the population: the people who join panels and those who respond to being bombarded from customer lists. The majority of the population takes part in very few surveys, but a small number of people take part in hundreds of surveys.
The widespread use of CRM software means companies no longer need market researchers to capture transactional data. The new role of the market researcher is to understand customers in terms of their inner motivations and their emotional relationships with brands and services. The trend has moved away from enumeration and direct surveys towards understanding the why and using indirect and implicit methods. In qualitative research there has been a similar journey, from face-to-face focus groups to online focus groups to market research online communities. This change represents a move from asking people questions to working with them to understand their world and their relationships with brands and services. In the past, researchers were able to assume that their market research approximated to random probability samples. They based their confidence in their estimates by relying on statistics and proven methodologies. Today, because co-operation rates have plummeted and research participants are hard to keep engaged, market research has morphed through access panels and now to cloud-based customer intelligence platforms secure communities of customers that companies turn to for ongoing real-time feedback and insight. 04
Researchers can no longer simply rely on statistics; they need to use benchmarks, modeling and triangulation. The focus for many researchers is on producing an experience that keeps the participants engaged and willing to take part in future research. In the age of social, mobile and big data, the role of market research in the enterprise has never been more critical. The age of the empowered customer means companies need insight professionals to bring clarity and surface actionable business insight. As insight professionals, we should rise up to the challenge by accepting the realities of the new business landscape and by acquiring skills that will help us thrive in this era and beyond. 05
The New Rules of MARKET RESEARCH What can market research and insight professionals do about these profound transformations? Choose to adapt and stay relevant by embracing these 10 key rules. 1 Separate the Signal From the Noise Research is now too diverse and complex for any one researcher to master the whole process. From neuroscience to semiotics, social media to smartphone ethnography, big data analytics to online communities, the field is vast, with fast-moving parts. Most agencies and client-side departments don t have sufficient resources to cover the full breadth of current market research. A key skill for insight professionals in the future will be the ability to collaborate with providers of different services and, beyond that, to manage multidisciplinary teams and the relationships between different providers. For example, the evaluation of an advertising campaign might need to involve the advertising agency, the social media team, providers of metrics from brand and advertising trackers, providers of metrics from social media and the input from a specialist agency conducting market mix modelling. 06
2 Traditional Surveys Aren t Enough The fields of neuroscience and behavioral economics have shown that long, traditional market research surveys are a poor way of understanding how people make decisions. People do not carry around in their heads a matrix of views about brands which can be converted into a grid. Similarly, their intentions can t be captured by a long series of checkboxes or scales. Decision making is much more about emotions than rational choices. As the leading neuroscientist Antonio Damasio said, We are not thinking machines that feel; we are feeling machines that think. For the MR professional, research is no longer about asking long sets of direct questions: it s about creating an ongoing dialogue, so that meaning can be uncovered and interpreted. Old methods like traditional surveys don t provide answers that are meaningful. Armed with a deeper comprehension of human decision processes, researchers must employ implicit approaches, inferred measures, and two-way, ongoing conversations rather than interrogations. 07
3 Big Data Isn t Enough Big data continues to grow even bigger. The global market research firm IDC estimates that 90 percent of digital data was created in the last two years, and that the volume will keep doubling every two years. IDC also estimates that spending on big data analytics will grow three times faster than spending on traditional analytics. Big data is a black hole that researchers have yet to decipher meaningfully. There are a number of reasons for this, including: The more data that is collected, the more bogus patterns will be found in the data. The richness of big data reduces the perceived importance of variables that can t be measured by big data. For example, the market research firm Keller Fay has shown that 90 percent of a brand s word-of-mouth occurs offline, but the focus tends to be on the 10 percent which is online, because it exists as digital data. The people who are best at working with data, the data scientists, tend to have a poor understanding of business issues and human decision processes. Big data is largely a rear-facing technique: it only predicts tomorrow when tomorrow is like yesterday. Big data predictions struggle to cope with new brands, new contexts and changing needs. Researchers must develop more appropriate analysis and application of big data so that it s easier to interpret and provides more actionable and impactful insights. Here s how: Using market research to generate hypotheses to test via big data. Using market research to explore patterns found by big data, assessing whether they are likely to be causally linked, correlated or bogus. Adding the missing human element to the data to provide a complete picture of the customer. 08
Engage Customers in an Ongoing Two-Way Relationship The days of methodological certainty are gone. Quantitative market researchers can no longer take for granted that sampling and measurement procedures will produce a set of statistics that indicate how good an estimate is likely to be. Quantitative researchers today need to learn from qualitative researchers, who use more than one source of information to help check and confirm findings. The best method: a customer intelligence platform, which allows a company to engage with customers in ongoing, two-way conversations to better understand their wants and needs. Consider this scenario: a radio station sees its reputation attacked in social media yet its listenership number rising. The radio station thinks that this proves its broadcasts are appreciated by fans and alienating non-listeners. By using their customer intelligence platform, the radio station can verify that the social media outrage is from non-listeners, probe its impact on fans, and confirm the explanation of the apparent contradiction in the social media ratings and the listener figures. 10 09
Become a Storyteller Market researchers used to let the research speak for itself. Findings were delivered in the form of data, numbers and statistics. This approach is no longer sufficient (if indeed it ever was). Insight professionals must now communicate their research through engaging narratives: how the research tells a story that creates impact, answers business questions and provides insight on surmounting business challenges. Market researchers need to become great storytellers like Steve Jobs, who showed how thin the Mac Air was by fitting it into an envelope, or Al Gore, who explained how climate change is not about data, it s about messages such as no more snows of Kilimanjaro. 10
Go Mobile For empowered customers, smartphones and tablets are the default device for media consumption, online shopping and more. The International Telecommunications Union estimates that there are already as many mobile phones as people on the planet, and the Economist has predicted that within five years about 60 percent of the world s population will have a smartphone. Mobile must be an integral aspect of market research, too. One of the key reasons to go mobile is to be with customers all of the time, opening up chances to be in the moment, to collect passive data and to collect multimedia such as photos and videos. In-the-moment research is proving to be more accurate than methods based on recall (such as PC-based surveys) and more conducive to collecting data through an ongoing dialogue. 11
7Embrace Innovation Researchers need to keep adding items to their toolkit in order to stay relevant, blending traditional methods and skills with new options created by technology. The next 10 years are likely to change more than the last 10, leading to disruptive change and innovation as a way of life. For example, messaging apps like WeChat, WhatsApp and Snapchat could open a vast range of new options for marketers, content providers and market researchers. Location devices (such as ibeacons), wearables (such as Garmin Vivifit, Fitbit and other fitness trackers), app-based recording (such as the system developed by Flurry) and innovations like the Apple Watch are changing the quality and quantity of information that can be collected. 12
Connect the Dots When data scientists struggle with understanding brands, people and qualitative information, they fail to connect the dots. Most managers who look after brands and services on a day-to-day basis struggle to understand the many possible sorts of different information (from big data to qualitative discussions) and its potential to improve decision making. Insight professionals are the people best placed to ensure that information is connected, turned into a story and used to support evidence-based decision making. They are there to represent the customer, because they have the relevant skills and because they re regarded as objective. 13
9 Translate Business Problems One of the key roles of the insight professional and researcher is that of translator. Market researchers must be able to take business problems (as expressed by marketing, production, brand management, logistics, finance and HR) and turn them into research problems. The research problems then need translating into steps and words that make sense to the research participant. The results from the research participants, including their verbatim responses, need to be translated into insight that can be used by the business to create impact. 14
The key role of market research is to provide illumination to decision makers across the whole organization. Sometimes research provides an answer to a specific question (e.g., which of these four models is the one we should use); sometimes it provides an explanation of what is happening (e.g., defining the pathways of purchase for a new mobile phone); and sometimes it provides insight (dealing with a problem within eight hours converts a problem into an opportunity). In some cases the researcher will be able to help with the implementation; but many times the researcher does not have access to the information required to offer definitive plans. However, the research should always provide illumination, enabling the business to make a better decision and create insight-driven impact. 10Break Out of the Market Research Silo 15
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About the Author - Ray Poynter Ray Poynter is the director of Vision Critical University, author of The Handbook of Mobile Market Research and The Handbook of Online and Social Media Research, editor of ESOMAR s Answers to Contemporary Market Research Questions, content author for the University of Georgia s Principles of Marketing Research distance learning course, founder of NewMR, and visiting lecturer at Saitama University in Japan. Poynter is in regular demand as a conference speaker, workshop leader, trainer and consultant. 16