FEATURE14 April 2011

Avoiding the big squeeze

Features

Market researchers and client procurement departments are going to be spending a lot more time together as companies push to get more bang for their buck. But the focus of the relationship shouldn’t just be on money, says Value Engineers’ joint MD Katy Mousinho.

To ensure cost is just one part of the buying equation, Mousinho argues, the clientside researcher should be given a seat at the procurement table. “All too often the stakeholder tends to hand things over to the agency and procurement department and doesn’t have enough involvement,” she said.

Moushinho believes that a “tripartite” relationship would be a more fruitful one, with the clientside researcher acting as the middleman to broker deals, smooth things over when needs be and, more importantly, help explain the value of market research to the people holding the purse strings.

Her comments come as advertising body ISBA releases its guide to working with market research agencies. Research previously spoke to a co-author of the guide, Brian Jacobs, who called on agencies to be more transparent and more open with procurement teams to help them better understand the role of research agencies and how they work. But Mousinho doubts that honesty and openness will be enough.

“We need to start thinking about what the deliverables are, what are we going to be assessed against, what value are we adding and then how that can be measured – the stakeholders need to do this”

She said: “It became very evident at the launch on Monday that procurement is struggling to understand the very intangible nature of our work and the fact that it’s so different.”

Even comparing what’s on offer from two agencies vying for a contract poses problems, she says. “When you have a [research-related] product it’s difficult to benchmark it against another because no two are the same. I think it’s really hard for them and they need help from their internal clients.”

The one area where stakeholder involvement is needed most, Mousinho thinks, is in explaining the benefits of good market research to procurement teams and ensuring that agencies are not selected by their day rates.

She said it is “very difficult” for procurement people to understand the added value of research and insight, and believes this is where clientside teams need to step in and act as the “missing link” between procurement and MR.

“Clients can explain why they need to pay a higher price so it doesn’t come down to the lowest common denominator,” Mousinho explained. “We need to start thinking about what the deliverables are, what are we going to be assessed against, what value are we adding and then how that can be measured – the stakeholders need to do this.”

Moushinho counters claims made at the ISBA launch event by Hay Group procurement head Jill McPherson, who said that procurement departments really want to be a “friend” to suppliers. “Quite a few of them aren’t very friendly,” she says. “People think procurement wants to squeeze agencies on costs and hammer the value out of the work that we do. The reality is that unfortunately a lot of them are like that because they think they’re doing a good job if they’re getting something cheaply, but they are not thinking enough of the values that agencies can bring.”

But throwing up barriers and seeing procurement as the “big bad guy” won’t make them go away, says Mousinho. “I strongly believe we just have to bite the bullet. We might not like it and the internal stakeholders might not like it but we have to learn how to work with the procurement department.

“We need to equip agencies to better deal with procurement as well as the other way around. I really feel the stakeholder is key here but they just aren’t very present at the moment.”

2 Comments

9 years ago

A valuable debate - but I would like to offer clientside perspective on procurement and the role of stakeholders. Firstly, I question whether stakeholders should be 'explaining the benefits of good market research' - surely this is the role of any MR manager? The time stakeholders give to the initial stages of any research project is typically a scarce resource and better invested in articulating their needs and what a successful project will deliver to them. Secondly, we risk stereotyping procurement, in reality they play an extremely valuable role, when we (MR + stakeholders) have selected an agency (rarely the lowest priced) we use our team to handle the final price negotiations, they use global rebate arrangements, fix invoicing terms and schedules and clarify milestones. They also ensure all agencies submit proposals in a consistent format - a real benefit. Finally, stop seeing research as unique in being difficult to quanitfy, our procurement deal with our PR, ATL and BTL agencies and consultancy work - all areas that deliver an element of intangible services. Sure, there are not perfect, I baulked at the idea of introducing the dreaded online procurement auctions but in my experience procurement will adapt to the requirements of each business function given a little informed persuasion... We need a balanced debate and we need to avoid stereotyping this relationship.

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9 years ago

I agree....up to a point. As a former clientside research manager I firmly believe it is the research manager's job to own and manage the project, including the end client, the procurement team, the entire process. But problems arise when procurement systems are remote and inflexible and, above all, don't understand 'added value' in the context of market research. It is curious how mis-used the phrase 'added value' has become. It's an economics term and the classic example is the steel industry. You can produce excellent quality steel, or you can add value to it by making things from it, like cars. The point being that the product you've made commands a higher price than the base material. The equivalent in market research is the distinction between field and tab (data collection and procesing), and full service work with interpretation, insights and conclusions. If procurement teams don't know the difference (and why should they if no one tells them) it is the research manager's job to explain it. In short, 'added value' is not intangible. But the ongoing pleas for 'added value' suggests that many clientside researchers don't actually understand what it is - and/or want it without extra cost, which is fundamentally contradictory. If clients are paying for added value and aren't getting it, they need to take it up with the individual suppliers that are failing them - with the help of their procurement departments. And go to a different supplier next time.

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