FEATURE1 April 2009

Things I know (and don't know) about research in a recession

Cris Tarrant of BDRC admits to knowing some of the effects that recession will have on the research business, but puts his hand up to being in the dark about others

I know that the research industry has not avoided impact from the recession

Coming into the present recession there was a naive arrogance, peddled by some, that research is somehow recession-proof. Why should this be? If research is an integral part of the global economy it is as exposed as any other sector to the exigencies of the present situation. What I do know is that research can be recession-resilient – but not as a matter of course, only if it demonstrates a meaningful return on the investment. In a recession the ‘nice to know’ will be dropped and research plans will have to justify themselves that little bit more. The tide will come in again and when it does all involved will focus more on the value of what research delivers for the commissioning organisation. No harm in having a reality check.

I don’t know when we’ll hit the bottom, so it’s rash to make too many calls

18 months ago several commentators said Northern Rock was a dead brand. That was before we knew autumn 2007 was just the early warning. This recession is being characterised by a slide, then a period of relative stability before another shock knocks us further. The bad we can live with, it is the uncertainty that is unnerving as it makes it difficult for any business to plan. For some this is an opportunity – witness Northern Rock now being heralded as the potential saviour of the mortgage market. As to when we will reach the bottom, by Q4 2009 the year-on-year comparisons will be with weak results from last year, so if they are still negative then we may be heading towards depression.

I know that consumer behaviour is more volatile in a recession

In a recession consumers change their behaviour. For marketers this should be the moment for consumer insight to command even greater attention. You cannot assume that the way consumers thought even a year ago remains relevant now. It is more important than ever to understand what it is that makes consumers tick. This is a time for deep dive and engaging techniques, such as semiotics, ethnography and ZMET, that can get below the surface expressions of consumers’ known feelings to find out what is really driving their changed behaviour. Equally, now is not the time to ditch long-term trackers, but they need to be complemented by fleet of foot research tools that are responsive to consumer change.

Recessions are disruptive and they create opportunities, but I don’t know what these will be

The traditional orthodoxy is that major brands do better in a recession as there is a flight to quality and weaker competitors fall by the wayside. But this is the first wired recession and it may just be emergent brands with new offerings that are able to identify and exploit the opportunities that most definitely will emerge. With Charles Darwin a strong contender for personality of the year it is worth recalling his deduction that it is not the strongest of the species that survive, nor the most intelligent, but the ones most responsive to change. Recessions change industry dynamics so, we need, both as companies and as individuals, to be prepared to re-invent ourselves faster than before.

I know that we need to keep on topping up the talent

If the recession is as severe as some predict then inevitably that there will be less recruitment into the industry. But there is a need to retain a mix of skill levels and to attract some new blood or, as in previous recessions, as an industry we will pay the price in four or five years’ time. Investing in people must remain a priority. Certainly within the BDRC Group, although we have been reviewing all of our costs the agreed training budget has been ring-fenced as sacrosanct. Honing existing skills and learning new ones must be part of the re-invention that is more in the spotlight at a time of stress.

I don’t know how socially divisive the recession will be

History tells us that downturns are associated with greater social division and often actual expressions of public unrest. For public sector policy makers this has implications for programmes that focus on the disadvantaged, which will assume greater significance. For commercial organisations there will be a need to distinguish the winners from the losers. Project Mars, a BDRC study that assesses ‘the battle for discretionary spend’ not only identifies the economic winners (e.g. those with lower mortgage payments) and losers (e.g. those made redundant), but also the psychologically affected. This large group, although not directly affected by personal economic misfortune, are behaving as if they have been. Engaging with these people is an imperative in creating new strategies to stimulate their renewed economic activity.

I do know that clients want to extract every last drop from their investment in research

For many clients marketing budgets have been trimmed and research has suffered. Re-interrogating existing data, making greater use of advanced analytic techniques, consolidating previous research findings, involving agencies in the creative process of devising the solutions that the research leads them towards are all activities that commend themselves in these times. Agencies with deep knowledge of clients’ markets will be able to help them in this process most effectively. It is always worth remembering that the business of clients is business, not research. For clients, in the face of the pressure to reduce costs, equally it is worth remembering that the cheapest research quotation is not necessarily the best choice. Relationships between clients and their partner agencies assume even greater importance when those relationships are being stress-tested.

Consumer trust has been seriously damaged, especially in the financial services sector, and I don’t know how long this will take to repair

As a nation we’re used to not trusting our politicians and we are, perhaps, not unhappy with this situation as we have the democratic means to get rid of them. But the financial services industry, once a bulwark of assurance, has wrecked its position of consumer trust. The re-shaped banking industry has a major re-building task ahead of it. Research has the potential and the tools to play a central role in determining how the financial services sector can re-engage meaningfully with its customer base. It may not be back to Captain Mainwaring, but a new retail banking financial order must be created; certainly it is an opportunity to
re-model financial distribution.

I do know not to believe all of the headlines

For many this is a media-stoked recession: having invested in the story they have a self-interest to chart its downward path. Yet in contrast to the headlines of major corporations announcing large-scale redundancies, small and medium-sized businesses are doing what they can to hold onto their employees. Recent survey results show that SME business leaders are tackling the downturn head on. Their top three initiatives are reducing overheads, increasing sales and marketing activity, and offering better deals to clients. Notably, reducing staff and making redundancies are at the bottom of their list of planned actions. Just like their consumer-facing counterparts, for B2B organisations now is a key time to be in touch with the mood of their customers.

The public sector is holding up, but I don’t know how long for

Research in much of the public sector is booming. Yet this may be no more than an 18-month mirage, depending on how the political dice roll between now and the next general election. While many may flock in this direction it has to be those with accumulated years of experience who are best placed to understand the nature of its insight needs. Having specialist teams familiar with assessing government funded marketing campaigns, the strategic goals of the Health Service or the social access targets of the publically backed leisure sector has to be of value to the commissioning authority. Now is the time for such specialist teams to demonstrate the value of their knowledge.