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FEATURE1 August 2010

Time to put your foot down

Volkswagen Group’s economic and insight manager Steve Gatt has had enough of market research that’s inadequate and out of touch with business needs, writes Robert Bain.

It’s rare to turn up at an interview to find your subject ready with a folder of notes prepared in advance. But Steve Gatt, economic and insight manager at Volkswagen Group (working on the Audi, Skoda and Seat brands alongside Volkswagen) knows exactly what he wants to say. In fact, it feels like he’s been building up to this ever since he joined Volkswagen’s insight department more than twenty years ago.

Asked to sum up his feelings about market research in a few words, Gatt says, “I would say it’s inadequate, I would say it’s reactive, and I would say that in delivering results it is out of touch.”

“It’s got to the stage now where I feel I’ve just got to discuss it with someone,” says Gatt. “I’m sure there will be many people out there who will disagree with me, but I’m sure there are going to be a minority that strongly agree with me.”

Gatt’s complaints are not new. Actionable insight, understanding of the business context and effective communication of findings rank highly on many clients’ lists of MR bugbears. But for all the attention paid to these issues, Gatt doesn’t see things getting better.

He traces the origins of the problems in today’s research industry as far back as the recession of the early 1990s. “Obviously after a recession people are shedding labour, and also there was a period where the training was reduced, so when the economy came to lift off again there weren’t the skillsets around to the extent that was required.

“I do not want a 70- or 80-page report, what I want is the shortest report possible that’s got the ideas that will move this business forward. That could be 20 pages, it could be fifteen pages, and actually we’re down now to three as a summary that goes to key people”

“Because of the lack of skills and the cost cutting, the market research industry drifted towards more process-driven tools, large-scale off-the-shelf studies. They looked for methodologies to place people and clients within, rather than actually looking outside the box. That compounded the issue about skillsets because although people were being trained, they were being trained in a certain process or a certain methodology. I have seen that at several agencies, where you’ve got talented, capable individuals who have only worked on that one process, and once you ask them to step outside that, they’re unable to do so successfully.”

Clear, calm and critical
Given the strength of his feelings, Gatt remains remarkably calm while discussing the state of research. He’s thoughtful, precise and anxious not to say anything that could be misconstrued, so when he says “the majority of market research is not up to scratch”, you know he means exactly that. If he was ever angry then he got past that stage some time ago, and his tone now is more that of a doctor delivering bad news to a family member.

These problems might not apply to the whole industry but they are, Gatt believes, “more widespread than most people probably would admit”, and the latest economic downturn has only made client companies even more demanding of research agencies.

“There are more agencies than not that are not up to scratch to delivering into this company, across all five of our brands and the group service area,” he says. “I don’t think the majority actually know what should be delivered into a business.

“Because they don’t understand what industries require, they want to produce a wealth of information. We don’t want that. I do not want a 70- or 80-page report, what I want is the shortest report possible that’s got the ideas or insights that will move this business forward. That could be 20 pages, it could be fifteen pages, and actually we’re down now to three as a summary that goes to key people. I think the vast majority of agencies struggle with that. If we want to have more information, we’ll go back to the agency and say so. But it’s got to be presented in a way where I can get the message across very quickly, very insightfully, so it registers in the head and then people can take it forward and use it. There’s this sort of belief that if you give people 70 or 80 pages then that is fulfilling the brief. That isn’t the case.

“It’s a bit like our cars. The technology in our cars today is exceptional. But how many people do you see on a Sunday tinkering around with their engines like they did when I was a boy? You just don’t see that. People just expect the engine to be there, working. That’s what [senior clientsiders] do with research fieldwork today. It’s my job to ensure everything else is a given.

Clients aren’t blameless
The problems are not just agencyside, Gatt says. Client companies too have “shed experts”, and so don’t always create opportunities for the sorts of relationships that bring about great research. But the bulk of blame, he insists, lies with agencies. “That’s what they do,” he says. “If we are paying good money for an agency to deliver insightful results, then go away and deliver that.”

Part of what’s wrong, Gatt believes, is the type of people who populate the MR industry. “I think market research agencies, particularly the larger companies, attract people who want to stay inside the process. They want to stay inside a large company, they don’t want to take risks, they don’t want to innovate.”

“For market research to improve in the future they have got to look at their own businesses. They have got to say, ‘Industry is asking us to do more, there’s an opportunity for us,’ rather than recoiling and thinking it’s a threat to them. It’s for the market research industry to sort out”

Gatt, who began life as a statistician, picks out “methodology and process” as one area that has improved in research over the past decade or so. But it takes more than methodology experts to create research that gives businesses what they need. “You’ve also got to have the people who are innovative,” he says. “The ones who have stayed at large marketing research agencies for a number of years are usually people who are more introverted, and therefore they don’t want to come in front of the client and they don’t really know what the client requires.”

The people who don’t fit this profile tend to set up their own agencies or leave the industry altogether, Gatt says. When asked which industries they head for he replies, “Any industry other than market research, I think.”

Gatt chooses not to name the agencies he thinks have the worst problems – “but I could”, he says. “Apart from the big brand trackers we tend to work with smaller agencies, which is amazing when we’ve got nearly 18% of the new car market.”

The partnership edge
One of the small agencies that Volkswagen Group regularly uses managed to win a four-way pitch despite technically not being able to meet the company’s reporting standards. Gatt says he gave them a chance because of their willingness to work in partnership. “We worked with them for about six to twelve months to get them to a level that they then could analyse and report into this company and that relationship has gone from strength to strength,” he says.

So what are the consequences of inadequate research? Gatt speaks of a “downward spiral of unusable findings and cynicism”, which he sees as one of the reasons that DIY research has taken off to such an extent. Does he blame the research industry for the growth of DIY? “Blame is too strong a word,” he says. “But it’s a manifestation of this longer-term decline in the quality of services that the market research industry offers.”

Some gap analysis
He’s disappointed that MR agencies haven’t done more to respond to the gap in the market that the DIY trend has highlighted. “DIY would have come along in any case,” he says, “but I would have hoped they’d be more competitive in the market research industry and actually offer alternatives, rather than [leaving clients with] a choice between either a DIY survey or full-blown market research, as you have at the moment. Why don’t they just be a bit more proactive and lead?”

Pricing has also contributed to the growth of DIY, he says, with too many agencies “trying to pull a fast one”. This is a particular problem in larger agencies where the people who come in to pitch for work are distanced from the ones who decide how much to try to charge for it. If the people presenting to you can’t justify or negotiate a fee without talking to someone back at their office, “you start questioning everything,” Gatt says.

Cold calls from research suppliers pitching for business seem to sum up the situation for Gatt. He finds that asking callers the simple question “What is the competitive advantage that you are going to offer through this piece of research?” gets rid of most of them. “When I ask that question and someone comes back with maybe not the exact answer you’re looking for, but [an answer that lets you know] they’re thinking, you may say, ‘Come in, let’s have a chat.’” More often than not, though, that doesn’t happen.

Tough love
How optimistic is Gatt that these problems can be remedied? “When we actually start working with agencies and we work in a co-operative way, then market research does deliver and does raise standards for us,” he says. “But at the moment we as clients have got to put in far more effort than we should.

“For market research to improve in the future they have got to look at their own businesses. They have got to say, ‘Industry is asking us to do more, there’s an opportunity for us,’ rather than recoiling and thinking it’s a threat to them. It’s for the market research industry to sort out.”

6 Comments

7 years ago

I partly agree with Steve Gatt. I agree with the fact that we need new market research methods, but I also believe that market researchers and scientist have acknowledged that there is a need for new ways of doing market research. I'm actually doing a PhD thesis on this subject. I want to research how we can use the conversations that consumers are having online for market research purposes.As part of writing my thesis I read a lot of books and articles. I've read several articles where the authors have used new market research methods, such as e-netnography, mobile research, blog mining, datamining and sense mining. It seems that these methods are quite accurate in comparison to the traditonal market research methods. I believe that with the upcoming of social media applications more people are having conversations online. This has opened up opportunities to innovate the traditional market research methods.

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7 years ago

Is there any connection between this article and the one of August 2nd that attracted nearly 20 comments?

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7 years ago

Given the level of coverage and comment this article has generated there is surely an opportunity to seek more comment from clientside buyers on this topic. An opposing or alternative view perhaps? The comments from Steve raise a major issue for the industry but spend in the automotive sector has nosedived and his negative comments should be corroborated. Personally I would be very interested in reading more on this subject.

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7 years ago

I could not agree more with Steve Gatt. The big agencies are geared to maximise the profit and to do that they have to cut the labour costs in the labour intensive MR industry. The consequence of this is a off-the-shelf research which does not satisfy client's needs. The more skilful researchers i.e. researchers that have skill set that combine organisational, communicational and analytical skills combined with ability to recognise clients' needs and ability to combine several available research methodologies are expensive to have on the payroll, they are hard to find and they themselves would not stay in the agency which use off-the-shelf research. But not all blame for this situation can be addressed to MR agencies. It is very often the case that buyers of research themselves do not know what they want from the research they buy, combine that with off-the-shelf research and you have research which is below every standard. A good small agency with the right approach of doing research will approach the client who is not able to recognise good researcher and the client will opt for more established agency believing that is buying value for money.

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7 years ago

I am wondering after reading the interview with Steve Gatt whether this is one of the reasons behind the rapid growth in neuromarketing studies. Every report using this new methology delivers unique insights with actionable results.

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6 years ago

I am Chairing a new forum (committee) at the Advertising Research Federation (ARF) focused on working out how to improve the connection between research and business needs. I welcome any input or thoughts from this audience.

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