Is there a research deficit?

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The market research industry contributes more than £3bn to the UK economy but what value does it provide to the organisations that use it?

A small part of the work we do at PwC, Research to Insight (r2i), looks at the use of research within organisations. This has shown us that there is a huge disparity across individual organisations between the best practice, where research is a valuable investment that drives action and supports change, and the worst, where research can be seen as simply a cost burden.

Based on our observations we have made some hypotheses about what distinguishes those who get value from research and those who are not exploiting its full potential.

Insight is now derived from more sources than market research; as well as sales data and consumer feedback we have the many forms of social media as a rich source of information. The danger is that these sources become competitive rather than cooperative and the silo tendency within so many organisations means that the fully rounded picture has no chance to emerge.

Information is held at many different points so the knowledge is disconnected and fragmented. At its worst this can lead to research being duplicated for different departments adding cost wastage to the loss of value.

Modern research joins all the sources together and is conducted on behalf of the whole business and not just the marketing function. Customer complaints and employee understanding (particularly within service businesses) are all part of the big picture.

Another distinguishing feature depends on where research is being driven from. Is the strategy driving the research or is the research driving the strategy?  

Where strategy drives research, the research is often commissioned to justify the decisions taken. It can therefore be undertaken late in the process and be perceived as holding things up. Senior decision makers are not fully involved in the process and just interested in the one line ‘answer’. Top line is prioritised and a high proportion of the research may never fully see the light of day. Research gets the reputation for being slow and cumbersome.

Where research drives strategy the company builds a customer intuition. A deep understanding of customers’ needs and values leads to better decision making. In this case the research has happened in a timely way before decisions are required and therefore there is more confidence within the organisation and less need to ‘check things’ before we go to market. Research gets the reputation of being central to the business and is at everyone’s fingertips.

There are still instances where research is being used to fill out a scorecard rather than to provide insight. This can lead to large, expensive surveys being conducted to drive a number of KPIs on a dashboard. Where these KPIs are drivers of performance bonuses there is a reluctance to change time series and the danger is that the metrics become increasingly detached from market realities. 

This inevitably leads to a backward looking focus and diverts attention from current trends and anticipating the future. In today’s markets where the customer journey is constantly evolving it can lead to measurement of old customer habits just as new habits make the old ones irrelevant. 

The work of the Ehrenberg Institute stresses the importance of getting new customers in the pursuit of business growth. Do customer surveys place too much weight on existing customers at the expense of finding new ones? Are organisations measuring the things that matter to the market now or the things that mattered to the business yesterday?

There has to be both pull and push with information being made accessible and available to those looking but also brought to the attention of those areas of the business where it will be useful.  A survey conducted for one purpose will probably also contain information useful to other parts of the business. 

And how is the budget set? Does the organisation look at last year and add some? Does that lead to the research function scrabbling to find projects at year-end to spend the budget so that it doesn’t get reduced by procurement next year? Or is there a careful bottom up process where the needs of the business and the need to understand the changing customer are carefully weighted and planned? 

We don’t intend this to be an ‘attack’ on the research function. Quite the opposite; we want to promote the importance and value of research within an organisation. We believe that by highlighting some of the best, as well as some of the worst, we can contribute to an overall improvement. 

Alison Blair is director, PwC, Research to Insight (r2i)