Posted by Alan Nazarelli ● Fri, Apr 24, 2020 @ 09:15 AM
Maximizing Market Research ROI - Why Companies Don't Invest in Research
Market research is often the step child of the marketing process. We frequently encounter companies where it is seldom given much thought. I recently visited a twelve year old San Francisco Bay Area company that had never done any formal research. In fact, they could not answer the question on who was buying their product - age group, gender, etc. They had never bothered to find out, despite the fact that they spend a lot of money on media advertising.Why do so many companies shoot in the dark? What are some of the reasons market research is not better embraced and used, especially among technology companies?
Here are some reasons, speculations, and anecdotes from our 17 years calling on and working with technology companies distilled into three main themes:
1. Market research done badly
Many times poorly executed research that yielded low payback and poor outcomes is to blame. Experiences of the marketing executives of the firm, even at their previous companies, have soured them on the experiences. As a result they shy away even when they encounter a problem market research can solve. As market research practitioners, we need to ensure we execute projects well and keep with the quality standards of our industry. Every poorly executed project reflects on us all. Every poorly recruited focus group participant who gets in when he should have been screened out is a blight on our collective reputations. We recently were called in to "re-do" a project for a long term client. The previous vendor did not have the ability to deliver on their (over) promise, which was to recruit C level executives in mid-market firms for a series of site visits. In almost every case, a lower level manager was recruited instead. The recruited manager was "coached" to say he represents the C level executive. In one instance, the manager asked if the interview could take place at the coffee shop around the corner because he didn't want his boss to know he was getting paid for the interview! In this case, the client was willing to spend again (albeit a smaller budget) to get the job re-done and done right, but such experiences cause many firms to avoid market research activities altogether.
2. The proliferation of big data
Yes, you heard that right. The presence and availability of big data is an impediment to doing primary market research. Here's why: many companies mine transactional and telemetry data for trends and insights. This is particularly true of companies that practice methodologies such as the lean startup. The telemetry and transactional data are invaluable sources of insights.
What they fail to do though is explain the "why" behind the observed transactional patterns. Moreover, the failure to understand the customer and their journey beyond the point at which they are or were transacting with you creates blind spots that impact marketing to these folks. In another blog post, I presented the Research Triangle that is central to our work in research design. There are three facets to customer facing data and insights-primary research, social sentiment and big data. Focusing on just one or two of these components yields to an incomplete comprehension of buyer behaviors, motivations and drivers.
3. Education and Access
The last factor is education and access. I have to admit this oversight by industry players has played in our favor. Over the years, we have spoken to a lot of companies who have never been called on by our competitors or even had an idea that the type of services we and our industry offer were even available. Market research executives hate to make sales calls. A lot of times this has to do with founders from academia who feel "cold calling" is beneath them. As professionals, they deserve to be found and wooed to accept assignments. As research practitioners, I feel we need to be evangelists and champions for our work. The industry practice is to preach only to the converted. Many companies who could use market research are therefore left in the dark on what market research can do for them, often ending up with misperceptions and lack of education and access to the valuable services our industry provides.
Alan Nazarelli is President & CEO of Silicon Valley Research Group, a global market research and strategy development firm focused on the needs of technology companies.
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