Why Research is for the Happy Few

The most successful companies made their way to the top because of their successful marketing strategies. A great new idea or product supported by the best possible campaign and budgets. If you read these success stories, a few are based on a fantastic idea or even luck, while others are based on a combination of experience and market understanding. We don’t read very often how market research played an eminent role in getting there. More often we read how market research is able to prevent companies from damage.

However, market research is a perfect way to support decisions and making sure that everything you do is tested and optimised. But market research is not available for all companies and certainly not done in the best possible way. Smaller companies that don’t have sufficient marketing budget are in most cases able to optimise good ideas and make them perfect, or prevent the company from damage or waste.

There are several reasons for smaller companies to find creative ways to use market knowledge and understand what is important. This article describes the challenges smaller companies face when conducting research. Good market research should not be just for the happy few. If a few lessons are learned.

The cost trap

Research requires budget, and according to different academic journals this should be at least 2-5% of your marketing budget. This budget is not always available and for that reason, we see that a lot of companies are looking for other ways to reduce the budget for market research, like:

• Do-It-Yourself solutions: There are a lot of do-it-yourself solutions that help you create your own questionnaire and send questionnaires to people you know. These tools are widely available and don’t require a lot of budget. However, the challenge is that setting up a good study requires skills and knowledge that is not widely available.
• Hiring an intern: A lot of companies try to find students that could conduct a study via the tools mentioned above. The idea behind it is that these students are sufficiently skilled and guided by professionals. In reality, these students don’t understand the practicalities of research and the professors don’t have the time to help the students properly.
• Rely on gut feeling and experience: This is probably the biggest mistake. Consumer reactions are not logical and are definitely hard to predict. Gambling or taking risks will in most cases result in disappointment and even more loss of money.

Based on vision interviews with many marketers and owners from smaller companies we have that these solutions are widely used, but hardly successful. Pennywise and pound-foolish is applicable to many companies.

The knowledge trap

Conducting market research also requires a lot of skills that are normally not available within smaller organisations. Interpreting the results from a study is something else than setting up a study. This requires knowledge of:

• Creating questionnaires (not every question is a research question).
• Using the right methodology (do-it-yourself tools are limited in possibilities and create boring questionnaires resulting in low-quality data).
• Sampling: It is important to have representative samples of the audience you are interested in.
• Cleaning data: Making sure that only those respondents are used that will give quality feedback.
• Analysis: There is so much more to analysing data than frequency tables.

In most cases, these skills need to be found at research agencies. People within research agencies do get the proper training to do this in the right way. The challenge however for smaller companies is that this will come with substantial costs.

Research by the happy few

So, now that we explained the traps smaller companies get stuck in, how do we eliminate them? To access good quality research with the knowledge of a research agency and the costs more fitting to the budgets of smaller companies, you need to find a do-it-yourself tool where a couple of things should already be implemented:

1. Pre-defined questionnaires that are not based upon quick and dirty principles. There are many validated scales and methodologies that have a proven track record and in market predictive validity. Make sure the questionnaire you use is validated, and use benchmarks.
2. Fieldwork that is done by an ISO-certificated research company: not every database is a representative database. Also, a large base of people is not a representative sample. Sampling requires more than just finding enough people.
3. Reporting with strong guidelines and reading principles. Interpreting results requires skill. Most agile solutions provide an online dashboard that only shows the percentages after the questions. This is not a dashboard! A good dashboard selects the right KPI, puts it in perspective and has a strong hierarchy of what is important.

If these principles are met, smaller companies with more limited budgets have the possibility to do research and support decisions based upon proper feedback. Most agile research solutions fail to deliver that. They are in most cases fast and cheap, but almost never good enough. Make sure you go for good and forget about quick and dirty.

By using the right principles smaller companies with limited budgets for market research can have a marketing strategy based on both experience and market research. They could make their way to the top, but on the condition that they never listen to consumers to optimise plans and ideas.

Blog Lucas Hulsebos – CEO DVJ Insights