Original ideas are rarely wholly original. Most innovations come about through a process of fusion. A chance remark opens our eyes to a fresh take on a well-worn idea; we spot a pattern emerging from fragments of data or draw a parallel between some phenomenon in business and the natural world.
Even so, fostering creativity isn’t easy. When we start school we begin to put knowledge into boxes – English and mathematics, arts and science. In our careers we find that knowledge is walled in by business structures – sales and marketing, customer services and finance – blocking an all-round view of customers and their needs. But could the world be organised differently?
Know your market
Strategic Research managing director Steve Wills believes that it could. In a paper with Nationwide Building Society head of market research Pauline Williams – which took the top award at the 2004 Market Research Society Conference – Wills argues that commercial decisions are hampered by the absence of “deep embedded knowledge about customers and the market.”
To see customers from all angles, he argues, knowledge has to be liberated from every part of the business – sales and finance, planning, market intelligence, customer service and complaint handling – and brought together to create a “joined-up” view that can be used to guide strategy at the highest level and support frontline employees. To make this happen, Wills argues for the appointment of a director of customer insight, reporting directly to the chief executive or, at the very least, with direct access to the chief executive’s top team.
He writes: “We must routinely talk about insight as a strategic asset. We must be arguing for the value of customer insight to be reported in the company report and accounts – just as some are beginning to report the value of brands, and intellectual property, and are moving towards valuing knowledge in more general terms.” But is such a cultural shift either practical or desirable? Not everyone is convinced.
Power is knowledge
The first problem arises from the relationship of insight to business strategy. Although knowledge based on analysis should inform strategy, knowledge, on its own, does not create strategy. It is merely an input. “If you make someone director of insight, you create a power base without operational responsibility for creating value,” says Marco Rimini, director of strategy at J Walter Thompson (JWT) in London.
The second difficulty is that there is often no obvious mechanism for quantifying the difference that insight makes to a brand’s success. Take, for instance, the relationship between insight and advertising. Briefed with identical insights, two creative teams might come up with radically different campaigns: one an award-winning success; the other a flop. Rimini says: “Demonstrating the return on advertising to chief executives is controversial; expecting them to swallow a figure for insight is ridiculous.”
But if conferring boardroom status on insight directors is not the solution, what is? One way to make better use of knowledge might be to concentrate knowledge workers from across the organisation into one team, under the aegis of a single department – marketing, IT or business analysis. The drawback here, however, is that a team based in marketing might continue to emphasise market research, while the IT function might favour database methods.
Another possibility is to come at the issue from a change management perspective. For instance, Link Consumer Strategies managing director Louise Southcott advocates appointing a senior manager as champion of insight. “Many businesses are still at the stage where they need someone to challenge how things are done and fight for higher standards [of customer care],” says Southcott. “Once the culture has been changed the role could be phased out.”
A connection is made
JWT’s Rimini argues for a more radical shake-up. “In many businesses, marketing and corporate strategy work from different sets of information and don’t connect well. Maybe it’s time to make the customer central to decision making, by merging marketing into corporate strategy,” he suggests.
Businesses differ hugely in their structures and cultures, so it is hardly surprising that there is no one-size-fits-all prescription for managing knowledge more profitably. However, it is not just brands that need to get smarter at extracting insight from information. As companies become adept at integrating data, it seems reasonable to expect their suppliers to evolve similarly, “to reflect the new joined-up insight needs of the market”.
One possibility is for agencies to extend their skills by purchasing expertise in related areas, such as database analysis, forecasting and market modelling. A few agencies, including MORI – which acquired Market Dynamics in 2002 to develop a capability in strategic analysis – have begun on this path. But according to Mick Byrne, planning director at communications agency OgilvyOne, most agencies are fighting shy of diversification: “There’s been a lot of talk, but not much evidence of dissolving the barriers between data analysis and market research.”
Tempting though it may be for agencies to play to their traditional strengths in data collection and research remaining highly specialised may prove a riskier option, in the long-run, than embracing the higher value business of integrating and analysing knowledge. But if traditional agencies stand to lose, who will gain?
Strategic marketing consultants offering data integration and analysis, in addition to market research, have been picking up business for some time. Strategic Research is active on this front and was recently hired by financial services group HBOS to pilot a scoring system that will allow the bank to predict, from someone’s account history and interactions with the bank, whether a customer is loyal and satisfied or potentially on the point of switching to a competitor.
Another related technique – one that can be used to profile customers’ preferences and pinpoint the service improvements that would do the most to please them – involves linking what people say about their priorities, when questioned in surveys, with information on how they spend their money. “It’s the key to talking appropriately to customers and offering people products that are right for them,” says Steve Mattey, managing partner at brand consultant Tree.
A wider perspective
However, learning from insight isn’t simply a matter of transmitting knowledge to marketers or product developers. To genuinely improve business profitability, customer knowledge must also change the way in which operational employees in stores, call centres and back-offices behave.
“Clients aren’t simply the people who commission research, they include those who deliver service to the customer,” says Nigel Cover, board director at Grass Roots, a company that specialises in performance improvement. He adds: “There must be more emphasis on getting the customer’s voice heard, all the way through the business.”
Successful brands seem to have a sixth sense for doing the things that matter most to customers well. The most effective businesses understand this and are prepared to invest whatever it takes to acquire the knowledge they need. But market researchers shouldn’t assume that they are the natural beneficiaries of the growing passion for insight.
As Wills and Williams point out, in the modern business, customer knowledge is created from multiple sources and directed towards multiple audiences. If market researchers fail to broaden their skills to reflect these new realities, they risk becoming “bit players” in the knowledge economy – while others reap the rewards.
MAKING THE MOST OF WHAT YOU KNOW by MORI MARKETING DYNAMICS DIRECTOR ANDY THWAITES
Business people often have to make critical decisions based on imperfect knowledge. There is rarely a piece of market research that can, in isolation, answer questions such as: ‘What areas should I be looking to for profitable new product development next year?’ Ã¢â¬â yet increasingly this is the type of question that business people want answered.
This is where organisations like MORI Market Dynamics come in. We are happy to make recommendations – albeit often judgements – based on a variety of different pieces of information and research. Here are two examples, one specific to a business, the other from our syndicated forecasting service, which illustrate how this style of working helps us fulfil our clients’ needs.
In the first example, Marks & Spencer Money wanted a realistic estimate of the revenue stream a new M&S Mini Cash ISA could achieve. They also needed to understand how changes in the product specification and in the level of marketing spend would affect the revenue stream.
So MORI Market Dynamics constructed a forecasting model, based on a combination of customer research and market analysis. The model allowed M&S Money to independently alter product characteristics, competitive offers and economic conditions and determine likely revenue streams, under various conditions, for the next five years. At the end of the project M&S commented: ‘At last, research that gets off the fence!’
The other example concerns ‘Consumer Finance’, a forecasting product for financial services. We begin by forecasting the overall size of a particular sector, such as mortgages or health insurance, using data from secondary sources. The forecasts are then adjusted (judgementally) to simulate the effects of outside events, such as changes in household structure or government regulation. All our assumptions are explicitly stated.
Finally, we draw upon MORI consumer research to predict where the sales will be made, whether through branch networks, independent financial advisers or direct marketing channels. Another illustration of a readily exploitable business tool made possible by joined-up analysis.
Andy Thwaites is presenting on predicting future trends at Insight 2004. This event, for users and buyers of market research, is running at London’s Earls Court on October 26 and 27. Supported by Marketing Week, the event includes more than 120 exhibitors and is co-located with the DM Show. At the conference, leading figures from the world of insight and brand marketing will be sharing their thoughts on the latest online, international and brand research techniques and talking about their experiences of developing brands and markets, with the aid of research insight. For further information and a full event programme, please visit www.insightshow.co.uk.