One of the important functions of market research is to quantify marketers’ “gut feelings”. Putting a number against perceived potential, or identifying the attitude which leads to a sale can be invaluable in defining a strategy. Yet when it comes to choosing an agency to carry out the research, most marketers still rely on the same “gut feeling” they are trying to substantiate.
In many respects, this is not surprising. It is the way in which most marketing services suppliers are appointed, including those who will be handed far greater budgets, such as advertising agencies. And yet it goes against the general trend of business decisions, which is to codify the process and validate any choice against fixed criteria.
“It can be done formally,” accepts Philip Talmage, market research manager at Commercial Union, “but it is usually done informally. Some research agencies are now adopting ISO 9000 certification and those client companies with similar certification do tend to use formal techniques when choosing research suppliers.”
This has been the subject of some discussion within the Association of Users of Research Agencies (AURA). Certain clients, such as Whitbread, are keen to see a more structured approach to agency selection. Others prefer to draw on their own experience and that of their contemporaries.
This is where AURA and its industry-specific analogues, such as the General Insurance Market Research Association (Gimra), play an important role. According to a spokesperson for the Central Office of Information: “We are sometimes buying research for areas which are unfamiliar for us and we will seek intelligence from other buyers. We are a member of AURA and share information with other members about the quality and performance of research agencies. We will normally seek corroboration from other sources before deciding whether to invite an unknown agency to tender.”
Within a concentrated-skills area such as market research buying, such peer group contact can be extremely useful. But it does not preclude some degree of structure in using agencies. The COI holds a register of agencies it has used or invited to tender in the past two years, plus a list of agencies it intends to seek a tender from in the future. New agencies are regularly seen, but no more than one or two per month.
“We have a policy of seeking a tender from at least one agency we have not used or asked to tender in the past two years on ten per cent of projects which go out to tender,” explains a spokesperson. Since between 150 and 200 research projects are bought in each year, this gives the COI exposure to a considerable raft of potential suppliers.
Structure can also be imposed on the process from the other direction, through agencies adopting their own formal techniques. Nick Watkins, director of NOP Corporate and Financial, notes that his company has adopted ISO 9000. “To ensure the client is happy at the end, we spell out carefully what we are going to deliver, pricing, timings, and so on. To that extent, as an agency with quality management systems in place, we use it to the advantage of clients. If they don’t have them in place, they can use ours to help them.”
Time represents the greatest pressure on both clients and agencies, but its effect is not the same on all of them. For every buyer keen not to let haste lead to a poor decision, there is one who will stick to a roster of known agencies, through lack of time to look around.
Paul Beswetterick, group market research head at National Westminster Bank, notes that “marketing guys are far busier” and have little time for hour-and-a-half presentations from every agency. He believes the same time pressure is also putting greater demands on researchers to get to the heart of their findings more directly.
“By contrast, if you watch a presentation by management consultants compared to market researchers, the former are more used to dealing with more senior people. They do simplify and are more courageous in saying all the issues are there, but these are the key ones and these are the reasons. They are not stuck on proving every claim,” he says.
Technology is now helping to deliver faster information to buyers about their potential suppliers. The Association of British Market Research Consultancies has set up a database, called Select Line, which holds details on 124 of its 152 member companies. Clients can phone up the ABMRC and have a search done on the database according to key words. These might be industry or skills-specific.
“There has been a great level of interest because it cuts out a lot of leg work,” says membership secretary Jill Lonsdale. A shortlist of between three and six agencies, depending on the search, will be supplied. Detailed information can be cross-referenced from the ABMRC Handbook.
Since launch a year ago, there have been 200 enquiries, although the pace is increasing. At last month’s Marketing Forum on the Canberra, 60 separate searches were carried out. To understand the impact the system was having, ABMRC researched its users. From the 33 per cent who responded, including blue-chip companies such as Tesco, Sainsbury’s, 3M and BOC, the average number of consultancies recommended by Select Line proved to be 3.2, of which on average 2.5 were asked to quote.
The outcome of these enquiries was that 31 per cent of users placed a job with ABMRC members, 25 per cent said they were likely to, 17 per cent had placed work with a non-member, and 27 per cent had not gone ahead with the project at all. The average value of projects placed was 17,000 out of annual budgets averaging 100,000.
But it is not just technology that is enhancing the selection procedure; human skills are also coming to the fore. Across marketing, many traditional management functions have been shed, although the requirement for those jobs to be executed remains. A new breed of consultants have stepped into this skills gap, such as John Wilks, principal of The Market Research Guidance Centre.
Wilks notes that “the more specialised the information needed, the more esoteric the function – market research is esoteric. So a general manager doesn’t have the necessary skill to select the right organisation. That is why they select somebody like myself.”
He believes the use of “shadow departments” like the Guidance Centre will grow, as headcounts are reduced on the client side and as the complexity of work being carried out under the umbrella of market research increases. “There is certainly an increasing need to tie internal databases into the market data provided by research,” he says.
Clients are becoming concerned about turning the findings of surveys into usable information through what Wilks calls “an iterative process. Not a lot have the expertise to do it, but you can do it. It revolves around the way you get a sample and how you tie it to individual responders. You can do it with large qualitative groups to provide an overlay for the database.”
The trend towards greater use of external consultants, and for those consultants to be working for suppliers, is evident across marketing services. Many of them are former clients who are able to bring considerable experience and expertise to bear. But it is a trend that some clients are wary about.
“I feel it is a big mistake, especially in insurance, which is technically demanding and difficult to research,” says Torben Jessen, market research controller at Orion Personal Insurance and chairman of Gimra. “You need research expertise in your own company. At Orion, we are bringing more skills in-house rather than fewer.”
Where clients are making greater demands for interpretation and analysis, it could bring about changes that agencies will find hard to bear. One of the unspoken truths of market research is that it relies extensively on the energy and dedication of recent graduates as cheap labour. While they may be numerate and keen, they do not have much understanding of the marketing issues at hand, let alone the broader business picture. One senior client says agencies need to employ more marketing people, but recognises this would push prices up.
At NatWest, Beswetterick would welcome more heavyweight input from agencies. “There is a delicate balance in the difference between what the research says, which is objective, and what the researcher says, which is interpretation. Confidence is the key. If you have no confidence in the researcher, you have no confidence in the research,” he says.
If agencies are concerned about being asked to adjust to the convergence of database marketing and market research, many clients find it just as perplexing. At Commercial Union, Talmage notes that the two are still functionally separate. One outcome is that the database function is buying in commercial information, leaving the researchers to carry out bespoke surveys. “I can sometimes see we ought to be joining forces and working as a whole. But life’s too short to have the amount of internal information we ought to have,” he says.
It is also too short and too expensive to transfer some of the same techniques that are applied to sourcing advertising agencies into market research. The COI says it looked at the possibility of operating a formal roster system, but concluded there were no real advantages
and that the costs would exceed the benefits.
Technology may provide some of the solutions to these issues in allowing more complex research and analysis to be carried out at greater speed for less cost. Computer-assisted telephone interviewing has transformed large-scale surveys by standardising formats and giving rapid feedback.
At NOP, Watkins says entirely new techniques have been developed, such as the fusion of its FRS data with a model developed by Berry Consulting and a current test in Cambridge using interactive TV to conduct surveys.
“You have got to create services that give clients a competitive advantage. They are increasingly under time pressure, the pace of change is faster, and organisations are de-layering. That means they need greater support from external suppliers,” says Watkins.
If database and research skills do become more closely aligned, the need to justify the choice of supplier will become even more pressing. Linking findings to subsequent marketing action will begin to reflect back on the quality of the research and therefore of the buyer. For the time being, “gut feel” and individual experience is enough. What formality exists is mostly, as Talmage admits, to do with “making sure the boss is happy”.