I’ll start with a true story. A potential client at a large B2B company emails me and says he was talking to a colleague about doing market research as they start a new product development project. The colleague refers him to us. (Great news; I love this story so far – new client, product development, before project start.) He goes on to tell me how they really want to do this right because in-light-of competitive products already available, they not only need to try to get to market quickly, but more importantly they must get it (the product) right. (Still love this story – clients who want to do the “right” thing.) He explains a few more details of the project, enough for me to get a handle on who would need to be included in the market research study, and then asks me to put together a research proposal for them, with some options, like “good,” “better,” and “best.” (This is STILL a good story, but raises a caution flag for me that while they might want to do it “right,” the “best” option may not be feasible for them.) So, I do just that. I write a proposal. I give options. All the options are feasible and I believe all the options can get the client what they need to make decisions. I send the proposal off and shortly thereafter I get an email back saying they LOVE all the options, but even the “good” (enough) option is way out of their budget. (This isn’t the end of that particular story, but it’s the end of the story for this article. Because you’ve heard this story before, from one side of it or the other.)
So, I want to talk about the cost of market research – why research is worth the cost, what drives costs, and what saves costs.
Why research is worth the cost.
Every time a client tells me they can’t afford research, I want to ask, can you afford not to do research? Can you afford to make expensive decisions without good information? Not conducting research can result in million-dollar (or more) mistakes. To this, some clients may say, “I’ve been in the business for 40 years, I know the answers to these questions.” Honestly, that’s unlikely, because people change, technology changes, perceptions change, etc. I’m not a proponent of conducting unnecessary research and I have, in fact, advised clients against it in some instances.
On the whole, if you are even thinking you may need research, then you probably do. And if you’re not thinking you need research, there’s a better than 50/50 chance you’re simply following what your competitors and the market are doing and getting by – by getting by. In my opinion, the biggest reasons for doing research are: re-branding, product development, customer satisfaction and/or loyalty, and advertising/marketing testing. Just think about those areas and how much money your company invests in them. A LOT. Can you really afford NOT to do research?
What drives research costs?
I believe the greatest impact on the cost of research is getting the right research participants – whether that’s for focus groups, IDIs, or online surveys. And not coincidentally, the greatest cost is spent on the most critical of the research components. You MUST have the right research participants, because if you don’t, your research won’t mean anything. Don’t skimp on getting the right participants. You don’t want your research results and the ensuing decisions to be based on bad information.
The second greatest cost driver is often the expertise of doing the research. This would include your researcher’s time and skills to make your project happen and get you the unbiased results you need to make decisions. Again, this seems like a no-brainer. You NEED to spend money to make sure the person or people who are conducting your research know what the heck they are doing and then know how to analyze the results, in an unbiased way. (Sorry, but If you’re doing DIY research, “unbiased” probably isn’t a priority.) Your project manager, moderator, and/or analyst likely have years of experience conducting market research. Don’t skimp on quality work.
What saves costs?
Clients always ask me, “where can I save a little money on this research project?” My first response is to eliminate any questions or aspects of the research that do not specifically pertain to the critical questions at hand. Get rid of the “nice to know” and save only the “need to know.” Get rid of the five questions the marketing team wants to know about a different topic and stick to the objectives of THIS project.
I hesitate to say you can save money on sample size, but in some cases, this is true. If you’re doing focus groups, you probably don’t need 11 participants in each group. A conversational 8 or 9 participants per group is great. And by decreasing your group size, you could save over $1,000 on your project. If you’re doing online research, maybe you don’t need 200 (hard to find) participants in each of 5 geographically remote areas. The error margin on a sample of 1000 is +/-3.1%. Maybe 150 in each area will work. The error margin on 750 is +/-3.6%. If your cost per participant is low, then this isn’t a factor, but if your cost per participant is higher (say $4 or more per), then you may be saving $1,000 or more for +/-.5% margin of error. Project specifics will really determine if reduced sample size is a viable way to save costs and it’s important to know when this is an option and when it’s not.
Lastly, maybe you can save money on the extent of reporting. Reporting from a market research analyst is critical. No one is closer to your research project and no one can provide unbiased analysis as well as the project analyst. But reporting gets expensive. And rightfully so. Clients are looking for the insights that will drive their decision making. But, is a 25-page comprehensive report critical (maybe) or is a 5-page (summary) report critical? Do you need quotes from the qualitative? Do you need extensive graphs for your quantitative? Some of these things can add a lot of money to your reporting costs, when maybe what you really need are the rich insights the analyst will glean from the data or information and not necessarily every piece of supporting evidence for them (which would be in the raw data).
As a researcher, I continue to strive to write the most important and noteworthy information with brevity. It’s hard not to tell everything. But really, your researcher’s key thoughts and analysis are the most important thing. I’m happy to develop a report full of enlightening graphs and quotes that tells the story of the information gathered. But, if you NEED to do the research and you NEED to save money, the Reader’s Digest version of the results may be an option.
You may wonder why a researcher is giving you ways to save money, when it will affect her bottom line. It’s because I believe that much in the value of market research. I WANT you to do research. I WANT you to have the answers you need to make solid decisions. I want to be part of your success.