According to the International Monetary Fund, global growth will fall in 2023 and 2024. Meanwhile, in the UK, a Conservative peer recently lamented, “Our GDP per capita is lower – for heaven’s sake – than Lithuania”.
Is the picture any rosier for the market research industry? Unfortunately not. Recent figures shared with Marketing Week showed net spend on market research has been negative for the best part of a decade.
So how can research agencies adapt and turbocharge long-term sales…
…while remembering that (based on the saying) profit is also key in providing sanity?
One promising vehicle is behavioural science (BeSci). Indeed, research has shown companies applying the principles of BeSci outperform their peers by 85 per cent in sales growth and more than 25 per cent in gross margin.
This article describes a critical way in which behavioural science boosts research agency growth: by reducing opportunity costs.
“Remember that time is money”
These were the words of Benjamin Franklin, from a 1748 essay. The advice is sound and clear: saving time saves you money.
But even though we all know this, how often do we practice what we preach?
Based on the latest reports, the research industry is worth a whopping £8bn to the UK. However, it’s clear time could be used much more efficiently. Take, for example, a recent UK Market Research Society survey with over 700 research professionals. A key recommendation from this study was that “employers should look at ways to help better manage workloads”.
It turns out there are two especially consistent and lethal time – and therefore money – leaks in research agencies.
Time/money leak one: Qualitative analysis
Recently, I came across an interesting article where the author declared, “Most market research projects look a lot more like wandering in the woods than they do consulting a map”.
According to the article, most research projects meander along, usually involving two stages:
Observing human behaviour
Trying to make sense of observations made
But what’s the problem with that?
Well, first, the author claims that without a map to guide us, “divining the signal from the noise of all the data collected can introduce subjectivity, bias, and inaccuracies”.
Okay, so not good.
However, from my qualitative experience, I would also add that the absence of a map often leads to very long analysis sessions, which frequently draw heavily on senior staff time.
Again, so what?
Well, one way long, resource-intensive analysis sessions create hidden monetary leaks is through what economists call opportunity cost. Opportunity cost describes the potential benefits an individual or business misses out on when choosing one alternative over another.
In short, more time on analysis equals less time on other things, such as pursuing new business activities.
From a growth perspective – and especially where senior staff are concerned – what would you prefer your teams to be most focused on…?
Time/money leak two: Quantitative analysis
Before any quallies start writing in, the time/money frittered away in quantitative analysis is at least as eye-watering…
Another fascinating article I recently devoured argued that – perhaps contrary to conventional wisdom – “being data-driven is impossible”. Instead, “we can’t help but view the world through the lens of our pre-existing theories”.
So why is that a problem?
Well, first, according to the author, our pre-existing theories are often wrong. Again, not good. However, when multiple people put forth different – remember, often wrong – theories, this also hugely inflates quantitative analysis time in particular.
The economist Ronald Coase coined the phrase, “If you torture the data long enough, it will confess to anything”. Unfortunately, as quantitative researchers, we are often swept along by a multitude of pre-existing theories – and unwittingly suckered into torturing the data for vast periods of time.
But again, so what?
As above, the opportunity costs are crippling. Large amounts of time could be much better spent on revenue-generating activities. Further, painstaking bouts of “data torturing” also sap researcher morale. And with inflation still high, the average cost of filling a (junior level) vacancy has ballooned to £6,125.
If you want your agency to grow, can you afford to swallow the opportunity (and recruitment) costs caused by our pre-existing theories…?
In summary, opportunity costs associated with both qualitative and quantitative analysis are a consistent drag on research agency growth.
So what’s the solution? There are two key steps.
Step one is understanding the scale of the problem:
How many days in a typical month does your research agency spend on qualitative analysis?
How many of these days involve senior staff?
Most crucially, how much do the above add up to over the course of one, five, and ten years?
And what’s step two? Step two is understanding how BeSci solutions can help – the most critical being behavioural models.
In summary, behavioural models provide two key things:
The “map” is urgently needed in part one above. When considered from the research design stage onwards, maps enable us to do less “wandering in the woods” and to make qualitative analysis much more structured and efficient.
Accurate theories, as identified in part two. Again, thinking about theories in the design stage helps to slash the time spent “torturing the data” in quantitative analysis.
Behavioural models are an essential tool to reduce opportunity costs. Not only will this help boost your agency’s long-term growth, but you’ll also be doing Benjamin Franklin proud.
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