In Market Research, The Message is the Method:

Present “Bad News” from Market Research & Live to Tell the Tale

The objectives of the article are to:

1) Demonstrate the importance of the high-quality research (and its presentation) in persuading skeptical clients to accept research findings, and use them as a guide to making changes to their products and/or services; and

2) Corporate culture plays an important role in the acceptance of market research findings that are considered negative or “bad news”.

The market researcher can only control the quality of the research, its interpretation and presentation.

Presenting Good News

Market researchers prefer to present good news to their clients such as:

• High customer satisfaction scores
• Uncovering new markets and business opportunities

Generally, anything that tells the client that all is well, keep doing what you’re doing, maintain the status quo, make only small adjustments to the way you do things

The market research brings the good news and looks like a hero: a confirmation that what the company is doing is perfect and that the money spent on the research was well spent, indeed.

Stakeholders, shareholders and internal clients are all happy. Clients can’t get enough of this good news – and neither can the market researcher.

Presenting Bad News

Market researchers do not like to present bad news (and I’m sure that this is a surprise to all of you):

• Low customer satisfaction scores
• New and unexpected competitors threatening the company’s position in the market place

Generally, anything that forces significant changes to a company’s product and service offerings is a hard sell, because the ramifications move up the chain of command, impacting the c-suite, stakeholders, shareholders, board of directors, etc.

(Put yourself in their shoes: Imagine being a senior manager or VP and you need to explain the research results to your boss: they are quite likely to push back against the results, proving the old adage “Denial is not just some river in Egypt”)

Tension in the Air

This is what it feels like for the market research consultant presenting the “bad news”: The world turns dark, cold and hostile, just like being caught outside under a supercell thunderstorm in the high plains.

You can run but you can’t hide. Nor should you try to run and hide.

If you did your job properly, you should be able to present your findings with confidence and provide the client with a solution, or at least guidance to solve the problem.

It is these situations that prove your worth as a market researcher.

A Recent Study As An Example

A recent study provides the scenario for this article:

• Client provides a subscription service, paid full at the beginning of the year or 12-month term

• Customers tend to be large multi-nationals, with 10,000 or more employees worldwide

• Biggest contracts bring in revenues of several million dollars annually

• Weakness: a use or lose it policy, that is, no carrying over of unused service to the next year

For example, a customer pays $1 million up front for a 12-month subscription and 11½ months into the subscription they’ve used only used $900,000 worth of the service, they need to spend the remaining $100,000 in the last two weeks or else the money is wasted on unused service.

If you’re a senior manager in that company, how do you explain the loss or waste of money to your management group, etc.? Very uncomfortable situation to say the least.

Yet that is the situation some of the client’s customers were faced with, and many of these customers were large multi-nationals.

Our research found that a competitor was aware of this flaw and that their sales reps were exploiting it during sales presentations, telling prospective customers “There is no need to worry about unused funds or service. You can carry over into the next year with us.”

The result for our client was devastating: lost bids on new sales as well as the loss of long-time customers: this was cost the client literally millions in lost revenues.

The client’s reputation was being damaged.

Presenting the Research Findings

The research findings were indisputable. We were using a mystery shopping methodology modified for the B2B environment.

Our client’s customers were aware of the problem. Our research showed that they reacted positively when, during the sales presentations, the competitor’s sales reps raised the issue of carrying over unused funds. No use it or lose it with the competitor.

The question we asked was: Why wasn’t the client aware of the problem earlier, since they conduct customer satisfaction studies? This is an issue for a separate discussion.

The client company (meaning, the human beings who make up the senior management team) had to accept or reject the research findings – this is out of the hands of the market researcher.

In a severe test of the company’s corporate culture, the client made the difficult but correct decision to modify their product offering: no more use it or lose it policy. (They were lucky in that it was only a policy they had to change, as opposed to overhauling or modifying the actual product. Yet it took some convincing and there were some tense moments during the presentation.)

Validation of Research

Q: Why do clients resist research findings that show the need for change?

A: Validation of the research results takes time and can take place only after changes in the product offering had been made.

That is why their decision was a hard one to make – even though it was just a change of policy and not a change of product or service.

Proof of the validity of the research lay in the comparison of sales wins/losses and customer retention/losses in the six months before and after the research:

• From unsuccessful bids and loss of clients
• To successful bids and retention of clients

Improved sales alone justified the cost of the research on a $400:$1 ratio.

I propose a 0.1% rule on market research budgets (excluding the salaries of market researchers): A company’s market research should be a minimum of 0.1% of sales:

• A company with $1,000 million in annual sales should budget at least $1 million for market research

• A company of $50 million in annual sales should budget a minimum of $50,000 for market research.

Summation

Our experience with this research project leads to the following four conclusions:

1. Acceptance of “bad news” is largely dependent on two factors:

• Quality of the research (execution, accuracy of data and presentation of the findings) and
•  Corporate culture of the company – the human beings who form the senior management group

The market researcher can only control the first factor.

2. Non-traditional market research methods can play a positive role in helping a company improve its customer service experience and, hence, improve sales and customer retention. Mystery shopping, for example, can provide insights into real time and real life interactions between customers and vendors.

These methodologies do not replace traditional market research or Big Data, but they can serve as complementary research strategy to add a more nuanced understanding of customer behaviour and customer experience

3. Every $1 a company invests on market research can result in hundreds or thousands of dollars in new sales and customer retention. Be aware of lag time in seeing the results.

Market research is an investment, not an expense.

It is vital to change the mindset that regards market research as an expense, a cost of doing business as opposed to being what it really is: an investment with real and quantifiable benefits

4. Market research budgets should be a minimum of 0.1% in annual sales in order to see value for their market research investment