A company's relationship with consumers is only as good as the information it has on them, but top retailers are hobbling themselves by not analyzing data properly, according to a new study by Boston Consulting Group. 

The study claims that nearly 90% of blue-chip companies are conducting market research, but they are not making the most of the data collected. Rather than using the information to set prices, find distribution channels or plan promotional activities, large brands are having trouble figuring out what to do with the data they collect. 

BCG surveyed 800 executives from 40 companies, each with sales of more than $1.5 billion, and found shortcomings in the use of research to drive business growth.

The study, titled "The Consumer's Voice -- Can Your Company Hear It?", found that 72% of respondents said consumer insight is used to help with the development on new products and marketing messages, but only 30% are using consumer data to help decide channel and distribution strategy. The survey found that only 1/3 of respondents use research as an input to financial forecasts while only 38% use it to drive pricing.

A disturbing insight comes from what happens to data after it is collected. 73% of consumer insight staff said that they can answer the question "so what?" about the data they share, but only 34% of their counterparts in the business units think analysis questions are answered. Meanwhile, less than half of consumer insight staff believe that senior management would pass "a pop quiz on basic facts about the consumer."

That falls in line with the estimate that only 28% of executives believe they spend enough on market research today. But the study found no connection between spending as a percentage of sales and insight performance, which shows that companies are not allocating resources properly.

In fact, the most successful companies actually spend less on consumer insight per full-time insight employee. From the study:

"As a result, the insight team is not forced to hop from study to study and instead has time to effectively draw out strategic implications from the research through structure and analysis."

"Giving the insight team a seat at the table both requires and enables them to rise to the occasion," said Kate Manfred, a Chicago-based principal and a coauthor of the report. "This means upgrading the performance of the insight organization by addressing such issues as hiring and talent, career paths, and training."

One reason companies might focus their research less on consumer intent and opinion surveys is because they can find that data elsewhere.

Becky Gillan, VP of global market research and satisfaction at Starwood Hotels & Resorts, tells AdWeek:

"It's about how do we capture all this social media [commentary] and all this emotional connection with the customers and do better? This is the next evolution from e-mail surveys, which was a big sea change" in itself.

But at the same time, companies need to maximize their research spending by investing time and effort into analyzing the data they collect. Market data and insight is only as good as how it is used.

Meghan Keane

Published 24 November, 2009 by Meghan Keane

Based in New York, Meghan Keane is US Editor of Econsultancy. You can follow her on Twitter: @keanesian.

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