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
“This means upgrading the performance of the insight organization
by addressing such issues as hiring and talent, career paths, and
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.