An insightful new report from Boston Consulting Group reveals that “most companies have not yet unlocked the value of consumer insight.”  The report is based on a quantitative survey of more than 800 executives from 40 global companies with at least $1.5 billion in sales.  The survey was supplemented with around 200 qualitative interviews, and the participants included line managers as well as members of the consumer insight function in these companies.

The authors found that companies fall into one of four stages of consumer insight capability:

  • traditional market research function
  • business contribution team
  • strategic insight organization
  • strategic foresight organization.

The companies falling into the last two stages are getting the biggest return on their investments in consumer insight.  However, according to this report, only about 10% of the surveyed companies are in one of these two stages of insight capability.  In Stage 1 companies, the insight function is more or less an “order taker” relegated to “back room” status, and the focus is on tactical research.  Things are a little better in Stage 2 companies in that  sometimes projects are more strategic, but the insight function is still project-focused.

If the consumer insight function is relegated to back room status in the majority of companies, does that make research agencies a back room to the back room?

If so, that’s a big problem for the industry, especially the large integrated companies that are trying, for strategic reasons, to be more “consultative.”  The research industry is facing a number of challenges that, cumulatively, are creating greater fragmentation in the industry.  Data collection is regarded as “commoditized”–another way of saying that it’s an intensely competitive activity over which the larger, integrated companies no longer have exclusive control–and similar price pressures are spreading to all parts of the research value chain.

I think that the research agencies who are trying to move up-market into more consultative roles face the same barriers that their counterparts in Stage 1 and Stage 2 companies (who comprise the majority of clients) confront in trying to gain a seat at the management table.  Agencies that want to grow beyond serving as the back room to the back room will need to transcend the focus on individual projects that characterizes Stage 1 and 2 companies.  The best way to do this might be to help the Stage 1 and 2 insight functions move into a higher stage.

Building on some of the suggestions made by the authors of the BCG report, research agencies have a couple of opportunities here.  First, research agencies might do more to help increase the business skills of their Stage 1 and 2 clients.  In particular, the client-facing professionals in research agencies often have experience with a broader variety of business problems than the average researcher in a Stage 1 or 2 insight function, and there are many ways–formal and informal–that these professionals might share those experiences.  Second, research agencies are often in a position to change the style of engagement between the members of the insight function and their internal clients in line management.  One trick that I’ve found effective is to insist (gently, of course) on broad stakeholder participation at the beginning of a project.  Agency staff are also in an excellent position to help Stage 1 and 2 clients link the insights from individual projects to broader business problems.

So, at least part of the solution for the research agencies is not so much becoming “consultative” as it is using their existing capabilities to help their Stage 1 and 2 clients move higher up the insight ladder.

Copyright 2010 by David G. Bakken.  All rights reserved.