By Patricia Roller, Founder and CEO, Vidlet
Despite the rumors of its demise, market research is not dead. It’s just stuck in its old sluggish ways. We use surveys, focus groups, and very occasionally field research to understand what customers are thinking. Ethnographic, or design, research can be the most effective method for truly understanding your customer in context, but it’s prohibitively expensive and the sample size is limited due to time and cost.
According to a Frost and Sullivan report, companies spend an average of 1 percent of their total revenue on market research. But all that money being spent hasn’t magically helped business better understand their customers — over 90 percent of new products introduced to the market still fail.
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If you look at their track record, most companies are spending money on market research methodologies from the Mad Men era, without getting any deeper insights or producing any better products. Coca-Cola’s “New Coke,” Coors Rock Mountain Spring Water, Colgate Kitchen Entrees — all of these products are regarded as some of the biggest flops in marketing history, all developed by companies that spend millions of dollars annually on market research. It makes you take a step back and ask yourself why.
If companies are spending extraordinary sums of money trying to understand their customers, yet still failing, perhaps the market research techniques they are using don’t work as well as we once thought they did.
There a few factors at play here. First of all, the emphasis for a long time has been on the quantity, not the quality, of respondents; research firms are often paid by how many respondents answer a survey, even if it means tapping someone who’s not actually part of the survey demographic. Focus groups are one of the most common market research methods, yet their shortcomings are well known. It’s hard for people to be candid, spontaneous, and convey habits and values in a group setting, where peer pressure and other social phenomena exert influence.
On the other side of the spectrum is the growing elitism of ethnographic or design research. While the firms and individuals working in this field are exceptionally skilled at what they do, their talents don’t scale well. Ethnographic research is valuable and appropriate for some use cases, but it is also expensive, time-consuming, and limited to a small sample size. Is gaining insights from 5 respondents really enough? Wouldn’t you like to engage a broader set of people in different locations? There are very few products that are limited to a single geography. You need to account for cultural differences in a global market.
In order to develop innovative products and services, companies first need to innovate the way that they’re conducting market research. Technology has improved our ability to connect to anyone anywhere in the world with a smartphone. Consumers have a voice and an opinion. It’s easier than ever to find consumers and get their opinions, yet most companies still haven’t put the smartphone at the center of their research strategy. Apps like Vidlet, a new mobile video research tool that I founded with former colleagues from frog design, are solving issues related to sample size, geography, relevance — and the traditionally high cost of traditional qualitative research.
Brands can and should be using digital technology to maintain an emotional connection with users, particularly with a generation that has such an intense emotional and personal connection to digital technology itself. Brands should allow customers to capture and share information on their lives using mobile video, which market researchers could then organize and distill insights from.
Let’s take the example of TripAdvisor. You will often see the same hotel get rated clean by one customer and dirty by another. But what does clean or dirty really mean? If you could show me on video it would be more meaningful. Another example is a study we did for a health care company about the type of care people would like to receive outside of their doctor visits. It was startling to hear the unique stories and expectations from the respondents. They actually did not want to spend a lot of time with doctors and hoped that their local pharmacy would be a place to go instead. It was insightful and unexpected for our client and helped shape their plans.
Market researchers already know that video is a powerful communication tool. The problem with research is that the “old world” mentality and outdated methods have to evolve. It’s time that companies embrace readily available technology to yield insights that are more accurate, timely, and effective.
Patricia Roller is a pioneer in the integration of design, technology and business. Roller is currently the CEO of Vidlet, a new mobile video platform that transforms how brands communicate and capture insights for empathy and knowledge transfer from their customers, employees, and anyone else important to their business. Roller is the former owner and co-CEO of frogdesign, a global design and strategy firm operating across 16 offices globally.