You know you need to do more customer research before making product decisions and that you need some help collecting relevant consumer input. But, as a product manager, you may have limited experience in market research. How do you choose from the many market research options that are available? Which one is right for each of the different questions you might need to be answered?
In this final blog in our beginner’s series, we’ll provide a framework to help you choose the right tool for the job by looking at the two largest categories of services: Market research agencies and the growing category of research technology platforms. As you’ll discover, the question isn’t so much which to use. It’s which to use when.
You can read a Beginner’s Guide to Product Research to start at the beginning of the blog series.
If you search Google for “market research,” you’re likely to be overwhelmed with entries that seem to have nothing in common. This is because market research is a huge industry, estimated to be as large as $75B in 2020. It is composed of many segments, including firms that perform primary and secondary research, as well as alternative data sources, such as government agencies and educational institutions.
We’re interested in primary research services (aka, field research) because these services enable the sponsoring company to investigate a specific consumer group by asking questions and analyzing external factors. Unlike secondary research which analyzes trends in an entire industry and sells the data to any buyer, the sponsoring company owns the data gathered through a primary research study and can tailor the research to answer specific questions it is facing.
Historically, the primary research industry was dominated by full-service agencies that conduct customized studies on behalf of clients. But with the relatively recent introduction of research technology platforms, product managers now have other options. But when should each option best be used?
The short answer is that full-service agencies are best suited to answering complex questions in-depth, while research platforms are best suited to quick, directional feedback for fast decisions.
Now let’s dig deeper into the long answer.
Agencies are staffed with research professionals with specialized skills, tools, and resources. They employ a range of quantitative and qualitative research strategies to test important hypotheses or provide an in-depth analysis of consumer preferences and motivations. For example, an enterprise organization might use an agency to determine whether an acquisition in a new market will be complementary to their business.
Agency research methods are good at uncovering buyer motivations. They may employ focus groups, 1:1 interviews, ethnographic studies, usage tests, surveys, polls, and many more types of research to understand why buyers make the choices they do.
Specialized agencies can execute large-scale surveys that gather the many thousands of responses needed to make statistical projections and perform in-depth analysis against multiple variables.
The agency business model is typically based on a defined project that is described in a statement of work. Pricing varies based on project complexity, including survey size, geographic scope, multivariable analysis, and other factors. Projects are executed over several months and a modest engagement can easily start at $50,000.
Historically, the decision to engage a full-service agency has sometimes been made by default. Product teams in many cases were simply not aware that there were alternatives for their research objectives.
Even in the presence of alternatives though, there are still plenty of situations where the cost and time investment of engaging a market research agency remains the best choice. Broadly speaking, these are situations where both the questions to be answered and the methods required to answer them are complex. Here are a few examples:
If you need research conducted by someone who deeply understands the nuances of the carbonated soft drink market, that expertise needs to come from somewhere. If your team does not have it, it makes sense to rely on an agency with that specialization.
Very niche audiences
When sampling and quotas are very complex, an agency may be the best choice. An example might be if you need 40% of your respondents to be female business owners with revenues of $1-3 million dollars, another 10% to meet those criteria but also be under 5 employees, and the remaining 50% to be female owners of businesses with revenues of up to $5 million dollars. Accessing complex or difficult-to-reach audiences may require an agency with expertise creating these specialized participant panels.
In-depth qualitative research
When you need to develop a deep understanding of buyer motivations, a full-service agency may be required. They can conduct focus groups and live interviews to unearth a deep understanding of buyer behavior.
While research platforms are great for learning whether customers are likely to buy your product, you may need the expertise of an agency to help determine the potential total addressable market for that product. The requirements for assembling a valid audience sample are particularly complex. The quality of analysis and market projections depends heavily on the quality of that audience. Before engaging an agency for a custom primary research project though, look for existing market research that may answer your sizing questions. If such research already exists for purchase, your budget and timeline will thank you.
Integrating multiple study types
Given sufficient time and budget, agencies can conduct multiple types of studies and integrate the results. If the questions you are addressing are so complex that you need to combine quantitative surveys, qualitative interviews, and ethnography to answer them; an agency is probably the best choice.
You need help interpreting results
Sometimes simply conducting research is not enough. You may need someone to read responses, interpret, distill and make recommendations based on the data. Be realistic about whether you have those skills in-house. If not, an agency may be able to help. Because research platforms have become increasingly adept at surfacing insights, this requirement alone may not always drive you to an agency. In combination with one or more of the other factors above though, the need for help with interpretation and recommendation may be a reason to work with an agency.
In summary, full-service marketing agencies are most worth the substantial investment of time and money when research requirements are complex or very specific expertise is needed.
The category includes well-known brands, including Nielsen, JD Power, and GFK, and smaller boutique firms. In addition, management consulting firms frequently offer market research services, including McKinsey, Boston Consulting Group, and Bain.
Research technology platforms scale human research expertise and automate critical research tasks. These tasks include assembling a qualified consumer audience, formulating questions without bias, executing a survey, and analyzing the results.
In contrast to full-service market research agencies, research technology platforms are optimized to provide quick feedback to support rapid, and often iterative decisions. This does not make the choice of agency vs. platform an either/or. A company may engage an agency for a deep-dive project when deciding to enter a new market. That same company may also use a research platform to continuously test new features with consumers before investing in building them out.
Research technology platforms bring consumer data into a range of business decisions – from concept testing that validates product-market fit to early-stage discovery to find your next big thing. Because they provide data quickly, they can reduce your reliance on opinions when fast decisions need to be made.
Feedback Loop, for example, is a product-focused research platform. As such, it is designed to give product teams quick feedback about a range of decisions that commonly occur over the life of a product. This feedback is gathered through a short survey (10 or fewer questions) of a pre-qualified group of consumers matching your target audience, with a turnaround measured in hours rather than weeks or months.
Research platforms are the best choice when agility trumps precision, such as when:
Time is off the essence
When you need to make decisions quickly, the alternative to a research platform usually isn’t an extensive full-service research project – it’s guessing or making decisions based on internal opinion. Research platforms are useful for making informed decisions quickly.
You need to focus
When complexity is your enemy, not your friend, the constraints of a short, single-pointed survey help you stay on target to a particular question or topic. If you have other questions to answer, a survey platform makes it practical to simply run another test.
You need a gut check, not a dissertation
Research platforms shine when you need to test an idea by bouncing it off of people outside your company walls. Testing ideas with a group of target customers is a rapid cure for groupthink.
You want to empower your team
If you want to help your team build things fast, research platforms get them close to customers and drive rapid decisions. Democratizing access to research cuts out red tape, enables curiosity and lets your team make rapid decisions and move on. Research platforms align well with iteration and agile development.
A team can run dozens of surveys on a research platform for less than the cost of a single project from a full-service market research agency. Research platform services are commonly sold in subscription packages that bring the per-test cost down to the low thousands. These packages are structured to support the type of fast-paced, iterative decision-making that typically occurs in product organizations.
Feedback Loop, the publisher of this blog, is one of the multiple vendors in the research technology platform category. Some others include Attest, Suzy, Momentive, and Userlytics.
Choosing between a full-service agency and a research platform doesn’t mean deciding which is “better.” It means deciding which is a better fit for your current need. Choose an agency for complex questions that require specialized expertise and questions and merit the substantial time and money investment required. Choose a research platform for quick, focused feedback that lets your team learn, iterate, and keep moving.
This blog wraps up our beginner’s series. We’ve covered a lot of ground over the past six blogs and we expect you’re chomping at the bit to launch your first market research project. If you need a refresher or an easily accessible reference, you can download A Beginner’s Guide to Product Research.
We wish you much success with incorporating customer feedback into your product decision-making process. If you need any help, contact us!