“Show Me the Money!”

Jan 29 2011

What makes research valuable?

I had a great time running a Tapestry Workshop earlier this week on “Winning the Hearts and Minds of Clients”.  One of the key, and often repeated, messages on the course is the importance of linking research to business value creation.

I have read several defences of market research recently, with articles by Spych, Frankie Johnson in the last few days.  As a passionate market researcher, I love to read other passionate researchers standing up for the industry and the importance of linking everything back to the customer, and I applaud them for it.

Although there are many challenges to the legitimacy and relevance of market research, I believe the biggest obstacle has always been, and will continue to be, the ability of market research to impact the bottom line.  I have written about the topic previously (with Mike Sherman and Linda Collard), and it’s worth revisiting the importance of sources of value.

Jerry Maguire and market research

The key learning of “Winning the Hearts and Minds of Clients” is to always follow the philosophy of Jerry Maguire and “Show me the money!”.  For those who haven’t seen the film, watch the clip below.

This is a great mantra for anyone writing a proposal or report.  Always link everything you do back to the client and how they can make money, by creating value with their brands, products or services and categories.  There are four key ways to create value and they are very easy to remember.

Value creation

The first way to create value is to increase your share of the current market.  This is a common strategy, and a frequent (if unstated) objective of many market research studies (especially those which evaluate brand and communication performance). Coca-Cola and Pepsi compete in many categories and with many other companies, but compete in a perpetual battle to win share from each other.

The second way is to capture surplus (sell products at a premium).  This is a more challenging strategy, but something which many companies do well.  Most notably, management consultants such as McKinsey are able to sell business intelligence at a much higher price than most market research agencies, by delivering greater value (or perceived value) to the client.  Similarly, Apple are able to sell mobile handsets at a much higher price than Nokia, by delivering a more “valuable” experience to their customers.

A third way is to grow overall demand for the category.  Apple have achieved this aim with the iPad and the tablet computer market, which seems to have hit an unmet need, creating demand for something new (although there is some cannibalisation of the broader computer category this is not their main source of business).  This is something that is particularly relevant in emerging Asian markets with growing wealth, as long as you can make deliver the right product for the ‘job to be done’.

The final way to create value is to reduce costs.  This is probably the least researched of the four value creation routes, although recent economic history may have focused the minds of clients a little more.  I still see very little research which seeks to understand where cost can be taken out of products and services, although it is all too common for many product features to be of little or no value to customers (and businesses typically see innovation as a process of adding more features rather than rethinking the focus of a what a product delivers).  The trick that many businesses miss is to “cut to the chase” and focus on the key sources of value for their customers.

“Show me the money!”

For myself, I believe there is intrinsic value in understanding customers and their needs and motivations, but this is not and should not be enough for market research users.  Businesses must always focus on leveraging research to create value.  Too often, market research focuses on what is interesting and “insightful” at the expense of insight which creates real business value by growing share, capturing surplus, goring demand or cutting costs.

So if you want to truly “Win the Hearts and Minds” of clients, always be prepared to “Show Me the Money”!

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