An Industry Still In Need Of Insight

By Piers Lee, President of the Market Research Society of Singapore

Following one of the most difficult years for the research industry, at the start of 2010 the Market Research Society of Singapore (MRSS) initiated a survey of the research business in Singapore.  The objectives were to assess the key challenges and opportunities for the industry on the economic recovery, and how agencies need to address with these in the next 2-3 years.

Based on fifteen depth interviews with major buyers of research in Singapore and ten interviews with heads of some of the leading research agencies, this survey was one of the most in-depth ‘research-on-research’ studies ever undertaken in Singapore.  Results of the survey were presented by Piers Lee, President of the MRSS and director of business research group Kadence, to over 40 industry stakeholders at an MRSS Breakfast Talk held at the Grand Hyatt Hotel on 18th March.

The client view:

The most encouraging news about this industry came from the clients.   Clients report that ‘fact-based decision making’ and ‘customer dialogues’ are now central to their corporation’s business planning and marketing functions.  This is particularly so in categories where clients are now primarily ‘owners of brands’.  Common among consumer goods’ clients, ‘brand owners’ are now found to manufacturing and service industries that are increasingly outsourcing their production and service operations.  Consequently, service quality measurement and customer satisfaction research is growing in importance, as clients appreciate that these factors are key to their continued success.

The reduction in research budgets seen in 2009 (and for some continuing into 2010) is only a temporary austerity measure in response to recessionary conditions.  Further encouraging news is that Singapore is maintaining, if not gaining, its status as a regional hub for market research.  Although Singapore as a consumer market is often overlooked by regional brands as being ‘too small for consideration’, Singapore is viewed as a centre of excellence for the research and consulting business in Asia, and is yet to lose this status to lower costs markets around the region who are competing for this title.

However, the single biggest complaint from clients is one that has lingered with the industry since its inception – lack of insight!  Clients view that research firms are still delivering quantity rather than quality in their reports characterized by data overloads or verbatim dumps but with no clear message, no memorable take-outs, and superficial examination of research findings.  Clients have observed ‘factory-style’ approaches to research which they view as an outcome of a new style of relationship between working parties with suppliers treating each project as a transaction rather than part of a longer term relationship building exercise with the client.

Clients recognize the factors behind agencies being unable to deliver insight; firstly too little time or effort invested by agencies in projects and / or too little involvement from senior agency-side researchers.  Secondly it is the lack of analytical capability of agencies or their lack of industry insight.  Client recognize that the pressure put on their own budgets had transferred to pressure on pricing means agencies are spreading researchers’ time around to more clients and to more projects as margins fall.

Others comment that the agencies’ inability to deliver insight is in part due to lack of innovation, particular in the area of qualitative research.  In contrast, some view that innovation in quantitative research has gone too far resulting in opaque black box solutions, often applied inappropriately by junior staff trained in providing to clients product-based solutions rather than consultancy style solutions.

Off-shoring is also highlighted as a concern among clients.  Many agencies in Singapore, seeing rising costs in staff and office facilities, are seeking to offshore parts of their business to lower cost markets such as India and Malaysia.  Although off-shoring of data processing has been around for nearly ten years, agencies are now looking to have charting, analysis, and reporting off-shored.  For some clients they see this as further encouraging ‘factory style’ analysis and reporting, resulting in the Singapore client team being removed from the facts and figures they need to present their findings in a really informed manner.

The agency view:

Although the industry (and retrenched employees) are still finding their feet after the recession, most agencies still say that the biggest challenge facing them is finding and retaining good staff.  Most recognize that there are simply not enough Singaporeans interested in careers in market research, and despite the Global Financial Crisis and its impact on the image of financial institutions, graduates still prefer instead to go into ‘higher status’ industries such as banking.

Some of the agencies also comment that working styles of Singaporeans is still not conducive to ‘insight generation’, for example the ability to ‘think outside the box’.  Some highlight that it is very challenging to find staff with the range of skills needed for the industry – a successful career in research requires strong organizational, analytical, people, and commercial skills, a combination more challenging than compared with many industries and usually quite hard to find in any market.

The second biggest challenge highlighted by agencies was fieldwork quality.  While much of the debate among clients focused on insight, data collection issues ranked relatively low in their list of concerns, despite the fact that data collection quality is the very foundation of insight.  But for agencies, many see that pressure from clients on pricing and on faster project turnaround time is leading to slipping standards.  Ironically the agencies (who are increasingly outsourcing their fieldwork) are also criticized for buying fieldwork on price from low cost fieldwork vendors with poor QC standards.

Issues with procurement:

Although the clients who took part in the MRSS survey downplayed the influence of procurement departments in their selection of agencies, the agencies interviewed feel that procurement is the next biggest concern for the industry.

The involvement of procurement departments in research is viewed by agencies as ddontevaluing the entire industry.   They complain that while professions such as management consultancy and legal services do not have to go through procurement, research does along with commodity items such as stationery.  This implies that research is viewed by corporations as a low value item, and yet at the same time the market research managers as the buyers of research want more consultancy style consumer insight.  This conflict in approach is leading to some tension in the industry.

Agencies also view procurement departments in corporations as very amateurish.  Generally procurement officers do not understand research and therefore cannot assess the value-add of research and that of specific agencies.  Government agencies came in for a lot of criticism here – many comment that the open-tender procurement methods used by Government agencies are drawing in rogue players to the industry, companies with little or no knowledge of research.  They often bid for Government projects on open-tender at very low prices and are winning them based on their competitive price.  Often their lack of understanding of research means they allocate too little budget for data collection which leads them to cut corners, and they are also delivering very poor quality insight.  There is also evidence of outright fraud.

Evidence for this shoddy procurement practice is found in the MRSS survey itself – the one Government agency who took part in the research is pulling back from commissioning research due to poor quality, whereas most of the private sector clients are looking to do more.

Although many in private sector clients are willing to pay a premium for quality and for insight, the question remains as to how far clients are willing to go to pay for knowledge, experience, specialism, and senior level involvement in projects.   This issue started a debate at the Grand Hyatt Breakfast Talk between the clients and agencies attending the session.   The debate lead to what the long term direction the industry might be in Singapore.  For example will it become a commodity business driven by easy access to information through the Internet and through greater influence of procurement departments?  Or will it become an increasingly value add profession raising itself to the standards of management consultancy?

This in itself raises more questions, meaning more research will be required to answer them.  The future is therefore quite bright for the research industry.