Why so many companies are divesting in consumer research

If you live on planet earth, you know that the way that people live their daily lives has completely changed in the past few years. The pandemic has impacted where we work, where we travel, and how many hours each day we spend on TikTok and Netflix (spoiler alert - it’s a lot).

The pandemic forced businesses to adapt to these changes. Companies that missed the memo on building a strong digital presence during the COVID lockdowns…well 2021 probably wasn’t great for them. And rising inflation, supply chain issues, and political instability are making it even harder for businesses to stay afloat.

In order to succeed in today’s climate, it’s vital for businesses to understand how people’s lives are changing and how those changes will impact the way people learn about, buy and use their products.

So you would think that to navigate these changes, companies must have increased their market research budgets, right?

Nope.

Many large companies are actually decreasing their research budgets every year. Does this mean these companies care less about making consumer-led decisions?

Nope!

In fact, companies are spending more than ever on being consumer-led. They just aren’t putting more money in the hands of the market research team. Many senior leaders view these folks as clinging to old-school research approaches like 30-minute surveys, and other inferior ways to predict behavior.

Even during the lockdown, there was no amount of money that could have convinced me to honestly answer a 30 minute survey…

Instead, companies are investing more and more in using big data to predict the future. According to an EY study in 2022, ninety-three percent of CEOs are increasing their investments in data and analytics.

They are doing this for good reason. Data science can be incredibly powerful - it’s the reason why Amazon, Alibaba, and Google are some of the world’s most successful companies.

…however - while there are many incredibly talented data scientists who can build powerful algorithms and make accurate predictions about the future, there are certain skills they often lack. Designing a business that gives consumers what they want requires a deep understanding of human motivation. It requires strong empathy skills. It requires a thorough understanding of what it takes to build a successful brand.

In the last 12 years of working in the consumer insights industry, I’ve met hundreds of folks at different companies who help businesses make consumer-led decisions.

I’ve met people who are perceived by their leadership as money and time wasters. People who insist that it takes $60,000 and 6 weeks to answer every question about their consumer.

I’ve also met people who are treated as oracles. People perceived as indispensable when organizations need to better understand their consumers.

The latter group has a few things in common. They have an incredible ability to empathize with people. They blend proven consumer research capabilities with data science. And they aren’t afraid to continuously test new technology to find better ways to uncover consumer insights.

Like every industry, technology is overhauling the research industry.

While some companies spend tens of thousands of dollars on focus groups every time they want to better understand their consumers, others use AI to analyze publicly available data to get an even better understanding.

While some companies take 6 weeks to run concept tests to see what consumers think about a new product idea, others run behavioral online experiments using A/B testing approaches - and get answers in hours or days.

With inflation eating away at many company profits, few organizations have the time or money to waste on out-of-date research approaches.

And traditional market research professionals can’t afford to stay still - they need to adapt to the new world quickly to remain relevant.

I’ve spent 12 years studying the best-in-class approaches to uncovering what consumers want. I’ve worked with Harvard-trained Behavioral Scientists to learn how they predict human behavior. I’ve met with 130+ consumer research suppliers to learn how they help companies make better business decisions. And I’ve directly tested tons of new learning capabilities to see which ones are most effective at predicting future behavior.

I’ve developed a highly sophisticated consumer learning toolkit. And I’m now bringing my toolkit to the broader industry through my company Jumpspark.

Follow this blog to learn about how you can improve the way you understand your consumers and make better data-driven business decisions. It’s going to be a fun ride.