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The future of market research
By Duncan Smith
This is the final Mindlab interview in a series of three with the renowned author and leading expert in consumer behaviour, Philip Graves.
Philip, do you think the way businesses carry out market research will change?
“There are two important forces affecting this and they are very oddly diametric in some ways – a carrot and a stick.
“One of the forces is straightforward competitive pressure. The businesses that throw off the shackles of traditional consumer research will be more successful because they are not throwing random, rogue variables into their decision-making.
“The other force (the stick) is regulation. Regulators are embracing behavioural economics. They won’t accept consumer surveys as sufficient evidence. There is still quite a lot of conflict over a different way to approach it but there is definitely a drive towards innovative thinking, especially in financial services where the Financial Conduct Authority has such power.
“How quickly will these forces impact? I said in 2010 that in thirty years’ time we would look back on the way that most market research was conducted and be embarrassed. I don’t know whether I would change my timeline – it was probably a little optimistic – but that time will come.”
What will be the final trigger that creates this sea change?
“Currently, you don’t have a ruthlessly objective client evaluating what comes back. But I’m seeing younger people coming through into business who’ve learnt about behavioural economics during their MBAs and degree courses. They’ve grown up in a world that has a better understanding of behaviour and data. They aren’t as tied to the old ways of doing things. This will lead us down a path that will take us away from current practices to achieving more accurate and useable insights.
“There is a process to go through in terms of casting off the old which is undeniably uncomfortable. There is an allure to a statistic wherever it comes from: for many people, a statistic feels like a fact irrespective of how it was derived. It takes a particular mentality to stand back and question: ‘is that true?’”
When it comes to market research, how can businesses adapt to get ahead of competitors?
“The best organisations will evolve to be able to conduct live experiments more easily than they can at the moment. They will dynamically evaluate whether changes they make are the right changes. Working towards this setup should be a big focus for insight teams.
“Getting more out of behavioural data is also key. There is a bit of an unfortunate duality here. We have access to more data from the digital world and from tracking people but we’re not very adept at working out what’s important. When something looks quite complicated, we’ll take the shortcut and go and ask people what they think.
“Beyond that, the end users of insight need to make sure the research they reference has psychological validity, asking researchers: ‘What is the reason we should believe this? Is this a good proxy for what we’re trying to understand?’. Techniques like implicit testing, association testing and implicit measurement all have a role to play because they provide better psychological validity. They still need to be evaluated as proxies against behavioural outcomes: it should be a science, not a faith.
“Businesses have traditionally been awful at asking these empirical questions. They go through this wash, rinse, repeat cycle. When things don’t come out right, they just keep going around this same process. That’s one definition of insanity. Unfortunately, standing back and evaluating to learn from past experiences is not something many corporations do well.”
Will the current focus on customers, in particular, ‘customer centricity’ continue?
“Looking into the future is a reasonably well-documented fool’s game. We’ve tried to do it since the dawn of time but anybody that claims to be able to do it well is probably the last person you should listen to.
“What is clear though is that when people talk about ‘customer centricity’ they get themselves confused. Some think that it means listening to customers. If you listen to customers, you will hear all sorts of things that are not necessarily true. Putting customers at the heart of a business should instead be about understanding them, today, and recognising the limitations of how that will apply in the future.
“When it comes down to it, there is a sweet spot for insight and that is this: what has just happened? To give yourself the most solid foundation for creating something new, identify what has happened and do your best to understand why it has happened. But don’t ask a human to explain themselves and expect the truth. It’s just not something our brains are designed to do.”
For more insights from Philip, read our other interviews on:
Philip Graves is the author of Consumer.ology: The Truth about Consumers and the Psychology of Shopping. He is the founder of research company Shift Consultancy which, for the last decade, has worked with clients as diverse as Abode and the BBC. Mindlab is proud to have worked with Philip on a number of projects for clients including innocent, Lloyds Bank and Diageo. Philip is also an associate at leading economic consultancy, Frontier Economics, where he specialises in behavioural economics strategy work.
