Articles

A New Era in Customer Driven Marketing - Part One

Internet Research... Faster, Cheaper, Better

It's been almost forty years since I started my research career. In those four decades I've witnessed the birth and maturation of two eras. Each period saw market intelligence and consumer feedback become successively cheaper, more accessible and more powerful as tools in decision making. From the mid 1970s onwards, the telephone rapidly gained penetration across North America (and later in most other developed countries) as the principle tool for collecting information from consumers and citizens. From the mid 1980s onwards, the personal computer provided market research agencies and their clients with a cheap and easy-to-use means of analyzing the mountains of data that are produced in the field of survey research.

Today we are in the midst of a third revolution in the field of market intelligence - one that combines elements of both telecommunications and personal computers. In contrast to previous times, this new era involves the personal computers on the desks of consumers and citizens and the phone lines (and cable connections) that link them together. I'm referring of course to the Internet, a technology that is quickly transforming the marketing research world and providing end clients with unprecedented choices and options.

Internet Research: Better, Cheaper, Faster
The $7 billion (US) market research industry in North America is undergoing a fundamental transformation as the Internet is rapidly replacing the telephone as the principle means of collecting information on the experiences, attitudes and perceptions of consumers. Perhaps it's only a coincidence, but at the same time that telephone survey refusal rates consistently exceed 80% , the number of North Americans accessible via the Internet is rapidly approaching 80%.

The Internet "revolution" as applied to marketing research is about more than simply replacing the means by which surveys are conducted. It represents a fundamental shift in the entire business model of marketing research and business intelligence. The old pricing system, in which the cost of research is almost totally dependent on the number of completed telephone surveys, is being replaced by a pricing system in which the sample size becomes increasingly irrelevant as a deciding factor in the cost of doing research. The big winners in this shift are end clients who can obtain far more detailed, accurate and timely information at a fraction of the price of conventional research.

Under the traditional research model feedback from consumers is collected via telephone interviews (or more rarely face to face interviews) where the cost per interview ranges from $20 to $100 (or more) depending on the nature of the target audience (e.g. business travelers represent a small segment of the entire population and are therefore more difficult and costly to interview than, say, pet owners).

This cost model has historically presented many clients with less than adequate information for some of their most pressing business issues. For example, a multi location retailer with 100 shops across the country would ideally wish to have consumer feedback which allows for an analysis of "store level" data. The problem is that a minimum sample size of 300 customers per location is required for this type of analysis thereby yielding the need to conduct 30,000 surveys to produce data for this type of analysis. In the world of telephone surveys this type of survey would cost between $500,000 and $1 million. For most retailers this cost is well beyond their means.

Internet research removes much of this cost from the research equation. The charges for sending and receiving surveys are negligible. And unlike conventional research where a survey of 30,000 consumers would take a few months to complete, a survey of this size in the Internet space can be deployed and completed in several days.

Large Internet surveys, unlike their telephone counterparts, are completed by respondents on their own schedule and not one imposed by the telephone interviewer. Rather than being interrupted by a telephone interviewer in the middle of dinner, respondents can choose to complete surveys on their own timeframe - and often in an environment which allows for more considered thought on the subject matters being investigated.

Finally Internet based research permits those conducting studies to present visually engaging stimuli - pictures and video - rather than simply the spoken word. For example, it's far more realistic to have respondents in a survey of fast food companies give their impression based on a picture of a McDonald's location than to respond to the word "McDonald's'' spoken over the telephone line. After all it's the visual that consumers actually interact with in the real world.

These benefits are part of the reason that Internet research is mushrooming across the developed world. In the US it's estimated that 20% of all research is now conducted over the Internet - up from less than 5% five years ago. The major Internet research suppliers such as Harris Interactive, MarketTools, and Vision Critical report skyrocketing revenues while those in parts of the industry still with their heads in the sand, plying telephone surveys, are flat to down.

PART TWO

Reprinted with permission from Angus Reid. Read the full article at http://angus-reid.com.

Posted on September 23, 2004
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