GRIT Business & Innovation Sneak Peek: The Business Outlook for Market Research

Editor’s Note: Many people eagerly look forward to the release of a new GRIT Report. The brand new Business & Innovation edition (previously known as the Q1-Q2 edition) will be released later this month. Today, we are publishing a sneak peek by Nelson Whipple on the business outlook for the market research industry. No one should be surprised by the incredible dynamics taking place right now. Nelson’s summary, as well as more detailed findings on a host of other topics, will be printed in the full report

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Overall, insights professionals share strong feelings of optimism about their roles and their field, and the Insights and Analytics industry looks healthy, as a wide majority of suppliers enjoyed revenue increases. As a matter of fact, the percentage of suppliers reporting a revenue increase is at its highest level since we started asking this question in 2017.

Optimism and growth reign despite – or because of – intense struggles for constrained client budget dollars across competitors both familiar and unfamiliar. Clients and suppliers alike face constant pressure to adapt to new challenges and assess emerging opportunities as the ubiquitous “faster, cheaper” mantra often reveals its true identity as “do more with less.”

The picture on the client side is dynamic but more unclear about direction.  Looking to trends over time, the proportion of buyers reporting a decline in research spending continued to increase, as it has since the 2017 GRIT Q3-Q4 Report.  As a matter of fact, for the first time, the proportion reporting a decline exceeds the proportion reporting an increase. The proportion who increased has remained relatively steady since its peak from 2015 GRIT Q3-Q4 Report through 2016 GRIT Q3-Q4 Report when it was in the mid-’40s. Perhaps indicative of the turbulence or creative tension in the Insights and Analytics industry, about two-thirds of buyers report a change of some kind, in stark contrast to the more stable period from  2017 GRIT Q3-Q4 Report to 2018 GRIT Q1-Q2 Report when nearly 60% of buyers reported no change.

The difference between clients whose budgets increased and those who’s have decreased is like day and night. Budgets tend to increase when business leaders have to manage increasing complexity, see market insights as an important tool for managing the complexity and believe their insights department delivers solid business value. Budgets tend to decrease when business leaders are unaware of the value of insights, dismissive of it, or simply lack the resources to invest in generating insights. Companies in both situations want to take advantage of innovations in order to increase the speed and reduce the cost of insights work, but the former tend to reinvest the savings to address more business challenges while the latter tend to use it to invest in another area of the company or, often it seems, to prop up a sagging bottom line. Predictably, insights professionals in the former situation are more optimistic about their roles than those in the latter.

On the supplier side, specialists are thriving, as are full-service providers who make data and analytics expertise a priority focus, have the means to invest in it, and the agility to align their organization behind it. The smallest and largest generalist suppliers are more likely to struggle; the former, due to lack of resources to invest in competing more effectively in a fast-changing market, and the latter due to the effort required to define and align a complex organization to compete effectively against a bevy of more nimble, cost-effective challengers who meet defined client needs. On the client size, very large organizations face similar challenges relative to defining areas of focus and aligning all their different components.  Considering the level of M&A activity occurring within the upper echelon of the supplier community right now and reported struggles for growth from many of those same companies, this should come as no surprise.

In many ways, specialized skills or tools and the ability to match them to the right situations are keys for suppliers to win battles against competitors, and it is equally critical for clients to understand their value and where they fit so they can produce insights efficiently and effectively. Yet, when discussing the reasons behind their spending and revenue trends, up or down, clients and suppliers kept returning to the more general and timeless themes of “business value” and “customer focus.” Insights buyers explained that recognized value was instrumental in gaining budget while failure to perceive value contributed strongly to losing it. Suppliers explained that revenue increased when they focused on delivering client-defined business value and decreased when they lost that focus. Both client-side insights professionals and external suppliers expressed awareness that they need to align with the business needs of the end user or immediate client in order to be successful, and that business value is generally some function of “faster,” “cheaper,” and “better.”

At this moment in time, those who compete on “faster and cheaper” seem to recognize the need to be “better,” and those who compete on “better” seem to recognize the need to be “faster” and “cheaper.” According to GRIT participants, positive outcomes will continue to be driven by a “faster, better, cheaper” formula, and learning the right formula will depend on understanding how the customer defines those three elements, overall and for specific circumstances.