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News & Views from Alchemis

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Call us for a chat on +44 (0)20 7836 3678 or Email Jim Piper or David Newman

Market Research Agency Survey

Objectives of the survey

The objectives of the survey were to identify:

  • Common issues market research agencies face when trying to win new business
  • The best approaches taken to generate new business
  • Changes in the market over the past 5 years

Whilst the slant was towards ‘new business we found all the participants willing to talk expansively about their experience of working in research over the years.

You may also want to take a look at past papers we have published focussing on increasing new business conversion:

And finally a big thanks to everyone that participated in the survey!

Executive Summary

The survey revealed a trend towards clients being more demanding in terms of results and costs. Procurement procedures have become a bigger obstacle, often leading to frustration among agencies and MR buyers who believe low costs have occasionally trumped quality and innovation.

Majority observations on the industry:

Percentage figures are used where responses were made to a direct or multiple choice question.

  • Research buyers are risk adverse and rarely entrepreneurial in their thinking
  • Getting to the true decision maker is difficult  – often the big decisions are made by Marketing Directors and CEOs rather than Research Managers or Insight teams
  • Proactively getting in front of prospects is vital – 60% of our participants engaged in some form of telephone lead generation and all cited this is the most effective form of new business
  • Large companies will sometimes stay with a big incumbent regardless of quality
  • Bigger agencies offer safety and process but sometimes at the expense of genuine insight from senior level researchers
  • Compared with other marketing services it is more difficult for research agencies to demonstrate competency or value with case studies at the pitch stage as they are often bound by confidentiality
  • Research is an inherently intangible service to sell hence the move towards products and tools
  • The trend towards tools is being driven by the agencies seeking a point of difference as much as clients seeking something new and innovative
  • Some tools offer nothing new and may inhibit good research; some are merely gimmicks
  • There are some very good agencies out there but also some poor ones and it’s not always easy for a research buyer to differentiate; this is exacerbated by the involvement of procurement and the subsequent focus on cost
  • There are few barriers to entry – it is easy to set up a research agency but difficult to be a good one.  This has led to over-supply in the market
  • Average conversion rate from pitch to win was 1:3 but agencies are being asked to pitch more often, including work for current clients they would not have had to re-pitch for 5 years ago

Majority views regarding changes in the past 5 years:

  • 100% of participants stated that budgets have been reduced.  The smaller agencies we surveyed believed this presented as many opportunities as barriers
  • 85% felt market research was considered more important by their clients now than 5 years ago, even if the budgets do not reflect this
  • Procurement personnel are playing a bigger role and forcing a greater emphasis on cost
  • There is an over-supply in the agency world, which has led to increased competition
  • 100% of our survey believed there was less loyalty to market research agencies now than five years ago.  Whilst the majority felt this applied to their clients as well, several also felt that this churn has led to more opportunities
  • 20% of the survey felt that less loyalty across the board was a net benefit to them either because they were relatively new or because they were relatively small
  • More productised research – greater reliance on (and demand for) tools or proprietary techniques
  • Generally the quality of research output has improved
  • Harder to win business and retain it
  • More time and effort spent on pitches (new business and current clients)
  • Lower conversion rate of pitches to wins for genuinely new business

Specific challenges faced when trying to win new business:

  • 100% of our survey felt that getting in front of the right decision makers at the right companies was the first hurdle.  Telemarketing was believed to be the most effective route by the 60% of the survey that do telemarketing.  Agencies that did not do telemarketing felt other types of one-to-one engagement were the most effective; networking for example
  • Inertia – sticking with the incumbent.  Just under 60% of participants felt they had got to the last two in a pitch only to be beaten by the incumbent on at least one occasion
  • Trying to stand out from the crowd or offer something different.  100% of our survey cited this as an issue to some degree.  Most of our survey felt they did have a point of difference but sometimes found it hard to communicate this in an introductory meeting or pitch
  • Timing; this was particularly an issue for agencies that were doing proactive lead generation.  They were getting in front of good companies but not necessarily when there was a live job, suitable for them, to be handed out
  • Being uncomfortable in new business meetings.  Just under 20% of the survey volunteered this as a challenge.  This was expressed as a desire to not be seen as “too pushy”.  Alchemis research conducted over the years points to face-2-face performance in meetings as being a critical factor in wining new business.  We also know many people that deliver these pitches or attend these meetings would not consider themselves sales people and will have had no formal coaching
  • Cultural differences when conducting new business overseas.  A number of participants mentioned that prospects in SE Asia would be very positive and encouraging in new business meetings but often nothing would come of it.  They felt that prospects were behaving positively out of politeness, a commodity some felt was missing in the UK from time to time.

We also asked our survey what they thought was going to be the ‘next big thing in market research?’

The answers are listed below.  The common theme is that where a prediction was made they all involved the use of technology.

  • 30% said they did not know
  • 25% believed it would be greater use of online surveys in some shape or form.  One participant suggested that more companies would want their own communities
  • 25% believed it would be about ‘big data’.  For some this included analysing people’s digital footprint to enable researchers to analyse what a consumer did rather than what they said
  • 20% believed it would be going further into understanding consumer’s emotions – how they feel about a brand or company.  One participant suggested this could involve neural scans to see what lights up when brands are discussed

More detail on the findings

The last 5 years have been tough

Research budgets have been cut, there is more competition, you are being asked to do more for less and you have to pitch for it more often.  Everyone we spoke with believed this to be the case across the industry at large if not necessarily for their agency.

Interestingly most people said they have observed this trend over the past 5 years rather than part of a longer term trend.  This time period obviously correlates with the recession starting in 2008.  It made no difference what sectors the agency was operating in.  Several people felt that most of this environment was the new normal – they didn’t think things would return to the days where repeat business was all but guaranteed for example.  Having said this, most people expressed the view that things had perhaps bottomed out and confidence in the future was high.

The role of procurement

So what is causing this toughening of the environment that most people reading this are working in?  The encroachment of procurement departments was widely cited as one reason agencies are having to jump through more hoops to win (or retain) business than ever before.  The other reason was that there are too many research agencies out there.  The phrase “over supply in the market” was mentioned several times.  Increased supply rather than reduced demand was felt to be the cause of this.  85% of participants believed the “importance attached to research” among their clients had actually increased in the past 5 years.

Too many agencies out there

Over-supply was cited as a problem in the industry.  Figures from the ONS suggest that the number of research agencies has remained fairly stable at just over 3000 for the past few years so it’s difficult to support this view empirically using available data.  It could be that marketing agencies who do not call themselves research specialist are encroaching on areas traditionally served by research agencies?

MR budgets have been cut

100% felt that budgets had been reduced.  The one or two that didn’t think this was the case among their target market and clients said they felt that budgets across the board had probably declined.

Figures from ESOMAR for 2012 show that the UK is still second only to the USA for total market research spend but this spend fell 7.6% in the year (adjusted for inflation).  This decline in spend was greater than the European average (minus 1.3%) and the USA (plus 1.7%).  Asia Pacific and Latin America experienced strong growth.  Most of the agencies we spoke with did a considerable amount of work overseas with Europe, the USA and Asia cited as key markets.

40% said that declining budgets in the UK had “bottomed out” in the last year.  Together with worldwide growth this probably explains why everyone we spoke with was confident about the future.  The general view of the future was that some of the belt-tightening measures taken by UK companies are here to stay but won’t get any worse and will probably ease a little.  Procurement processes will probably evolve towards a more balanced outlook where quality and innovation are valued more.

Client loyalty and retention

Less loyalty among clients was quoted by several people.  The reason for this lies squarely at the feet of procurement.  Several agency owners described a situation where the marketing expert (the client) was pushing to use them again but procurement insisted on a competitive tender.  Often this meant that price beat quality and a proven track record, resulting in a lose-lose situation for the agency and the client.

So if there’s less loyalty it must be easier to win new business in the first place?  20% of our respondents firmly believed this to be the case but they acknowledged this could be because they were the youngest agencies in the sample.  Their experience in the past 5 years was that they were steadily building trust among their clients and a reputation among their target market.

80% of agency owners felt that it had not become easier to win business and everyone expressing this view cited price as being the reason.  These were established agencies with years of experience and an established track record but they occasionally find themselves beaten on price.  Several people expressed the view that they “could try and match the price but only by compromising on quality”; everyone we spoke with was set against doing this.

MR Managers are risk averse

Inquisitiveness among research buyers doesn’t necessarily translate into making a decision.  Several agency owners we spoke with expressed their view that professional researchers were cautious by nature and not very entrepreneurial.  Most people we spoke with said that they have enjoyed quicker conversion to new business when they are dealing with Marketing Director level and above.

Have some sympathy for research buyers though.  It’s not easy for them to make a distinction between different agencies when:

  • There are at least 3000 in the UK – over-supply in recent years was cited by most agency owners we spoke with
  • They almost all claim to have a unique hook or tool
  • Confidentiality prohibits research agencies from sharing case studies making it hard for an agency to prove competency

Perhaps this is why price has become such an important differentiator.

Best ways to generate new business

All of the agencies we spoke with had invested in SEO and were doing email marketing to some degree or other.  Telemarketing was cited as being the most successful route to new business by the 60% of agencies that were doing it.  The consensus was that telemarketing can be expensive (whether in-house or outsourced) but given time it will pay off.  100% of agencies that do telemarketing said telemarketing had created opportunities to meet with research buyers before a job had been put out to pitch.  These agencies had won business by getting in under the radar of procurement and a formal pitch process.

Alchemis research into why prospects meet new market research agencies listed the following 5 reasons / assets as most important (from a total of 15 reasons):

  • Unique methodology or tool
  • Gain insight into challenges of peers / competitors
  • Business Development Manager’s skill / rapport building on the phone
  • Direct relevant experience
  • Niche skill set of interest

Please take a look at the full study. Click on the image to enlarge.

Reasons For Seeing Your Agency chart

Reasons For Seeing Your Agency 2013

The value of owning a methodology

“Unique methodology” is interesting because some people had strong views on the subject.  90% of agencies we spoke with had developed something that could be described as a tool or proprietary methodology.  One or two admitted that they had ‘branded’ something they were already doing in response to a wider rush towards ‘owning a methodology’.  There was some scepticism as to whether some of the ‘products’ on the market really helped a client in any meaningful way and some could actually be counter-productive.   100% of agencies nevertheless felt it was important to have something that set them apart from the competition and increasingly, research buyers expect this to be a ‘tool’.

Although this didn’t apply to any of the agencies we surveyed our wider experience of selling research agencies has shown that some tools sound innovative and have a practical application but demonstrating what that application is can be difficult.

Appeal to the MR Manager’s curiosity

“Gain insight into challenges of peers / competitors” was a motivating force behind meeting research agencies more than any other marketing discipline.  Research people are curious by nature and will be more open to checking out a new agency than an advertising buyer, for example.  The respondents in our survey of research agencies supported this idea and at Alchemis we know from 25 years of working with every type of marketing agency that research consistently enjoys a high conversion rate of calls to meetings.

Conclusions we can draw from this 

Perhaps the first thing to note is that whilst 100% of respondents felt the market was slightly tougher now than 5 years ago we know this sentiment is not unique to MR agency owners.  At Alchemis we speak with hundreds of agency owners every year and a common theme we hear is that clients are wanting more, quicker, for less.  Yet, overall, we believe the marketing services industry is in great shape.  100% of agencies we spoke with believe demand had held up or increased in the past 5 years and was likely to increase in the future.

Technology offers huge opportunities for the market research industry but may present a threat to some market research agencies if they are unable to communicate the value of expertise and insight.

Some technologies have promised to make ‘codifying’ people and their opinions easier and cheaper but this is no good without the interpretation of an experienced research professional.  Research buyers need to be convinced of this simple truth.  The true power of technology is in its ability to bring added value to the best research.  ‘Real time’ responses made by consumers using smart phones is just one example of this.

The agencies most likely to thrive will be ones that:

  • Have great people with inspiring leadership
  • Develop a clear proposition; “this is what we’re best at and these are the companies we’re best able to help”
  • Develop a coherent and consistent new business programme; one that reaches out to prospects that meet well defined targeting criteria
  • Are prepared to ‘get out there’.  Our survey showed that 1/3 pitches result in new business wins.  The ratio of introductory meetings to wins is closer to 1/10 so be prepared to kiss a few frogs
  • Go the extra mile to win the first job from a new client.  Research buyers are risk averse so reduce the perception of risk by providing a compelling and competitively priced pitch.  Once you have broken the seal on a new client the risk will be dropping your agency for a new one
  • Keep in touch with clients.  The project nature of research can mean that clients will use agencies on an ad-hoc basis.  Agencies need to make sure they are front of mind when a lapsed client is looking to do a new project.  Regular phone contact is the best way to nurture a one-2-one relationship over time and make sure you are in pole position when the next opportunity arises
  • Are technologically savvy; able to spot the game changers from the fads and only deploy a technology if it’s going to improve the project

Alchemis have been helping market research agencies with most of the above for the past 25 years.  If you would like to discuss this survey or find out how Alchemis can help your agency win new business please get in touch with David Newman, Jim Piper or Amanda Francis

Sample & Methodology

  • The average age of the agencies was 15 years (newest was 3 years, oldest was 35 years)
  • The average staff size was 18 (smallest was 3 staff, largest was 100 staff)
  • Mix of qual & quant – the majority were both
  • Mix of sector expertise
  • Most offered consumer research, some did business as well.  One was a B2B specialist
  • Semi structured telephone interview
  • Average interview took 35 minutes
  • The survey was carried out over a 3 week period in July/August this year

Every interview was conducted by an owner / Director of Alchemis (each with at least 13 years experience working with research agencies and talking to research buyers) and in all but one case the interviewee was an owner / Director of their agency.

2 thoughts on “Market Research Agency Survey

  1. The results certainly reflect our feelings of the market. There has been a significant dropping of standards caused largely by a reduction of the skills of the average in-house researcher. This is highlighted by the all too often response of ‘nobody does it like that anymore’ refering to the use of access panels. The fact that a rgular access panelist will be doing 30 interviews a week whilst working for 4+ companies does mot seem to register with them as something to be worried about. In my view this decline in standards will lead to many in-house research departments closing down leading to agencies dealing directly with the relevant line management.

  2. Alan Bowman says:

    I am sure anyone who participated in this will get two feelings from the findings – a sense of we are all suffering from the same things and hopefully a resolve to make things a lot better. I agree with Mike’s comments – line management like category / Brand managers and marketing Directors or Operations Directors are where our influence should be re-focused.Research businesses need to stop trotting out the same old things and get up to speed with the realities of consumers life today – that means making sure we have access to people who are genuinely able to comment from their own experience … keep it real.

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