When Do You Need A Market Research Vendor?

Summary: Although in-house market research and UX research can lead to faster and sometimes cheaper research results, research vendors can support internal research teams by adding extra time, quality, innovation, validation, neutrality, and credibility to the research teams.

7 minutes to read. By author Michaela Mora on August 31, 2021
Topics: Business Strategy, Market Research

When do you need a market research vendor?
Rate this post

The use of market research vendors has been declining for years due to the increase of internal DIY market research teams empowered by technology and driven by lower budgets and shorter deadlines. More than a decade ago, many companies started to see DIY research as an acceptable alternative and sometimes the answer to management’s prayers to get at least some data faster and on the cheap.

I know how it is. I was the ultimate DIY research department at several of my former employers on the client-side. I was able to provide high-quality primary market research at a very low cost and a quick turnaround. I estimate I saved those companies millions of dollars in research. And that’s what companies are expecting, particularly in difficult economic times. Notice that I say “high quality,” “low cost,” and “quick turnaround.”

How? Simple: Expertise and experience.

Did I replace research vendors? Yes and no. My team could tackle many research projects that could have otherwise gone to market research vendors. But there were other instances where I needed the help of research vendors.

After being on both sides of the aisle, I firmly believe that a hybrid model is the most beneficial for both the company and its researchers.

There are six main areas in which internal UX or market research teams would benefit from partnering with a research vendor.

Missing Research Expertise

Market research vendors can offer expertise and know-how skills not available within the DIY market research team.

To be totally self-sufficient, a DIY market research team would need to have a staff of researchers with expertise and hands-on experience in a wide range of research methodologies, which is costly and nearly impossible. They also need researchers that can interpret results in meaningful ways to offer actionable insights. This requires industry and marketing expertise. These are expensive too.

Internal research teams that say they do “everything” internally are often limited to do certain types of research with moderate to low levels of complexity. They tend to rely heavily on technology.  Sooner or later they need a research vendor that can help them extract deeper insights from collected data or provide a different approach that better answers their business problems.

When the stakes are high, management is aware that “good enough” research is simply not enough.

Innovative Research Approaches

Internal research teams tend to get in the habit of using the same research methods which are selected based on available tools, researcher’s skills, and expectations from internal stakeholders who get used to certain types of deliverables. That leads to stagnation for both the business and the researchers. After a while the work gets boring and there is little learning.

The ecosystem of market research vendors includes both large and small agencies that are constantly looking for innovative research approaches to old and new business problems. Innovation is not only about new technologies and tools, but also about adapting different theoretical frameworks from the social sciences (e.g. psychology, sociology, ethnography, etc.) to solve business problems.

DIY research teams that are able to partner with research vendors in at least some of their research projects are more likely to find new and better ways to gain actionable insights and learn in the process.

Market research vendors also can facilitate access to target populations of interest out the company’s customer database when there is interest in studying potential customers. Although there is a trend of many companies creating online communities with customers for research purposes, they still must go outside their customer base in order to identify growth opportunities. Market research vendors can then find populations of potential customers. 

Validation

Provide validated methods and innovative approaches. Many research agencies use established processes and standardized methods that have been tested over time, which provides consistency in data collection and reporting (e.g. brand tracking research).

DIY research teams can add value to the service they offer internally by selecting market research vendors that have spent the time and resources on developing processes, learning new methodologies, and gathering experiences from different industries that can guarantee data quality and meaningful insights.

More Time

Most DIY research teams don’t have enough time and manpower to do all the work required of them. In my experience, there are no small research projects. Even in the simplest projects, there is a lot of work to do.

Nowadays, DIY market research teams are often small and don’t have time to handle all the internal requests. They may need to outsource parts of some projects or entire projects as other priorities take place. We see this often. For some clients, we help with research and questionnaire design and they do the rest. Others ask us to design and program conjoint studies, while they do the simulations themselves. Sometimes we come at the end of the process to analyze the data or write the reports, while on many occasions we take on projects from start to finish.

Research vendors can alleviate the workload for small and time-strapped DIY teams .

Neutrality

DIY research teams can also play a neutral role, but sometimes they can’t help but infuse certain biases without knowing them based on industry knowledge and office politics. I have seen many instances in which a DIY research team’s internal clients, hoping to get a particular outcome, explicitly request the use of a particular methodology that may not be the right one. Sometimes the DIY team is able to push back, but at other times they can’t.

Research vendors are neutral judges of research results and don’t have a vested interest in its outcome one way or the other. We don’t feel the pressure to get some hypotheses confirmed and our compensation doesn’t depend on it. Our unique position as a neutral party helps to prevent biased results.

In connection with neutrality to avoid bias, market research vendors can guarantee the anonymity of respondents and confidentiality when this is an issue.

Think of employee research. This often touches on sensitive topics regarding satisfaction with management, salary, co-workers, etc. Using a third party to gather and analyze data helps to protect employees’ identities and avoid any type of retaliation against them.

This can also apply to customer satisfaction research. There are cases in which customers might be unwilling to air certain opinions about a company if they know they are being surveyed by the company’s employees and can be easily identified. Even if customers know the research is being sponsored by a company, knowing that a third party is collecting the data and analyzing it, mitigates confidentiality concerns.

Credibility

Data gathered and analyzed by internal research teams can be received with some skepticism by some internal stakeholders and external investors.

Using a neutral third-party experienced research vendor can lend credibility to the research results since as explained above the vendor doesn’t have a vested interest in the outcome.  Research vendors are often in a position as experts to help internal research teams champion innovative research approaches that have been validated.

The Cost-Saving Fallacy

There is the belief that DIY marketing research is always cheaper than hiring an external vendor. If we look only at the cash that could have been paid to research vendors, DIY research may be cheaper, if the company doesn’t factor in the team’s salary. Even if they consider the salaries, they may be low enough to still make DIY look cheaper depending on the volume of research conducted in a year.

However, DIY research is not always cheaper.  DIY research can get expensive if:

  • Research needs to be tossed out or repeated due to bad quality.
  • Wrong research approaches are used due to a lack of time, staff, or skills.
  • More innovative approaches (provided by vendors) could have been used to find growth opportunities (lost opportunity cost).
  • There is no time or know-how to translate research insights into business implications.

I have seen many cases in which the research needs to be done again due to bad research designs at the hands of inexperienced DIY research teams. In times when many think they can write a survey because of access to cheap survey tools, the need for expertise is often disregarded costing thousands of dollars in wasted resources on decisions made on less than reliable data. In estimating the actual cost of DIY research, companies need to factor in the alternative cost of getting bad data quality, inadequate research approaches, and misleading conclusions.

In Short

 Consider partnering with research vendors when:

  • The UX or market research/insights team doesn’t have qualified staff to design and execute the type of research needed or the expertise to interpret the results and extract actionable insights.
  • A different research approach is needed to get deeper insights into the issues at hand.
  • The internal research team doesn’t have time to handle all research requests.
  • A neutral third party is needed to avoid biased results.
  • A credible party may be needed to legitimize the results.
  • Anonymity and confidentiality are a concern.
  • The DIY team doesn’t have access to the population of interest.
  • There is a risk of missing the opportunity to do high-impact research without the help of a research partner.

 

(An earlier version of this article was published in the Market Research Association’s Alert! Magazine, November 2010. The article was last updated and revised on August 31, 2021.)