Business research seems like a simple concept at first glance. So why do so many companies get it wrong?
It may be that the seemingly simple and straightforward nature of the idea leads to mistakes made from overconfidence and poorly-founded assumptions. For example, picking research methods that “just seem right” or happen to be the most convenient (or inexpensive). Or designing the research so that it leads one to a conclusion that decision-makers have already settled on.
It’s good to review and scrutinize assumptions periodically, and now is as good of a time as any to turn over the idea of business research and how it should be working for you.
What exactly is business research?
The basic concept of business research is simple enough to understand, but the details of collection and analysis are where the confusion can start and things can go wrong. There is an endless amount of information to look over, and this ocean of data is updating and changing all the time.
Successful business research focuses on a particular concrete goal that is of benefit to the organization. It usually starts with a question about how the business can be improved, for example: Is our target market aware of our product? How are people using our website and app? What are the most immediate and dangerous information security challenges we face?
From there, it’s a matter of applying the smartest and most effective research methods possible to get the answer. One major type is data analytics: collecting relevant raw data, then making sense of expected trends and patterns from it. Another is the qualitative approach, in which people are simply asked to answer your question: surveys, focus groups, interviews and so on.
Types of business research
We’ve touched on two general “macro” categories of business research: quantitative (studying accumulated numbers and data) and qualitative (asking people for their opinions).
There are many more “micro” categories within those broader conceptual groupings. For example, a type of qualitative research that nearly every business has used at some point is the simple survey. Quantitative research that “crunches data” is often much more complex, and handed off to specialists or outside firms.
These methods describe the most common approaches to market research, the type of research that most businesses will be centrally concerned with. But there are other types to consider as well. For example, some types of businesses will have a need for academic researchers to develop a product or formulate new processes. These researchers also use qualitative and quantitative approaches, but in a different setting.
There are far too many possibilities to concisely cover here, but the type of research generally follows from the question that you’re looking to answer. Matching an appropriate and effective method to a question or challenge is the trick to conducting useful business research.
How does business research influence decisions?
Very few business decisions are made without research these days. Long gone are the days of repeating an old strategy step-by-step in new conditions just because it worked in the past. Things simply move and change too quickly now.
The goal of business research is to make a more confident decision about a new move or direction. The central area for this is in keeping track of the market: what consumers are currently looking for, how they feel about the product, what competitors are offering, where price points should be set, and so on.
Here’s a concrete example from the real world. McDonalds spent much of the last decade adding healthier choices to its menu and trying to move away from the perception of “junk food.” But in 2020, shortly after the Covid-19 pandemic hit, it dropped all of its salads from the menu in the US. The sudden and unprecedented situation forced the company to make hard decisions given that its profit margins were thin, and research suggested that salads were a relatively poor performer despite the years of advertising emphasis. Eliminating them took out a big expense: having to keep several ingredients in the supply chain that were only used for the salads. One might have had a “gut feeling” that people would move toward healthy options during the pandemic, but data apparently said otherwise.
Implementing metrics and influencing them
Metrics are a highly useful tool both for defining research targets and for measuring research outputs. But structure is very important.
One of the foundational elements is that metrics should be achievable; an unrealistic metric just wastes research time and ultimately may demoralize the team. Another important basic element is that clear language is used, for example expressing goals in specific quantities instead of percentages when possible.
Key Performance Indicators (KPIs) are cornerstone research-backed metrics. A metric is not a KPI if it does not incorporate research, because KPIs specifically require trackable indicators that can demonstrate real progress with documented inputs and outputs.
The fruits of research will inform this process, and it will also be applied again when examining the ultimate outcomes to determine what went right (or, in some cases, what went wrong).
As with research approaches, potential KPIs are very numerous and highly situational. But here’s one element that a lot of companies miss when they establish their KPIs. It’s natural to want to center everything on the customer and the external market through the lens of the company: what people are shopping for, what they’re following in terms of trends, what the demand is for the product, how much they’re spending, and so on. What gets missed is measurement of the experience at the customer end, and these are sometimes the metrics that are the quickest fixes: frustrations with the app/website or in the customer service process, communication expectations, perception of value, willingness to recommend the company to others, and things of that nature.
Bringing business research into focus
CSO and Founder of Datos, Serge Iakovlev says: “Everything starts with identifying the most important questions that need to be answered. With that in place, organizations can decide whether to conduct business research using existing procedures or to hand the task off to a trusted specialist partner. In a world increasingly driven by data analytics, there are very few industries that can afford to ignore the competitive advantages that well-structured research provides.”
Business research can seem like an overwhelming task that simply demands too many resources to seriously consider, but it is something that is often handled by external partners that specialize in it. For example, clickstream provider Datos Inc harnesses the browsing patterns of millions of internet users to prepare easy-to-understand reports on desired research targets.
Outsourcing these tasks to a specialist firm is the simplest and most efficient way to incorporate modern “best practices” and cutting-edge research techniques; no need to train staff, pull them away from other vital projects, or worry about spending weeks or months focusing on the wrong things.
