Why bankers are now more creative at research than marketers

banker-research

banker-researchJust as marketers are trying to come to terms with big data, the world’s most sophisticated financial minds are finding creative ways to escape from it. At Sense Worldwide, we work with consumer giants like Nike, PepsiCo and Samsung, but we also work with private equity companies on the prowl for big takeover opportunities. I have news for the marketers out there: the bean counters are coming up with some of the most radical research briefs we’ve seen.

For example, one private equity company is buying daily satellite images of shopping mall car parks to predict footfall. They find it more accurate than any econometric model. Quite a few analysts pay people to count ships and trucks. There’s often little correlation between the reported amount of, say, ore reportedly coming out of a mine and the number trucks that pull up there. A certain hedge fund legend has an even simpler way of tracking data on a certain coffee chain. He noticed that their receipts have a universal sales number on them. Every day he buys a coffee and a muffin, then plugs his receipt number into a spreadsheet, and gets a pretty good estimate of sales volume. Marketers, if you want to save money on research, learn from a billionaire.

We recently worked on a large buyout where we used social media analysis to predict future growth for the target company, and checked their quant research using our network of 5000 influential creative thinkers around the world. The sentiment, and the thought leaders, both indicated that the brand was on the wane, even though it had reported record sales. Our private equity client factored in the marketing cost to buoy the brand back up, and passed on the sale.

Why have the spreadsheet jockeys looked up from their screens? Well, you may remember 2007, the year that the financial industry was almost destroyed by mathematical models. Nobel-prizewinning economists built valuation algorithms like Black-Scholes that few truly understood. But a few bankers were suspicious of them. When analysts pitched high-margin mortgage products to Handelsbanken, its CEO did a radical thing. He got on a plane and went to see the homes backed by the bonds. He concluded that they’d all been bought by speculators, and passed on the deal. Handelsbanken had a good financial crisis. Bear Stearns, who bet the farm on financial models, did less well.

Say what you like about bankers, they’re not stupid. They learned from their mistakes. While marketers still use qualitative research to inspire hypotheses which they take into quant, the financiers are doing the opposite. Yes, they still use surveys and algorithms. But if they can’t make sense of them in the outside world, they’re rejecting them and going with their gut. Maybe some of their methodologies will sound a little weird. But when the Masters of the Universe look at the brand valuation models touted by the likes of WPP and Interbrand, I promise you, they’re boggling at the idea that anybody would take that stuff seriously.

Going to the edges for inspiration

now network pepsi

now network pepsi
 

Jacky Parsons, our Director of Research, spoke on one of our favourite topics at this year’s ESOMAR conference in Nice: extreme consumers. The conference is an annual get-together for members of the market research industry and this year’s theme was ‘inspiration’. At Sense, we find talking to extreme users incredibly inspiring. Nick Graham, our PepsiCo client, joined Jacky on stage to talk about the extremely creative members of the Pepsi Now Network, managed by Sense, who are having such a big influence at corporate HQ.

Going to the edges for inspiration
Together with our friends at PepsiCo Global Beverage Group, we wrote a paper on the value of speaking to extreme consumers.  Click here to download the full paper.

In the paper, we show how people with more intense and unusual experiences, attitudes and backgrounds – who we call extreme consumers – can unlock insights that transform the work of marketing and innovation teams, even if your target audience is mainstream.

We describe three types of extreme consumer:

1. The Lover vs the Rejector
This type sits at either extreme of the usage spectrum of your brand or category. Extreme Users have a much higher than average usage profile – in terms of frequency or quantity. Rejectors on the other hand are lapsed users or non-users who have chosen not to engage with your brand.

2. Experts
Don’t think of academics when you read the term ‘expert’. This kind of extreme user has expertise relevant to your brand or category because of the role they play in life, but it’s a lateral connection. So for example, a soldier can be an expert in blisters.

3. Leading-edge Creatives
These people are extreme in terms of their cultural engagement and creativity, and their lifestyles. This is the type of ‘extreme consumer’ we have involved in the Pepsi Now Network during 2014. They’re the opposite of a conventional research panel – they’re muses who guide internal teams and shape the thinking of external creative agencies.

As Anna Peters reported on the Esomar site: ‘For Nick Graham (PepsiCo USA) this has been the first time in his career where “agencies have been begging him” to speak to consumers. In short, this approach has resulted in an organisational shift – where the function of Market Research has been repositioned from reporting findings, to inspiring solutions.’

The Pepsi Now Network demonstrates that the value of any approach involving extreme users goes beyond the commercial benefits to the business – it makes a qualitative difference for everyone involved in the journey. The research process becomes more interesting and rewarding for everyone involved, whether they are participants, recruiters, agency teams or client teams – as a genuine human connection is forged between people and fresh insights are discovered. And that’s what inspires us, as much as the new ideas ignited by the interactions.