Tom H. C. Anderson - Next Gen Market Research

According to McKinsey, High Performing Companies all use NLP and don’t mix their Segmentation strategy with CRM and Direct Mail

In this month’s Research World (ESOMAR) magazine there’s an interesting review of a study done by McKinsey among Europe’s leading companies and how they are coping with market change. The results are very similar to those of a similar study conducted among US companies in 2006.

The study separates the firms into two groups. High Performers were defined as those companies who outperformed the Other companies by at least two times on each of several key financial and market performance metrics. In this European study 200 executives were interviewed from 13 companies with some 20 business units.

Perhaps as expected, while most companies still employ a limited consumer insights toolkit, using only ‘traditional’ research, High Performers use a broader range of techniques. And “have realized that if everyone digs in the same hole, they get the same dirt out of it”. The study finds a strong correlation between excellence in consumer insights and business success.

Two specific areas mentioned in the report which I found most interesting, because Anderson Analytics is very much involved in these two, are Segmentation and Text Analytics.

Segmentation

Interestingly, the study found that while almost all marketers use some sort of customer segmentation scheme, High Performers are different in the way they use it. High performers seem to use more strategic segmentation schemes which take into account “purchase motivation, attitudes or behavior” and use segmentation as input into their communication. While Other companies rely more on demographic segmentation and use it more tactically in CRM and Direct Marketing.

While I agree that customer segmentation is a very important part of your customer strategy, I really don’t see why these High Performers can’t have segmentation schemes which are also actionable and can be used more tactically in direct marketing and CRM. A good segmentation scheme should definitely incorporate much more than demographic or RFM info, but it still has to be actionable. It’s always surprising to me how little is known about good segmentation strategy in market research. Each MR supplier seems to hold to their own little technique (usually built around primary survey data), and often fail to incorporate techniques from Direct Marketing which are also very important!

Text Analytics

The second item that caught my eye was a chart which I found hard to believe based on my experience with most large companies. According to the chart, 100% of respondents claimed to either “Frequently or somewhat frequently” (top-2-box on 6 point scale) use “Natural language programming/linguistics”! Can this possibly be true/or is it a typo?? This surprising finding was not discussed in the article.

I’m skeptical about this as Anderson Analytics has found that few clients have yet to understand the true value of NLP/Text Mining. Therefore I feel it still represents one of the best opportunities to gain an information advantage over the competition and not just “get the same dirt out of the same whole” as McKinsey put it.

- Tom