The results can be shocking.  INSEAD professor Erin Anderson says that they particularly surprise corporate management.  ‘Sitting in their ivory towers, corporate managers know what is supposed to be going on, but they almost never know what is really happening.

Yet whatever happens in channels happens in the field. You have to know what is going on out there to be at all effective. That is why research is so vital.’

But, all too often, research results are read, put away and never acted on.

Here we look at the kind of research that suppliers commission. What works and what doesn’t?  And how can you avoid commissioning stuff for the bookshelf? 

The amount of research that is carried out on channels varies massively.  On the one hand, companies such as Norwich Union, the UK’s largest insurer, are constantly commissioning qualitative and quantitative studies.  It uses them for everything from planning new products to working out how to boost loyalty and market share (see side panel).

“We treat intermediaries as our most important customer set.”

On the other hand, pharmaceutical company Pharmacia relies on occasional, unsophisticated surveys carried out by its own staff.  Such surveys typically focus on customer-service levels. They are also seen as a way of communicating what Pharmacia itself is doing.  Others, such as server vendor SGI, carry out major channel audits every few years.
 
Jinty Weldon, director at HI Europe, which specialises in researching channel partners’ opinions, says:  ‘Many suppliers do nothing at all. In the IT industry, for instance, the top ten suppliers commission most of the work . These tend to be the companies that employ in-house market-research specialists, whose job is to commission these studies.’

Weldon and Radan Payget, head of customer insight at insurer Norwich Union, both maintain that in practice there is little difference between researching the views and opinions of end-customers and those of intermediaries.

The same techniques apply.  Indeed, Payget says:  ‘We treat intermediaries as our most important customer set. They are independent from us, and they have product choice, so, in that sense, yes, they are customers.’

So what are the main types of research and how should they be used?  Julian Dent, chief executive at management consultancy VIA International, differentiates between  ‘market research’ and  ‘consulting research’.   ‘The former tends to be quantitative and to follow a predetermined questionnaire.

It enables you to benchmark trends and validate facts, and gives statistical validity. It confirms that you are on track.  Done regularly, it can track trends over time.’

Consulting research, on the other hand, is qualitative and probing. It should be carried out by experts who know the industry. It is good for probing the underlying issues, for proving a hypothesis and for identifying the specific things a company needs to do to deploy a new strategy successfully.

Dent says that people often expect too much from market research.  ‘They expect it to throw up the answers, and it simply is incapable of doing that.’

Research then can be tiered.

At one level, says Weldon, market research can be focused on how well a supplier is meeting a specific need.  ‘We can contact a number of callers to a technical support department and ask them how well their calls were dealt with.’

This very simple research is useful in establishing whether a supplier is carrying out a specific function well. Increasingly, it is being conducted over the Web and by e-mail. Richard Sanders at Burlington Consultants says that this can generate response rates of up to 20% on partner websites.

“Generally, research is bought badly and used badly.”

At a slightly higher level, we have the channel audit. Typically conducted over the phone using a preset questionnaire, it can measure issues such as intermediaries’ general satisfaction levels. Anderson says such surveys can also be done on the Web, but adds:  ‘It has clear-cut limits, but can be useful for taking the temperature once a year.’

Finding out what the channel really thinks of you is an exercise that can take many forms.  Xerox, for instance, came out with a whole series of measurements which enabled it to classify its channel partners into one of half a dozen categories, ranging from honeymooners who loved the company and its products through to deserters (see Measuring how much they trust you, page 9, Routes to Market, Winter 2003).

A lot of research is concerned with understanding views on a specific issue or topic – perhaps how far the channel perceives a supplier as competing with them, for instance. Here Anderson says that telephone research, carried out by skilled practitioners who know how to dig, can work well.  ‘You need people who can attack an issue in a multi-layered way.’

Weldon at HI says there is a growing market for in-depth, face-to-face research with senior managers in large intermediaries.  ‘What you get from this is some very direct, actionable planning on an account-by-account basis.’

It may also be worth researching partner business models. Dent says:  ‘Partners are willing to let a third party in to crawl over their books. We do this and then hold three or four in-depth interviews where we validate the principles before confirming this with a few others.’

“Everyone views focus groups with some mistrust.”

But if you really want to prove a hypothesis or identify what changes you need to make in order to achieve new objectives, you will have to do face-to-face interviews using experts.

Dent says:  ‘We do a lot of these. The trick is to start with an interview map, a series of issues you want to explore, and then to let the interviewee determine the order in which you address them.’

‘To do this successfully you need interviewers who know the issues before they start the interview and who can challenge the opinions being expressed by the interviewee, highlighting an apparent paradox, for example. They have to be really capable of digging. The more insight you can bring, the more respect and data they will give you in return.’

Everyone views focus groups with some mistrust. Anderson suggests that the noisy tend to dominate. Weldon points to the danger of putting competitors in the same room.  Payget at NU uses focus groups for brainstorming but says that the results then need to be validated elsewhere.

So how can suppliers commission and use research better?  Dent says bluntly:  ‘Generally, research is bought badly and used badly.’  He adds:   ‘The really big question is,  "what are you going to do with the research when you get it? What will you use it for?" ’

Sanders at Burlington says:  ‘A lot of the market research that is commissioned  doesn’t have any consequences at the end. This is the research that tends to not be followed up.  For instance, there is little point in commissioning research on what your partners think of your account management if you are not prepared to change it.’

Weldon reckons that all research projects need a senior manager to champion them and a willingness to meet the results with changes. She adds:  ‘I suspect that one-off projects are less likely to be followed up than continuous programmes where market research is built into the job role.

If your salary is partially tied to what the channel thinks of you and you hold regular surveys, then it is much more likely that the research will be used.’

Anderson says that, as part of a channel audit, it is often useful to interview account managers, the suppliers’ staff in the field, and to get their perception of what partners think.  ‘You can then get a good picture of whether your account managers are really in touch with the views of the channel, and where there are real discrepancies, and why.’

Sanders says that some software companies have developed an inner ring of intermediaries who are prepared to roll up their sleeves and get much more involved in helping the supplier get its marketing right.  Cultivating such a group might reap dividends.

What research you do and what weight you give to the findings has much to do with the nature of the intermediaries, says Sanders, whose firm carries out research for Orange and Microsoft among others. ‘In IT a PC dealer who sells PCs and packaged software to many small and medium businesses is unlikely to have much insight into the products he sells or his customers’ needs. He or she is likely to be focused on going out and doing deals. A software developer, on the other hand, will know the product inside out and may have a lot of customer insight. If we were doing a project for Microsoft, we would give a developer’s opinions and views 100 times more weighting than those of a PC dealer.’

He adds: ‘Often, how much co-operation you get comes down to how far your interests, and theirs, are perceived to be the same. Again, developers who are using Microsoft as their platform are likely to have the same interests as Microsoft. A box-shifting reseller may feel more antagonistic.’

Getting co-operation from intermediaries can be a problem.  Many get several requests a month. Jinty Weldon at HI says that it is probably best to reveal who commissioned the research, although perhaps not at the start of the interview. ‘In my experience, intermediaries really don’t like it if you won’t reveal who is behind the survey.’

Much then hangs on how the research will be used internally. Dent argues that research can play a big role in change management by showing everyone incontrovertible proof that change is necessary.

He warns:  ‘You can use research findings  to show why change is necessary. But if you do this it is important to cover an entire geography. Research conducted solely in the US and UK won’t convince a German or a Frenchman.’

“If your salary is tied to what the channel thinks of you, then it is much more likely that the research will be used.”

Perhaps the ideal situation has been reached at Norwich Union, where Payget says that account managers’ views and perceptions of what the channel thinks are fed back into the research, which is then read, and acted upon, by the staff in the field.  But very few suppliers have reached the stage where research findings are fed back in this symbiotic way.

Perhaps unsurprisingly, the research professionals both in-house and in the agencies reckon that it is essential to use a third party to carry out this research.  Anderson at INSEAD says:  ‘Intermediaries are much more likely to open up to independent third parties.’

She adds:  ‘It is also difficult for suppliers to be objective if they are doing the research themselves. Typically, I find that one or two noisy, articulate dissenters will capture suppliers’ attention. They find it hard to listen to the quieter voices, who might well be in the majority.’

“We would give a developer’s opinions and views 100 times more weighting than a PC dealer”

Yet when a supplier commissions such research it places enormous trust in the hands of a third party.  Research companies are only as good as their individual researchers, and what you get depends to a great extent on what you pay. Research companies are all too aware that projects are often awarded almost purely on price, and cut their cloth accordingly. 

If you commission research it behoves you to find out who will actually be conducting the work. Out-of-work actors may be perfect for mass telephone surveys.

But they won’t ask the same questions as senior consultants, who are experts on an industry and can thus probe deeply.  Equally, management consultants with little or no formal market-research experience, or who think they know most of the answers at the start of the project, can also fail you.

It is, therefore, worth interviewing the researchers in advance, and sitting in on the first day or two of the research process.  Yet few suppliers are prepared to make such an investment in time, much less to employ the internal experts who can ensure quality.

NU: Fitting research seamlessly into account management

To get an idea of the scope of channel research carried out by the most advanced suppliers, we talked to Radan Payget, head of customer insight at Norwich Union.

NU has regular programmes to track how satisfied its intermediaries are with its product and services.

NU, for instance, wants to know about how independent financial advisers (IFAs) perceive NU service levels and how it compares to other large insurance companies. This tends to be quantitative.

Every six months it also buys in an omnibus industry report, which gives market-share and satisfaction levels for all the major suppliers.

But its research goes a long way beyond that. NU turns to its intermediaries for advice on product development, future marketing strategy and the whole shape of the industry.

Payget says:  ‘IFAs are close to the market, so we are constantly asking them about our products – how we could make them better, what they think of our advertising, our brochures, etc.’

This tends to be done in focus groups –  ‘we want them to brainstorm a solution.’

“NU also wants to understand how it can gain market share.”

NU also wants to understand how it can gain market share.   ‘Often an IFA can select from one of several products. We want to understand why different types of IFA select us or a competitor and how we can best change this.’ 

Not only does it segment the IFA market into 23 demographic segments, but it also segments IFAs according to NU’s market share.  Payget adds: ‘ We are very conscious of different levels of loyalty.’

Much of the research is to find out what the IFA market will look like in one or two years’ time.  ‘In the UK, IFAs are free to go down several routes right now.’

He adds: ‘My task is to forecast the shape of the industry accurately. Today it is a much more complex environment and so we are spending more money on it.’

So what does NU do with the data?  How does it fit into the business plan and the account management process?  Payget says that NU has very close account manager-links with IFAs. 

“Often account managers will tell us about a specific issue, which IFAs are raising.”

‘Ultimately, our account managers have built a relationship where they don’t just inform IFAs about new products, but they also advise IFAs on how to optimise their own businesses.’

‘For instance, we do studies that benchmark them against their peers.’

Market research fits relatively seamlessly into this process.  ‘Often account managers will tell us about a specific issue, which IFAs are raising, and ask us to carry out some research on it.’

He adds: ‘We will then come back with our findings, which the account managers can read and then show to the IFAs.’