THINK LIKE A STORYTELLER…
Businesses look to research to answer questions. It takes asking the right central business question to get to the right “insights” story.
By Kerry Edelstein
@researchkerry
April 6, 2018
Once upon a time, our team was hired by an entertainment company to help launch a new marketing campaign. As the marketing director explained to us, their team needed research insights to better target audiences with Facebook, magazine, online, and TV ads. Their question was simply, ‘Where can we best spend our marketing dollars, to grow our subscription audience?”
It seemed a reasonable question. We’d learn shortly that it wasn’t the one they needed to be asking.
UNDERSTANDING THE CENTRAL BUSINESS QUESTION
We walked into their office for our final project scoping meeting, past the free frozen yogurt machines and friendly young receptionist, into a brightly lit, colorful modern office with floor to ceiling windows. We settled in and began discussing the business context around the project.
In the entertainment industry, several business models can turn a profit for distributors of content. There’s the HBO model: a deep high-quality library of programming, offered at a premium-price. The cable network model: dual revenue streams from both advertising and carriage fees. The Netflix model: a more affordable price, amortized over a mass audience. The earlier Netflix model: a massive acquired content library for an even more affordable price point. The broadcast model: a mass audience supported almost entirely by advertising. Any of these models can work.
During our meeting, the strategy laid out for us reflected none of those models. The plan was to offer niche content to a niche audience at a monthly price point that costs less than a cup of drip coffee at Starbucks – and with only one revenue stream.
We paused, perplexed. Slim content, to a slim audience, at a slim price, and nothing else? No amount of mathematical gymnastics could make that strategy turn a profit.
Certainly they could target media more effectively. But even if our research helped them perfectly optimize their audience targeting, they were still looking at an unsustainable business. They were building their strategy on a foundation of quicksand.
The central business question was not, as we initially understood, “Where can we best spend our marketing dollars, to grow our subscription audience?” It was “How can we grow revenue to become sustainable?”
They assumed that audience targeting was the answer. We didn’t.
And it wasn’t.
THE RESPONSIBILITY OF RESEARCH
A colleague recently heard this story and asked me, “What responsibility do researchers have to address questions that may be outside the scope of a project?”
My response was this: The scope should follow from the central business questions, not define them. Our responsibility is to understand the real business question(s) at hand so that we can define the right scope in the first place. And sometimes that means modifying the scope midstream, as new business context emerges. In that sense, there is a substantive difference between “scope creep” and “scope evolution.”
The scope necessarily evolved on the above project, because our understanding of the business context evolved. A study about audience growth necessarily evolved into a study about revenue growth. Yes, we did what we were hired to do – collect data to help focus their marketing dollars. But we also examined the context around that marketing spend.
As we anticipated, the data highlighted fundamental challenges with the product offering, branding, and pricing. Challenges that were going to be a hurdle to subscriber growth, no matter where they spent their marketing dollars. Challenges that would limit revenue potential until they were addressed.
That wasn’t the story they wanted to hear. But it was the story they needed to hear. And because we took the time to understand the broader central business question our client was facing, we had the right data to back up our story.
THE STAKES BECOME CLEAR
It didn’t take long for the President of the company to hear the message that they needed to revise the business plan before they revised the marketing plan. Midway through our presentation, he stopped us and asked point blank:
“Are you telling me that I need to go back to [the funding source] and ask for a much bigger content budget to be more appealing to grow bigger?”
He paused, considering his next words. “I can do that, but I have to be sure that’s the right thing to do.”
I glanced over at my colleague and took a deep breath. The question was a great one, but also a loaded one. Without knowing the budgetary constraints, risk aversion, or competing priorities of his funding sources, it wasn’t appropriate for us to answer the question. Instead, we laid out two different alternatives that were both supported by our research:
We didn’t need to elaborate on the implication of this choice set. We’d articulated only two potential paths to sustainability, and the company hadn’t been doing either. The stakes weren’t missing growth targets. The stakes were getting shut down. The urgency was unmistakable. And companies act when the urgency is tangible.
He furrowed his brow, listened a bit longer, thanked us, and then left early.
THE RESOLUTION
Recently I looked down at my phone and saw their mobile app had disappeared. In its place was a different app. It had changed colors and names. But it was the same service, rebranded. And they had nearly tripled their price point.
A smile crossed my face, and I knew that a sustainable revenue strategy was finally in place. The company didn’t love hearing the true narrative, but they did listen. Now they could finally launch that targeted media plan.
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