The Death of the Focus Group? At Invoke Solutions, Apple Vet Makes Market Research User-Friendly, for the Surveyors and the Surveyed
Focus groups are such a standard part of our market-driven culture that they’ve long since become the subject of parody. Decision-makers are seen as being afraid to act without consulting them; surely, no political party would pick a candidate, no legislator would introduce a big policy initiative, and no movie studio would green-light a big-budget film without focus-grouping it first.
But while they may be ridiculed, the truth is that business organizations—especially consumer product companies—still spend quite a bit of money on focus groups. Such ensembles are considered a crucial way to identify products people will buy and weed out bad ones before they’re brought to market.
The rise of the Internet, however, has created faster, cheaper alternatives to the classic eight-people-around-a-table-and-a-whiteboard scenario. Since 2000, Waltham, MA-based Invoke Solutions has been one of the companies running online surveys that, in effect, let market researchers assemble focus groups that are hundreds or thousands strong.
Until recently, Invoke’s surveys were still real-time affairs, conducted at scheduled times. Groups of researchers huddled in control rooms, administering questions, interacting with participants directly, and watching the data pour in. Last year, though, Invoke introduced a new “asynchronous” survey system called Engage that allows volunteers to participate in market studies at any time they choose. And in January, it enhanced the system with new reporting and analytics software that lets Invoke’s clients view and explore the results, via instant PowerPoint presentations and other types of visualizations, as they come in.
Invoke’s president and CEO Ben Cesare, who came by Xconomy’s office a couple of weeks ago, says the response to the new reporting software has been “thrilling.” Within 60 days after Invoke rolled out the Engage Analytics tool, 120 Fortune500 clients were already using it, says Cesare, who joined the company in 2005 and became CEO a year later. The veteran of Apple Computer, Psion, and Agile Software says he’s “not a research guy”—meaning he isn’t steeped in the strategies of giant market-research firms like TNS or Ipsos. But he says he does understand “innovation that works, capturing the information that matters. That’s what I really care about, and that’s what attracted me to Invoke.”
Cesare (pronounced like “Caesar”) argues companies need to embrace market research systematically, the same way they’ve embraced enterprise resource planning (ERP) or customer relationship management (CRM). In fact, he’s got his own three-letter term for what Invoke does—RDM, for research data management.
During his visit, Cesare gave me the basic download about the venture-funded, 55-employee company (which raised a $7 million round one year ago) and its latest accomplishments in the young discipline of RDM. But I started out asking him about the competition—the old fashioned focus group. A greatly abridged version of our conversation follows.
Xconomy: What’s wrong with focus groups?
Ben Cesare: The problem with focus groups is that they are time-consuming and expensive and they give you a small sample size. You could spend a month and a half flying around to six cities and talk to eight people in each city and then find that only three of those eight do all the talking. Are you going to make a call based on the opinions of 18 people? We’ll put you in front of 1,000 people over a week at a fraction of the cost, and all the answers will be believable. There’s no groupthink, no bias in the room. You’re not traveling.
X: So why do companies keep doing them?
BC: You know the old saying—nobody ever got fired for buying IBM. There’s a lot of safety in the same old stuff. People will say, “I have to do my focus group, I have to look those eight people right in the eye.” I submit the opposite. My point of view is that people will look you square in the eye and not be straight with you. They want to tell you something that goes along with the herd. We are social animals, and most of us follow. You can get interesting information from a focus group, but not enough to make a decision. With an individual in his home office, answering a well-designed, engaging online survey, I submit to you that you are going to get incredible honesty, because they are by themselves, not influenced by others in the room.
X: How did Invoke get into this business?
BC: Invoke was founded in 1999, and for about the first six months, it was a distance learning company. If you look at the requirements of distance learning, you need to be able to reach people globally; ask not just quantitative but qualitative questions; score answer rapidly and get immediate feedback and immediate results. When that product was shown here, a significant beverage company said, “This is interesting, but we’re not buying a distance learning tool right now. But we do lots of market research. Instead of getting people to join sessions as students, why couldn’t we just invite them as consumers?”
I credit the people who were at Invoke at the time for listening to their client, because as we all know, sometimes clients take you to where your products should be. I carry around an Apple Newton with me as a reminder. Apple didn’t do any market research on the Newton. They got a $1,000 brick that you can’t even fit in your pocket. It’s a brilliant company with brilliant leadership and creativity and innovation, but they probably should have talked to consumers about what they wanted. So some people from Apple left and did Palm, which was all about size, synchronization, and the price point. I take those lessons to heart when we develop new products like the Engage Analytics engine.
X: Okay, tell me about how that product emerged.
BC: For about six years, we hung our hat at Invoke on Invoke Pro, which was a live research tool. People would be invited three or four days ahead of time [for live surveys conducted at specific times]. You’d have half a dozen people in a room somewhere running the show, watching the real-time reporting, seeing instant PowerPoint and Excel reports. It was well ahead of its time. But we recognized something a few years back. You can get people from the general population to join a survey at 8:00 at night or 4:00 in the afternoon. But what happens if a pharmaceutical company wants to get together people aged 35 to 45 who suffer from a particular condition? That is very hard. So about a year ago we developed a product called Engage Open, which is simply an asynchronous version of the live service. People can come online at any time to answer surveys. But we retain the live experience; people who are logged on are welcomed by a moderator, they can still vote on other people’s answers, the questions are integrated with multimedia stimuli, and it’s a very active, conversational environment.
Engage Open was significant for us. In its first year, it became 28 percent of our business, because we could now get a low-incidence sample. If we wanted to recruit guys like you who might not be available at 7:00 pm but you could do it at 9:00 pm or 7:00 am. It expanded our business incredibly—it allowed us to do very specialized research in the B2B and biomedical worlds.
Now, if you look at research information, it’s oftentimes very complex to understand. There’s lots of filtering and segmentation. The reason chief marketing officers don’t like to read research is that it’s in the language of the researcher. But what would happen if everybody could understand research at every level in the company?
Look at the success of Apple in the music business. How did they become the biggest retailer of music in the world in just four years? Did they create the first handheld music player? Do they create the content? Did they come up with the idea of downloadable music? No, they created iTunes. They understand how people interact with information. That’s what Engage Analytics is. It’s iTunes for market research, so that people can all understand and have access to it and collaborate to get their work done faster.
If you go to our website, we’ve built 1-minute vignettes where you can see Engage Analytics in action; they’ll show you what the product can do. The bottom line is that we’re solving the same problems that the big research companies are solving. We just do it at a fraction of the cost, in a fraction of the time. Our guiding principle is that time and expense is not a prerequisite to get great research results.
X: You talk about being able to recruit these very specific groups of survey participants—like 35-to-45-year-olds with specific medical conditions. But how do you find them? Speaking for myself, I detest all the telemarketing calls and survey offers I get.
BC: There is a whole industry out there called sample providers. They are highly specialized to get you the people you need to attend these online surveys. They can get you panels that are very consumer-oriented, others that are B2B, others that relate just to healthcare. Believe it or not, a lot of people in the U.S. are anxious to share their knowledge, and like to be part of something that can have an impact on an industry or a category. Our B2B surveys are quite intellectual and thought-provoking. With other surveys, there’s a 35 percent abandon rate, and every answer becomes a “3” because you just want to get it done. Hundreds of millions of dollars are spent on those types of surveys. The material needs to be more thought-provoking, more engaging. Hence the name of our product.
X: How is the economic crisis hitting your industry? In times like these, do companies think it’s even more important to do careful market research, or are they cutting back? How does that affect you?
BC: The economic situation is impacting our business, of course. What we’re doing is getting much more targeted about how we’re different from everything else out there. In times like this, you have to be really crisp about what’s different—not just on price but on results. But it’s also clear that with travel budgets being cut, the focus group business is being impacted tremendously, which can only help us.
X: What are the potential exit strategies for a company like Invoke?
BC: You do think about exits, as a CEO, but I want to build a very innovative, profitable company that stands out, so that when the time comes, I have options. Those options are clearly getting acquired, being merged, or buying another company. The option I don’t entertain is going out of business. We have fun. We are not in a rush to do anything but be innovative and try to make our customers happy.
I will tell you that once you have spent so much time at a company like Apple you can’t get that taste out of your mouth. So you want to do things that matter. Especially in this economy, you need to be able to make fast decisions that you are confident in, and have transparent access to data that you can understand.
When you look at who is sitting around the table in the executive suite, you might have your CEO and your chief marketing officer and your chief operating officer, but it’s amazing to me that there is no group represented there you can rely on to tell you whether a product or a service is going to succeed. We are building the products we’re building because that voice needs to be there.
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