Eric Almquist, a partner at Bain & Company in Boston, is Global Head of Customer Insights and a leader in the firm’s Advanced Analytics practice. He is also a member of Bain’s Customer Strategy & Marketing practice.
Eric led Bain’s development of the research-based “Elements of Value” – specific types of value that help protect products and services from commoditization (both B2C and B2B, published in the Harvard Business Review). Bain’s extensive experience with Research Now SSI has included thousands of market research efforts for both corporate strategy engagements and private equity due diligence.
We spoke with Eric about his view of research for these engagements, and how he expects it to evolve in the future.
Q: When you are working with one of your clients, how do you determine the right research solution?
Eric: The key thing is to really engage clients and discuss what they hope to learn in a project and what decisions they will actually make from that knowledge. Sometimes clients just want to get smarter about customers, customer segments or a marketplace—they are trying to figure out “where to “play” or what types of customers to serve. However, often the objectives are much more specific—to understand the demand for a product or service, to explore pricing or price structure, or to help reposition a brand or proposition. Based on the objectives, we then design the right research approach.
Q: What differences in research do you see between private equity due diligence work and corporate strategy engagements?
Eric: Bain does a lot of due diligence work for private equity funds prior to potential acquisitions—we are a world leader in this field. We conduct research of this kind every week somewhere in the world, and given our wealth of past studies, we can help the funds judge whether a business is healthy in the minds of customers—or if it is tarnished and potentially in decline.
Research Now SSI has been very helpful to this practice, since we must often complete these diligence assignments in two or three weeks, under the pressure of deadlines from the private equity bidding process. The size of the Research Now SSI panel and their service responsiveness are paramount here.
Q: What are some of the advantages of conducting research as part of due diligence?
Eric: One might imagine that due diligence requires a lot of financial analysis, but the PE funds have deep competence in analyzing the performance of a business through balance sheets and other financial data. What they often need from us is an assessment of how well a company, its products, and its brand are performing among customers and prospects. That is where Bain can really help.
Q: Does the growth of “big data” affect the importance of research in the due diligence process?
Eric: In my opinion, no. I have been skeptical of the “big data” hype from the very beginning. The Internet and the Internet of Things are obviously spewing forth more and more data that can be useful. However, for consultants it is often unmanageable, of varying quality, or irrelevant to problems that our clients need help with.
Take the promise of social media. While we are using social media in some applications, one has to be very careful with it, as one knows little about the people behind the data. A lot of sentiment on social media has a negative bias, as “ego-casters” need to express their opinions about a bad experience with a product or service. A significant percentage of product reviews are fake. And a lot of social media chatter is laced with impenetrable jargon and slang—just read some raw social media comments sometime and judge for yourself. It’s hard to know what to make of it, and one wonders who the people are that have the time to make comments on social platforms.
Big data will be increasingly useful for customer insights, but it will never displace customer research or the value of spending time with customers face-to-face.
Q: How do you see research as a part of due diligence process evolving over the next few years?
Eric: We see potential for automation and efficiencies in many areas. We are already working on something called “predictive NPS” where we can use internal CRM and operational systems to predict whether a customer is a promoter, is passive, or is a detractor without asking the NPS question. Predictive models learn from past NPS surveys and background data on customers to be able to predict an NPS outcome. NPS surveys will likely never go away, but they can be augmented with models.
NPS as a system will persist. Despite all the customer focus of the last 30 years, customers are still routinely angered or disappointed by companies that serve them. Just look at the brand equity that has been lost by companies that have had the personal information and financial data of their customers compromised.
Q: What are some of the challenges that consultants are facing right now, particularly with respect to how they make use of data?
Eric: We have to be extremely vigilant about compliance with GDPR and personal information generally. The laws are changing fast in this area, and we have a legal team that is constantly monitoring this terrain.
Statisticians, data scientists, and data engineers are in greater demand now than ever, so recruiting is always a challenge. However, Bain is such a premier company that we’ve had good luck building a world-class analytics team over the last decade or two. We do our best to treat these people well and to be more than competitive in compensation and benefits.
One of the problems with all the new analytical tools is that the scientific assumptions and fundamental rules of data analysis have not gone away. For advanced applications, our Advanced Analytics professionals work with our generalist case teams, so we bring the best of both skills to serve our clients. We don’t let our consultants run specialized analyses without the guidance of specialists. Likewise, specialized analysis conducted without a business context and strategic thinking often ends up with wrong or unimportant insights.
Q: Do you view technology as a threat or opportunity that’s changing the market research landscape?
Eric: There’s an art to market research that will never go away, no matter how technology evolves. And as technology allows customers to interact increasingly remotely with businesses, research will be ever more important to understand those very same customers.
Q: How does including the “Elements of Value” help you obtain deeper insights for your clients?
Eric: When I developed the Elements of Value, my motivations were partly contrarian. I felt that all the hype about big data and analytics was distracting companies from thinking about the value they deliver in a fundamental way. After all, the delivery of value is everything in a business—and unless you constantly focus on it, you will lose your differentiation and revenue will collapse. Value is increasingly fleeting as global capital funds more and more ventures and start-ups. Thirty years ago, we sought sustainable competitive advantages for our clients, but I don’t think advantages are very sustainable any more. You just need to work constantly on delivering more value before your competitors do.
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