In today’s world, running a successful business is almost impossible without conducting proper market research. Many beginner entrepreneurs underestimate the power of good market research and how it can help their business start on the right foot.
Market research helps you gain insight into what happens in your field of business and provides a range of solutions for developing better business plans, increasing profits, improving performance, gaining a competitive edge and, of course, improving customer satisfaction.
Now, the real question is not whether you should or shouldn’t conduct market research, but whether to do it with an in-house team or outsource it to a specialized company. Both options have their own perks and disadvantages, but the choice you make depends on factors such as budget, goals and the size of your organization.
To ensure you make the right choice, we are going to compare and explore the advantages and disadvantages of both options below.
In-house or outsourced? Know the Difference
Before we go on to analyze the benefits and challenges of both options, we must take a look at the process behind each one.
As the name suggests, in-house market research is done within a company’s own business structure and uses only internal resources. This usually means there is a research team, usually within the marketing department of a company, dedicated to doing market research. Usually, in-house market research is a better option for large corporations, as they have the budget necessary to support the implementation and development of an in-house research team.
If a dedicated research team is not suited for your business, then outsourcing remains the best possible option. This means you will be employing a team of professionals from a third-party business that specializes in market research, to conduct the study on behalf of your company. Oftentimes, this proves to be a much better option, as a professional market research company has the necessary skills and experience to do a more complex job in a timelier manner. For example, hiring a specialized research agency is most useful for PR companies that don’t have the necessary resources, but want to gain a competitive edge.
Now, to help you decide which alternative works best for your business, we are going to analyze both options based on a few criteria.
Budget and costs
Cost-effectiveness has always been a subject of debate when it comes to comparing in-house market research to outsourced solutions because both can be a cost-efficient option in certain circumstances. If you don’t need to conduct frequent market research, then outsourcing to a specialized company can be a more inexpensive option, as you can commission them on a project base and only request their services when needed.
However, if your business needs to keep constant track of the market activity, then developing an in-house team will be much more cost-effective in the long term. Even if you have to pay their wages monthly, the total cost will be much lower than commissioning an agency to get the same number of projects done.
All in all, it depends drastically on your company’s needs and goals, which need to be clearly established before making any decision.
Security comes out as a clear benefit of running an in-house market research team because you have full control over the data that gets collected and analyzed. Reputable marketing companies will have no problem signing a non-disclosure agreement, but things can get more complicated than that. An agreement guarantees the company you are commissioning won’t disclose any information regarding the data they gather and reports they send to you. Still, in a data-driven environment, issues can happen at any time.
In the eventuality of an informational leakage or digital attack on their servers, your data risks being exposed and no money in the world can get your competitive advantage back.
To avoid such issues, make sure you clearly discuss security matters with your potential collaborators and ensure the measures they have set are strong enough to deal with cyberattacks.
Skills and expertise
This is where outsourcing wins hands-out, as the biggest advantage of doing business with a reputable and experienced market research company is getting access to their entire pool of talent and dedicated software.
An in-house team will rarely have the budget to make use of all the enterprise-level tools out there and hiring experienced marketers can be quite costly, meaning oftentimes your team will have to make do with what they can. And while there are plenty of free or cheap ways to gather the data they need, the quality of the end report can sometimes be questionable.
Outsourcing to a dedicated market research company means you will have a team of skilled marketers using state-of-the-art software to conduct their research. And because they need to constantly impress their clients in order to retain them, they will be constantly up to date with what’s new in the field and use that information to your company’s advantage.
You know your business better than anyone else, and your employers are expected to have the same level of dedication. And while passion and commitment are one of the key elements of running a successful business, they can often get in the way of the truth.
Because your internal team is tied to the company, avoiding bias is sometimes difficult. Consciously or not, your team may be tempted to come up with the “best results” in order to meet expectations and make the company look better. But for you to have a clear idea where your business is standing, you need objective, untainted results. Even the slightest influence from your research team can tamper with the results and paint an inaccurate picture.
While it is only human to want to defend something you believe in, bias is research’s worst enemy. With a third-party company, you won’t have to worry that results are not accurate, as marketing companies are judged based on their transparency and accuracy, and any tampering with the results could damage their image.
Ultimately, deciding whether to establish an in-house market research team or commission a third-party company to do the work for you should be based on your company’s particular situation and priorities. Some businesses find it best to outsource, while others have no problem working with their own team. Whatever route you choose, make sure it suits your company’s unique needs.