Editor’s note: Harold C. Daume, Jr., is president and co-founder of Daume/Swenson, Inc., a full-service marketing research firm based in southern California. Daume's marketing research career spans over 20 years and includes major qualitative and quantitative research assignments for over half of the top 100 national advertisers and 20 of the top 50 advertising agencies. He has spoken at major conferences throughout the U.S. on a variety of marketing and research topics.

Focus groups have enjoyed various degrees of success and come under various levels of both attack and praise since their inception. Recently, a new problem has arisen: cost escalation. The cost of focus groups today is at least one-third greater than four or five years ago. This article discusses the facts that have led to rising costs and offers the focus group user 12 practical ways to reduce these costs and increase the utility of focus groups.

"So, a $10,000 budget for my focus groups, " says the marketing director. " I guess that's okay. When are the four groups scheduled for?"

"Well," you explain, "that's not for four groups, it's for two."

And that's when the trouble begins.

"How," she wants to know, "can a focus group cost five grand? I can remember when they didn't cost more than $2,000."

The cold fact is, that's what they're costing these days, depending, of course, on your particular requirements. The questions are: Why has this happened, and what can be done about it? Not too many years ago, general consumer focus groups were running only about $2,000; business groups about $3,000. Today, costs have shot up by a third or more. Why has this happened? There are a number of interwoven factors. Back in the mid-60s, focus groups (they were called group discussions then), cost less than $1,000, often much less. We would convene a panel of people, loosely defined, and pay them $5 or maybe $10 to come to, say, a church meeting room where we'd use a portable recorder and sit behind an accordion room divider to listen in and take notes. We ate, if we did at all, the observer's standard fare: ham on rye with mustard and a Coke. Even by the early to mid-70s, this hadn't changed much. But, by the 80s, focus groups were a major business venture, and like other research methodologies, had developed their own unique infrastructure. There emerged:

1. The moderator (or research company with resident moderator),

2. The focus group facility, and in some areas of the country,

3. The panelist recruiter. Each operation or function became more or less discrete. The client hired the moderator (or research company) who in turn hired the focus group facility, which then hired the recruiter.

More luxury

With this came the demise of church meeting rooms. Now, the facilities became more and more luxurious for two reasons: Panelist comfort and observer comfort. Facilities also became more electronically sophisticated. Gone were the recorders sitting in the middle of the table, replaced by installed sound systems for both recording and monitoring. Then came one-way mirrors, for on-the spot observing. All of this, of course, costs money. And it's all passed through. Next came videocassettes, and the ability to video record focus groups. Certainly, this is a benefit to the client company or advertising agency, particularly when visual stimuli are used. But, again, there's an inherent cost factor. The next thing that changed has to do with panelist qualifications. No longer could one "make do" with people who, say, used mouthwash. Now, they had to use a particular brand, or use mouthwash at least twice a day. The more refined the requirements, the more it costs to find the "right" people. Coupled with tighter screening requirements came increased honorariums or incentives or co-op's. The more difficult the screening requirements, the more the recruiter wants to offer those who qualify in order to make the job easier and so as to lose fewer no-shows.

Artifacts of inflation

Increased honorariums also came about as purely artifacts of inflation. In the late 60s, the typical household income scale stopped at $12,000 or more. Today, scales topping out at $70,000 plus are not uncommon. Think what this does when you ask a person to drive to a facility, for a two-hour meeting, at 8 o'clock at night. Finally, there are the observer's amenities. We have, today, graduated from sandwiches and soft drinks to much more exotic menus: chicken cordon bleu, sushi and sashimi, veal picatta, and more, usually accompanied by bottled mineral water, or occasionally, Corona and/or a dry Chardonnay. This is not to suggest that this isn't appropriate. After all, the moderator's being paid for his/her work from 4 p.m. to about 11 p.m. but all the observers get is a longer work-day. A decent dinner is certainly not out of line. Add it all up, and you can see the escalation. Table I shows actual comparisons taken from our own records:

Table 1

 

% cost increase 1983 to 1988

 

 

Facility rental

20%

Recruiting fee

70%

Panelist honorariums

50%

Observer refreshments

50%

Videotaping

75%

In this same time period, the costs for moderating and analysis have gone up as well. Moderating has increased by 10% in the past five years and analytical costs have risen by nearly 20% in our company. Of course, there are always loopholes. Take the focus group facility that five years ago hired a videotape cameraman and his equipment for $125 per group, and charged $250. Today, tine' outside cameraman and his equipment have been replaced by a $10 per hour employee and a facility-owned camera, changing the gross profit per group, for videotaping, from $125 to over $300.

The bottom line is this: We have seen an across?the?board budget increase of some 33% in just the past five years. Translate this into a corporation that commissions, say, 100 focus groups a year, and it's likely that they're spending at least $100,000 more today than five years ago.

Holding costs down

The big issue, of course, is: What can be done to keep focus group costs from further escalating? Here are 12 suggestions for holding back costs and increasing the utility of focus groups today.

1. Consider smaller rather than larger groups, such as six to eight panelists instead of the historic 10-12. With 12 panelists, it's been calculated that, after removing the time it takes to "warm up" (usually about three minutes), and the moderator's questions and probes, the "average" panelist in a 90-minute focus group has some three minutes of actual talking time. Cut the number of panelists and you'll increase their ability to speak. You'll actually increase the utility of your moderator, too. Instead of conducting a group survey, he or she can actually begin to get more inside the panelists. Cutting the number of panelists recruited from 14, for 10 to 12 to show, to 10, for six to eight to show, can save up to $400 per group in recruiting fees and honorariums.

2. Never conduct an odd number of groups unless they can somehow be bundled into three groups in a day. The odd group on a subsequent evening will cost you at least 10% more than if it were one of a pair. When focus groups cost $3,000 and more, this can add up very quickly.

3. Consider contracting for a volume of work, and not just by project or brand. One focus group facility we work with offers a 10% discount for a commitment of five or more focus groups in a 12 month period. Of course, this has to be paid in advance, so the time-value of money needs to be taken into account. But this does serve to demonstrate that buys are still available.

4. Think about restricting the discussion topics to the issues actually at hand. This will save in discussion guide development costs, reward you with more germane discussions and hold down analysis costs. Parenthetically, many focus groups, as moderators frequently observe, often become the "community Christmas tree," everyone wants to hang his or her own ornament on them. Holding the line on the variety of topics covered can save incremental development, moderating and analytical costs.

5. When you need purely background information from panelists, use a pre-discussion questionnaire. This can cover occupation, buying habits, and household income, all of which information needed for analysts, without using up valuable discussion time.

6. Get the facility to have the 6 p.m. panelists arrive between 5:30 and 5:45 instead of the usual 5:45?6:00 p.m. and then don't let the facility feed the 6 o'clock panelists in the discussion room. This may seem like a minor point, but here's what happens: The panelists arrive closer to 6 than 5:45. They're checked in. They wait a few minutes, then they go into the discussion room and begin to make their sandwiches. By the time they've eaten and the moderator can actually begin, it's now close to 6:10 or 6:15. Effectively, you've just lost up to 15% of your total discussion time or you back yourself into the second group, with no time in between to debrief with your people or the moderator. In this same regard, don't waste time with a deli platter for the panelists. Deli platters may look nice, but they use up the precious time you're paying for. Get those sandwiches pre-made.

7. Don't use a videotape merely as a record. If that's all you'll use it for, skip it. If you do videotape, then don't bring an army of observers. Let them watch the tape the next day when you can fast forward to the parts that are critical, and offer running commentary.

8. When you're traveling out-of-town, buy a package of airline tickets and hotel rooms. You can often get discounts that would not be available if everyone traveling (including the moderator) booked their reservations individually. Take care of the moderator's travel arrangements along with your own. This will alleviate the moderator or research company from having to add a charge for the administrative costs of making arrangements and also assures that you'll all travel together.

9. Realize that most research companies and independent moderators have to include in their project budgeting a factor for selling time. Instead of using the competitive bid method for focus groups, select whom you wish to work with, and tell your designee that they've got your business. You'll certainly be rewarded with leaner budgets, even if you still buy by project.

10. Plan ahead, geographically, when running out-of-town groups. If your company is West coast-based, don't start out in New York. It takes a full day's travel to just get there. This means you and your moderator have to budget for an extra day. Instead, where possible, go to the Midwest on the first day (you can get to, say, Chicago, and run groups on the same day), reserving East coast groups for the second day. If you are East coast-based with groups to be scheduled across the country, consider doing your West coast groups first, and then picking up the remaining groups as you travel back East. When you do this, however, be sure to let your moderator relax on the West-bound air leg. Don't expect him/her to be "up" on the flight and then pull off two discussions that night. While the first leg may be the toughest, it gets easier when you're East- bound because, although you lose time, you're running the groups earlier in your day, based on the time-zone of the city you awoke in. Time-zones work against you when you're West-bound for focus groups.

11. Consider whether or not you really need a full, formal report. If its use is more archival in nature than actionable, drop it. Instead, have your moderator prepare a one- or two-page summary of each discussion, highlighting those aspects which are critical to you and dispensing with a recitation of each and every thing that was discussed, whether truly germane or not.

12. Make your focus groups evolutionary, not confirmatory. Don't repeat, word-for-word, the same discussion guide each time. Use each prior group as a springboard for new learning. This, while not saving dollars in a budgetary sense, will vastly increase the utility of what you set out to accomplish in the first place. Of course, not all suggestions will apply to each organization or each focus group project. Use what you can, as you can. Continue to look for ways to either hold costs back in a realistic way while simultaneously finding new ways to enhance the utility of focus groups.