Editor's note: Theresa Wrobel is vice president of Research 100, Princeton, New Jersey.
 
One casualty of slashed budgets may be the option to hire outside consultants. Or, paradoxically, when budget cuts lead to "downsized" departments, outside consultants may be called upon more frequently.

When should internal resources be used to help answer marketing problems? When should companies turn to outside research consultants for solutions? And what role should external consultants play to ensure their value?

Often, the "inside versus outside" decision is predetermined by budgetary constraints, timing limitations or the availability of essential resources. However, for those occasions when the path is not preordained, the following guidelines can help direct the decision.

Stay inside if internal sources solve the problem

Keeping the work inside makes sense when internal resources, such as customer databases and demographic information, can answer questions such as "How does my customer base compare demographically with the general population" or "In which ZIP codes do my most profitable customers live?" Issues such as these, which are descriptive rather than diagnostic, can often be addressed internally.

Customer information files, census data and the like can tell us what services are used and who uses them. However, they cannot tell us the "whys" of consumer behavior, what problems exist, which unmet needs remain to be filled. Only by asking focused questions can such answers be found.

When primary research is needed, the decision becomes more complex

When circumstances call for primary research, the decision to use internal resources exclusively or call upon the services of an outside consultant becomes more critical. Consider handling your primary research internally when...

1. Budgetary cuts dictate it.

2. Your company has all the necessary in-house resources to execute a project.

3. The question and answer process can be a beneficial learning device. For example, if management trainees can be used to obtain information from customers, two concurrent goals can be served. First, the trainees will learn face-to-face about customer needs. Second, customers will have a direct forum to express their concerns and wishes. It's important to note that management trainees and other non-professional interviewers must be carefully schooled in interviewing techniques. Also, many topics and occasions may be too complex or sensitive to deploy such a method.

4. Company employees may elicit more forthright answers because they are viewed by interviewees as being in the position to implement change. This is especially true in instances where customer problems or complaints are being fielded and the respondent is made comfortable with company employees as interviewers.

Care must be taken to avoid intimidating respondents, and, as always, interviewer training is a concern that must be addressed. Also, external consultants should be used in cases where respondents may not feel comfortable giving company employees candid answers.

How should the internal versus external decision be made?

An excellent way for a market researcher to determine whether or not to use an external consultant is to take a self-administered survey. Here is one survey designed to simplify the marketing executive's decision.

1. Can I be objective about my company's goals for a particular project?

2. Can I distance myself from hidden agendas and secondary issues to clearly identify the marketing problem and the appropriate solution?

3. Do I have the time to conduct the entire project, giving it the attention it needs and deserves?

4. Do I have the knowledge and the resources to complete the project without outside assistance?

5. Could I benefit from the added insights of an external consultant?

6. Would an outside consultant's resources assist in the execution of the project?

7. Would an external consultant's involvement in the analysis and presentation of findings lend credibility to the conclusions?

The consultant's role: guaranteeing that going outside is a rewarding experience

 In all fairness, the research consultant should also be willing to partake of what he or she makes a profession of administering. Hence, here is the research consultant's self-administered questionnaire, intended to ensure that value is delivered to the client.

1. When defining the research problem, am I spending most of my time listening to my client's needs, or am I selling my ideas?

2. Do I understand my client's business?

3. Do I recognize where the research project's goals fit within the larger framework of marketing and business objectives?

4. Have I defined and clarified my client's objectives so that all involved parties agree?

5. Have I made sure the research design clearly addresses the stated objectives?

6. Am I certain that my client will be able to translate the research results into usable marketing strategies?

7. Have I clearly outlined all the steps of the project, and addressed any uncertainties which might have an impact on timing or cost? That is, have I not only addressed the obvious needs and concerns, but made every effort to anticipate the unforeseen?

8. Do I have the resources and the knowledge to complete the project efficiently and cost effectively?

9. Can I provide my client with added value, based on my breadth of experience?

10. Am I supplying accurate, timely updates as the study progresses?

11. Are my final reports well organized? Do they answer the study objectives in clear, comprehensible language?

12. Do I go beyond simple reporting, and interpret the data to make suggestions for developing or implementing marketing strategies?

This questionnaire can serve a dual purpose. First, it provides consultants with a tool for self- evaluation. In addition, in these times of trimmed budgets, clients can use this questionnaire to assess the value obtained from their consultants.

Once you've determined that an outside consultant is necessary, how do you choose one?

The first decision has been made: an outside consultant will be hired. How should the selection process begin? Many marketers have developed ongoing relationships with consultants. Thus, past experience may be used most frequently to guide future selections. However, new research companies are often solicited to impart a fresh viewpoint since even the usual alternatives deserve an ongoing evaluation. The following guidelines for choosing outside consultants are offered for consideration.

1. What are the consultants' strengths? Do they match your company's needs? And, how can their qualifications be assessed on key criteria? First, make sure that you clearly understand your company's research needs. Then consider research consultants' abilities in several areas:

  • Are they problem solvers? This is particularly important when addressing marketing issues where internal knowledge is limited, or when differing opinions exist within the client organization about the nature of the problem. To test consultants' problem solving capabilities, have them develop a proposal based on a brief description of the marketing problem. Make sure the consultants have all the relevant background information. Be judicious about revealing hidden agendas or personal inclinations which may inadvertently bias their approach.
  • How strong are their analytic capabilities? This is always important, but it is particularly necessary when a large volume of data is generated, and the consultant must determine what ingredients are relevant to the final analysis. This may occur, for example, in a large segmentation, conjoint, or attitudinal study when secondary data must be examined and then used in conjunction with primary research to develop marketing recommendations.

Can the consultant synthesize data into a manageable format and then go beyond simple reporting to deliver usable recommendations? Ideally, a consultant will be able to provide examples of past analyses. However, the proprietary nature of much research may make this impossible. A detailed proposal explaining a consultant's research approach can help assess their analytic credentials. Another option would be to hire the consultant to conduct an analysis of existing data, to serve as a prelude to future work.

  • Do they have specific research methods which are relevant to your needs? If you wish to develop psychographic segments to help pinpoint the market for your product, or devise a pricing strategy using conjoint analysis, consultants' multivariate capabilities are obviously paramount. If the topic of concern is creative development via qualitative research you may need to inquire about consultants' experience in ideation research.

When questioned, consultants should go beyond reciting laundry lists of techniques, to clearly outline how their methods will address your needs. Have them explain how their techniques have helped other clients implement marketing decisions.

  • What resources do they have available which are tailored to your needs? If your customers are high net worth individuals or Fortune 500 CEO's, you will need a company with interviewers who are sensitive to the needs of these specialized groups. Further, you should be allowed to help brief the interviewers and monitor them. If the project you are considering is international in scope, then the company you choose should be able to provide knowledge about the research practices and norms in your required locations. In such cases, ask consultants to contrast their experiences when conducting research in domestic and international locales, and explain what implications these differences have when designing and implementing a research study.
  • Do they know your business? While the aforementioned concerns often take precedence over industry knowledge, this can be important when familiarity with complex industry structure and language is vital. Further, while a consultant may not know your business as thoroughly as you yourself do, they might be able to offer different perspectives on a specific problem based on the diversity of their experience within an industry or from other fields. Obtaining a client list, as well as descriptions of the types of studies conducted, should help you gauge consultants' level of familiarity with your industry.

2. When you are considering selecting a new consultant, what signs point to a trustworthy, reputable firm? Look for companies that belong to respected professional organizations that set forth a code of standards. Look for companies with long term relationships with client companies, and with individuals who have brought the consultants with them through job changes. Ask for multiple references, ideally from colleagues in the industry you know and trust.

Search for consultants with a commitment to professionalism and quality. This should be evident in introductory materials, in the presentation of their ideas in proposals, in the level of attention provided to both the client and the field during the implementation of a study, and in the quality of the final analysis and report. Become familiar with the credentials of all the people within the organization who will be actively involved with your projects. Ask what type of quality control measures they institute to maintain their standards of service.

3. Finally, have realistic expectations about what a research firm can and cannot do for your company. If you expect a consultant to complete a large multinational study overnight for pennies an interview, you are headed for disappointment. However desirable such a request from the client perspective, a research company cannot deliver the three major components of a study - quality, timing and cost - without compromising one of these three elements.

Quality should never suffer. And conscientious research firms are doing everything possible to streamline project schedules and costs. But reasonable compromises should be considered. Finally, when considering the cost of a study, all the aforementioned criteria should be assessed in order for you to truly evaluate the value you will be receiving.