Yahoo, Barnes and Noble, and Borders are just a few of the casualties.
Despite the small sample size and lack of scientific method, many companies are still relying on focus groups to guide their brand strategy. The industry association ESOMAR reported that in 2017 over $2 billion was spent on this technique.
Joseph Stromberg, a former Vox Staff Writer, and focus group participant reported being asked to choose if Image A or Image B best reflects his relationship with a brand. David Reischer of LegalAdvice.com recalled his use of focus groups, saying, "It’s like you’re looking at ants from above."
The allure is in watching was the common theme among the many focus group users interviewed by Stromberg. Executives appreciate being able to witness live reactions to their brand. A contrast to the cold facts from data analytic methods.
During the 1950s Mattel’s use of focus groups resulted in the Barbie Doll. Around the same time, Chrysler Plymouth used them to boost sales of convertibles. Today, data analysis with machine learning is proving to be a more effective and less costly alternative.
Digital brands like Google, Airbnb, and Amazon rely on data analysis to determine their market effectiveness. Everything from the colors used to the location of assets is discovered by analyzing millions of data points, not just five to ten people’s opinions.
Another issue with focus groups is the psychological one. Most people prefer to blend in with the group rather than stand-alone. In contrast, an assessment of one’s behavior through data analysis does not have this problem. Combine other sources such as social media interests and a significantly more in-depth view of the customer is obtained.
It is the qualitative versus quantitative debate. Traditional brands tend to lean more toward the live reaction while the newest global leaders think in terms of numbers. This is the reason many companies are still using focus groups, while others like Malcolm Gladwell and Steve Jobs have declared them useless.
Quantitative decision making is the disruptor to the qualitative approach. It is the answer to the question, "Which version sells the most?" Instead of "which version makes you feel the best?" A measure of results versus discussion of opinions.
In many instances, it is the least liked option that proves to be the most performant. The reason for this is fully explained in the book “Thinking, Fast and Slow” by Daniel Kahneman. In short, a focus group is mainly asking people to reflect on decisions while the reality of choosing something in the wild involves an entirely different mental process.
The shopping experience is largely emotional. Each decision based on a previous series of interactions with the brand being considered. A mixture of conscious and subconscious thoughts built on organic experiences and carefully orchestrated messaging.
A focus group examines the emotional response to these interactions. Data analysis discovers the best and worst-performing ones. Focus groups using the lens of social science and data analysis accessing the tools of engineering. Both trying to predict the future.
In closing, a brand relying solely on qualitative measures will underperform to a quantitative competitor. Yahoo was one of the first to realize this shortly after Google launched. Borders Books died quickly then Barnes and Noble downsized once Amazon got started. All thanks to a strategy based upon analytics over opinion.
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