Research agencies must balance intuition with their key performance indicators (KPIs) in order to grow, said Ben Leet, founder at Stratify Consulting.

While listening to their gut will give business owners an idea of their position in the market, KPIs are essential, said Leet, speaking during a presentation on financial growth.

“Your gut will tell you whether you are saturating your current SOM [serviceable obtainable market] and whether you need to move up," Leet said. "It will tell you your next move or your next opportunity, and it will probably tell you your risks. You instinctively know your spot. But your KPIs will tell you your scope to execute. They’ll tell you when to change tack and pivot. You’ve got to run the two things in tandem.”

Speaking while chairing the event on Thursday 6th February, Alison Bainbridge, founder, Kokoro Global, said: “The industry has had so much disruption thrown at it, so the industry is now smaller than it used to be.

“Growth is what businesses need, but also what the UK needs here and now.”

Discussing the challenges of shrinking client budgets, Bainbridge added: “Collectively, we need to get businesses to spend more on market research – not find ways to do things for less money.”

It is important for businesses to understand the wider context of uncertainty before they think about their own growth strategies, said Leet. “There’s uncertainty everywhere. We’ve got trade wars, lack of consumer confidence – and when that’s low, brands naturally pull back on budgets. Add to that, a new technology revolution coming with AI. We’re entering a post-Covid normal but also an AI normal.”

When it comes to organic growth, Leet said leaders must decide what to optimise for in their business strategy. “You can’t invest in revenue growth, and drive profit, and drive innovation – generally speaking, you can’t focus on all three at the same time.”

Discussing the theory of the leaky bucket, which suggests that businesses are continually losing customers, Leet said research leaders looking to grow their businesses should focus on customer retention ahead of customer acquisition in the first instance.

Leet said: “Growth starts with the leaky bucket, but if, in your efforts to grow, you focusing on the top of the bucket, you’re really on the treadmill, because you’re acquiring new customers but you’re lapsing customers.”

Discussing strategy KPIs, Leet talked about burn rate (the rate at which a business is using its cash), runway (how long a business can operate before it runs out of cash), and headroom.

“Headroom is a really important measure. If I know I want to have six months of runway at a given time, but I have 12 months of runway, then I have six months of headroom – that is the cash that I could take and invest in innovation.”

The talk was focused on organic growth, but Leet touched on the issue of raising funds from venture capital (VC), saying that leaders should “only raise when the stars align”.

He added: “Does your agency have the right IP, or the ability to create that IP? And can you scale it quickly? Is there a significant market opportunity available quickly? VCs [venture capital firms] are looking for companies that are going to go unicorn quickly – they’re not going to deploy cash unless that’s the case.

“I’m not saying don’t do it, but understand what it takes – do you have the energy to see it through?”

Also speaking at the event, Steve Phillips, founder and chief innovation officer, Zappi, shared some perspectives on the things that are essential for creating an innovation space.

The first is having a culture and mindset that "embraces innovation". The second is resourcing; having enough time and money. 

Thirdly, he talked about how to introduce innovation with clients. “That has been, for us, one of the biggest breakthroughs. Clients can be very risk-averse, but we don't think about it in terms of clients, we think about it in terms of people at clients. But you have to be very clear with them that it’s not going to work the first time and that it is coming on a journey.”

Lastly, the ability to be agile with processes and having a focus on developing small incremental value is key for innovation, said Phillips.

The event was the first in the MRS Leaders Forum series, a new network for agency leaders in market research.