How 3M Created a Cost-Saving Internal Survey Research Company
The Market Research Event:
3M is the type of company apparently that will spend millions on R&D to develop a product, but really only wants to spend a few thousand on market research to figure out if it’s the *right* product.
It’s no wonder that Deb Hartman and Sandra Kelly of 3M found that back in 2004 that marketing departments in the company were all doing their own DIY research using free or cheap tools. In fact, the marketers LOVED being able to do research on the penny. They didn’t have any money to use on more sophisticated software and really, they didn’t see the point of it much either. As they put it in an amusing slide “The Monkey was running amok at 3M”.
The problem was, with all this decentralized research going on by DIYers decisions were being made off bad or skewed research. Bad wording, poor sampling, and biased questions were just the start of the problems.
So in 2004, a group of 3Mers got together and decided to create an internal company to provide services to the 3M divisions. As with most 3M divisions they had to start with a business plan and get buy in — and their beginnings were modest, they started with two people simply programming peoples’ surveys and helping them pick the right questions. Between 2004 and 2008 they added 2 more people, reporting services and other services like conjoint and sample selection.
The model they used, because they are not a 3M profit center (this is all internal money) was to bill their internal clients as little as possible. Just enough to cover their own costs and the costs of their software. They shared their costs with us which was interesting:
Vision Critical Survey Software: $35,700
Sawtooth Software: $15,000
Contract Employees: $360,000
All I can say is wow. That’s quite a bit of value for very little at a company the size of 3M! Also, wow, they are spending too much on software — If you guys are reading this: you really should check out our dedicated-level accounts!
As a closing comment — they have saved the company an estimated $1.7 million by forming this internal company when compared to external vendors. That’s really impressive! Good job guys!