Aligning Department and Organizational Goals with LeapFrog/VTech

As we all know, some insight organizations have more impact on their clients and companies than others.  This podcast focuses on those organizations that are doing a good job making an impact – and in different ways.

We’ll be talking with leaders from brands and from suppliers that have made a lot of these steps and missteps.  We’ll cover the definition of success, how you know if you’re being successful, how to organize around that idea and other related topics.

Our guest today is Linda Pacheco, Director of Consumer Insights at LeapFrog/VTech.  Prior to Leapfrog/Vtech, Linda held positions at Blue Cross, Walmart, and Intuit.  Her definition of success is based on providing an impact on the organization – and with a limited budget.

We cover a number of topics in this podcast.  A few of the highlights are aligning the goals of the department directly with the goals of the organization – and a truly direct alignment for a product-driven organization.  Another interesting topic is the pros and cons of being an insight organization heavily focused on DIY.  Another key topic is the alignment between the insight organization and the other functional areas to be embedded in the entire decision process.

Please read the transcript or listen to the interview for more about his perspective on the goals of the organization, how to align the structure to the goals, and adapting to change within your own organization.

Gregg Archibald

Managing Partner, Gen2 Advisors.

 


Overview of Interview

Gregg Archibald
Hi everybody.  This is Gregg Archibald from Gen2 Advisors, I want to welcome you to our podcast.

This is going to be one in a series, focusing on how various organizations are achieving success in the insights function.

We’re going to be looking at brands and suppliers, of different sizes, shapes, and forms, and we’re going to be discussing what success really is, how it’s defined, how to do it, trials and tribulations, relationships with clients, and suppliers, and what the future holds.

I am pleased to introduce our guest today, Linda Pacheco, Director of Consumer Insights for LeapFrog and VTech, a veteran of the insights industry.

In addition to LeapFrog and VTech, Linda Pacheco has spent some time at Time Warner, Blue Shield, Walmart, Intuit, and a few others along the way.

Linda Pacheco, thank you for being here.

Linda Pacheco
Glad to be here.

Gregg Archibald
Can you tell us a little bit about LeapFrog and VTech just to get us grounded on the kind of industry you are in?

Linda Pacheco

LeapFrog has been a maker of educational toys for children since 1996, started by Mike Wood. His son had difficulty with the sounds letters made, so he could not teach him how to read.  And so, being an engineer (I think), he developed this reading device for his son, and it evolved into the LeapReader, which was one of the first products of its kind for kids.  I got it for my son when he was little.

And then LeapFrog evolved and grew into a leading brand in educational content and devices  for children, primarily from ages 0-8 years old.

We have all kinds of kids’ tablets.  We were the first ones to come out with the kids’ tablet.  And VTech was our competitor. So, they bought us. Now we are just one big company.
We have a subscription program called LeapFrog Academy that you can get from various app stores but we also preload it on our latest kids’ tablets. And then we have a bunch of different handheld devices.

Gregg Archibald
And how long ago was that purchase?

Linda Pacheco
  2016

Gregg Archibald
So can you tell us a little bit about the insights department at VTech/LeapFrog?

In terms of the kinds of projects that you guys work on, the number of people that are in there, can you give us a little bit of perspective?

Linda Pacheco
Yes, VTech did not have an internal research function until they purchased LeapFrog. So, we are the research function for both brands. There are five people on the team.

I brought a lot of the software that is needed to do research in-house to lower the cost.

So, we use a lot of Sawtooth Software for conjoint, MaxDiff, and things of that nature. It costs a lot of money to go outside and have a company conduct a conjoint study for you.  I know that because I was also on the supplier side for many years.

Now, it is basically just the five of us, two of us focus primarily on qualitative research.

We also have an in-house kid lab in our building with a one-way mirror between the testing and observation rooms.  We bring kids in there constantly for the producers to watch them work with their software, or with our toy prototypes before we ever consider launching a product.

And we also have a learning team, which are all PhDs in child development, and they have to OK any kind of content that is put in any of our toys.

We are mostly, the age ranges from two to seven years old, but kids usually drop off right around 6 or 7, and they start using iPads.  So the “sweet spot” is something like 3 to 6.

VTech, on the other side, has the same types of products, but theirs are considered less educational with more bells and whistles, so they’re viewed as a bit more fun for kids because they have all these different lights flashing on them and buttons to push.

Our brands are somewhat different, we are right now trying to figure out how to combine the two brands, but we’ll leave the names the same.

We’re trying to understand, who should we be selling to?  Is it the older kid who wants more of the electronics?  Or do we focus on boys and girls that are younger?  Parents are looking for an educational type of toy to sort of ease the guilt that they might feel when they put them in front of TV to get chores done.  In this way at least they know their kids are learning something.

Gregg Archibald
Ok, so you mentioned two of the people are more focused on qualitative, and you have got a kid lab, I am assuming that is 1 or 2 people, or that is integrated with the qualitative.

Linda Pacheco
The two qualitative people on the team are user experience specialists; with training in ethnography and heuristic usability testing.  They are very well-trained, and they manage the kid lab.

Gregg Archibald
And then the other three people on the team play what role?

Linda Pacheco

So of the other three, two focus on quantitative, and 1 focuses on applying the research to brand and consumer strategy.  Someone will come to us typically from product development.  And we work with both the Hong Kong office because that is VTech as well as the toys office, which is out of Arlington Heights, Illinois.

We [LeapFrog] are located in Emeryville, California, so it is a little bit tough, given the logistics, especially the time differences.

I have them submit a research brief, basically just says, what’s the objective, what is the big question, what are you going to use with the information for, and how it is going to positively affect the business.

I try to shy away from anything that starts with “I have always wanted to know”, or something just to satisfy curiosity.  You have to be a very curious person to be a researcher, but I am not going to waste limited resources on trying to answer questions that are not really going to move the business.

Gregg Archibald
What are some of the types of key business questions that you are addressing, you mentioned: user experience, and you mentioned really trying to get deeper into defining the target market.

What are some other big categories of work that you guys do?

Linda Pachec0
The types of research that we do, really run the gamut.  We start with brainstorming ideas for new products at the beginning of the year, which usually has a two-year window to develop them.

And we will take a bunch of those ideas and just summarize them in three or four sentences since they are just ideas at the time.

And we will do a concept test with those 15, 20 ideas in there to see what rises to the top in terms of sparking some interest so that we know which ones we should recommend product development take to the next step.

These are not fully developed but as they are developing them, they keep coming back for testing with the kids at each stage.  So, that is why it is nice having the kid lab right there because we can send them there.  However, it is a very clinical setting, so when we get further along, we do not use the kid lab, we will actually send the product to consumers’ homes and do in-home testing and ethnographies.  It’s only in the very early stage that we will bring them into the lab.

Then, at that point, we weed out which are the big ideas, and then we will take those ideas – the three or four that come out of it – and we will do a full concept test.  They will develop some stimuli to see what it looks like. As we go along, we might even develop a video demo of what it will look like and how it might work to see whether this has a lot of appeal both for the parents and the kids.

We will interview kids depending upon their age, and parents as well.

Sometimes the kids are too young. They just love everything, but we typically hear it from the parent, and it is usually the mother unless it is a high-end electronic device, at which point the dads want to get involved.

Gregg Archibald
So, it sounds like most of the work that you do is new product development,

Linda Pacheco
We also figure out pricing through purchase intent and sometimes volumetric studies.

So, we can see how many new products we might be able to sell, so Sales can figure out their plans.

And then we will do other things like A/B testing online to see whether there is certain messaging or positioning that sells better than others.

Gregg Archibald
So let us get into, really, the heart of our discussion, which is for your insights organization at LeapFrog and VTech.  What is success? How do you define success?

Linda Pacheco
Success is dependent on when they [senior management] listen.  There are times where they will say, ‘we can’t do what the research says’; for instance, charge a price lower because that is what people are expecting to pay for something or have to charge more than consumers told us they are expecting to pay because they have to cover the materials and manufacturing costs.

Or because ‘we’ll just lose sales’ or prefer to go with their gut.  At times when they follow what the research has said they should do, and it works, that is what we, in the insights department, consider a success.

What we do not consider is, when they launch with something that we said they should not do, we still think it is a success, because the research was right.  But being right does not sell anything.  So, we are not too happy about it.  But then we will go back out to find out why it did not sell.  And typically, it goes back to what they did not follow in the research.

Gregg Archibald
So, success is when you, influence the organization in a way that they make a better decision?

Linda Pacheco
Correct.

Gregg Archibald
For the Insights department.  How do you align the goals of the organization around that, and how do you kind of measure your effectiveness in influencing decisions in that consumer-centric way?

Linda Pacheco
They have meetings in Hong Kong every quarter.  And the product managers for each of these products will go to these meetings, and they will present the research data, saying we should move along with this one, or we should not promote this one, or let’s conduct more research for it.

So that is how we decide whether or not we’re actually achieving the goals of the department – if Hong Kong decides to actually move ahead with the projects that we’ve said should get the green light, then we feel we’ve done our jobs.

Gregg Archibald
Would the converse of that be true if they decide not to go ahead, recommend?

Linda Pacheco
Correct.  And we have recommended against more often than we recommend they go forward.

Gregg Archibald
And do you keep measures around that, what you have, within your own individual corporate goals to say for example that we want to be accurate 87% at a time?  How do you align that to your individual performance goals?

Linda Pacheco
What I have been doing since I have been at LeapFrog – which is for a little over seven years now – I have developed a normative database.  So, we can look at the metrics that we collected at all different stages of product development, and say, when you hit this particular metric on appeal or uniqueness or likely to buy, or expected price range, we have seen success.

And we then attach what the numbers are for those successful products, so that when we are doing testing, at the early stage, we say, OK you need to at least have say, 65% in terms of appeal otherwise it is not going to make it, and you have to be within this price range, or no one’s going to buy it.

We know from all previous research that we have done on a wide variety of products what those metrics should be at all the different stages of development.

Gregg Archibald
You mentioned a little while ago that you brought a lot of things in-house as part of a budget-saving measure.  Can you talk a little bit about what you look for to keep in-house and the kinds of projects that you may look for for more strategic partners?

Linda Pacheco
We really do not go outside very often, except for qualitative work. The software that we purchase is for conjoint and MaxDiff studies.    We use those when we want to understand what the key attributes of the product are that we can then tell advertising that they should be focusing on.  Because with a competitive conjoint you can assess what features drive sales.

So we know what the price should be and what the value is for each of those attributes (or product features).  And engineering can take a look at that and say, OK, we can’t afford to put this thing in there because it will drive the price up to this.

We can also do a TURF  analysis to see what the optimal product configuration should be.   These are the attributes that you should have if you want to sell the number you need to cover its cost.

The only time we go outside is when we do qualitative work.  We will go to a company, like 2020 Technology (they were just purchased by Schlesinger Group), and we will do a QualBoard.  We let them do the recruiting, and then we manage the actual QualBoard.

We write the discussion guide for the QualBoard, we write the screener for their recruitment team.  We do everything.  We just need their tool, especially their QuaLaborate tool, which allows you to do heat mapping on package images, say, so you know what stands out, and what does not stand out.  So when we do competitive packaging, we will use a QualBoard.

Remember, when we do in-house testing, we go to their homes.  So logistically it has to be our bubbles within the California area.  And that does not speak to the nation.  What is nice about a QualBoard is that you can get 30 women online, from all over the country, for 3-4 days, which allows you to iterate on creative designs and test again the next day.

 Gregg Archibald
We have talked a lot about new product development, and all along that cycle from the ideation through forecasting.

And when I think about, a lot of the research issues or business issues that researchers typically take on, there are some other components of that; marketing, communications, customer experience, and brand strategy, which includes targeting, positioning.

Do you work in any of those other three?

Linda Pacheco
We provide input to all of them.

We will work with advertising, social media, we really work with everybody in the company, providing them the insights for each of their different areas.  And like I said, in the early stage, we will do concept testing.  But once the product is in the development stage, then we will try to go out there and find out the best messaging for it based on its competitive set.  What will distinguish our product from their product that we should be pushing on?  And we will use the insights from the MaxDiff and from the conjoint to say, you know, if you offer these features and attributes, you can beat out your key competitors.

Unless it is a brand new novel thing, like when we first came out with the kid tablet, we did not have anybody to compare it to, so it was pretty easy to grab market share, it sold like hotcakes.  But now the kid tablet is a commodity and everyone is selling them.

Gregg Archibald

I did not want to pay short shrift to those other pieces.

You guys are kind of doing more in this DIY world, where you are working with, conjoint and Max Diff. And I am sure some of the forecasting tools.  How long ago did you guys start to make that shift, to be, as in-house as you are, today?

Linda Pacheco
When I arrived at LeapFrog in 2013.

Gregg Archibald
Ok, so, 7 years. Can you talk a little bit about the good and the bad of making that shift?

Linda Pacheco
The good part is, it is definitely a cost-saving.  When I first started here, they asked me, what can you do to lower the cost of research because the insights are not really driving any kind of ROI.

I said, well, I cannot tell you about the ROI, because you have to listen to the research.  And the only way to really tell whether it is good or bad is to go one way versus the other, and then test both ways parallel. Well, no one’s going to do that because they risk losing sales in the testing.

I said I could help reduce costs by doing whatever research we can in-house since I had done all of these different techniques.  All I needed was the software.  And rather than spending, you know, $200,000 on a conjoint, or a few extra thousand every time the research called for a MaxDiff, we bought  $19,000 of software, and now can do as many as we want.  So, we just buy samples to send our online surveys to, and that is how we keep our costs down.

Gregg Archibald
So, that is the good side of it.  Can you talk a little bit about the bad side?

Linda Pacheco
The bad side is that we can do so much that we can get too many requests of ‘we need a conjoint, too,’ and there is still the same number of people on the team that I had when I started.

How do you prioritize when all of a sudden everybody wants to do it?   And so, I have to go out and have the president make the decision, so he gets a project list from me every other week.  And there are usually about 10 to 15 projects on it, and he will just say which ones are a priority based on the business.

Gregg Archibald
That is a very easy prioritization process.  I have done this within large organizations, and that sounds like the most painless I have ever heard.

Linda Pacheco
It was not that way in the beginning. Until VTech bought us, it was everyone just complaining to me, ‘why isn’t my project getting done?’  And nobody wanted to decide priorities for the company.  The CMO liked this, and the president liked that, and the finance director wanted this. And business intelligence said this was more important and nobody got together to decide on it, they just yelled at us.  So, I made the decision that ‘you guys have to decide the prioritization and we will just do the research, but you tell me which things to do first, then second, and if I cannot do them, then you have to give me the resources to be able to supplement.’

Gregg Archibald
Many organizations look at themselves in different ways.  Some organizations think of themselves as the voice of the customer, as strategic consultants, as marketing researchers, or data analysts, and a bunch of other things.  How would you describe the research insights function at LeapFrog?

Linda Pacheco
We are a little bit of everything.  I would say that we are really, at the very early stages, the consultants, strategic consultants.  Does this really align with what it is you are trying to do based on the metrics that we know about our customers?  Is this a good fit?

And then as we go along, we will recommend that they remove something or add something because that is really the driver of actually selling it.  It’s not just the appeal of something or the uniqueness of it.

We get moms all the time, for instance, that say ‘my kid is going to use that all the time, look at the cost of batteries!’  But someone has to decide if it is worth putting a rechargeable battery in there or a connector cable as opposed to saying that the toy requires six AA batteries.

We will recommend the whole thing all the way up to the engineering side.  Now, they may push back on it and say no, the cost is ten extra bucks to put in a rechargeable battery and we will simply say, ’OK but realize you are not going to sell as many because the number one thing moms wanted was waterproof and rechargeable batteries’.

We will push what we can push, but we will be in there all the way. Even after the fact, we will do an attitude usage study, to see what other features we might add to the next release of a certain type of product.

What are they saying they wish they could do more of?  What don’t they use very much that we may be able to eliminate, or supplement with something that they think is much more useful for their kids?  Because most of these products have progress reports, parents can see how well their kid is doing in different areas.

They may not be using certain things that cost us money to put in there that they never even use.  So, we will do all of that even at the end, and take it to the customer experience level, and say, what you want, and then bring that information back to the product and marketing teams.  And then eventually, that goes to the engineers.

They are the hardest ones to convince.

Gregg Archibald
Can you talk a little bit about how your team integrates with your internal clients, whether that be engineering or marketing?  Do you guys participate in their team meetings?  Are you brought in on a project through a research brief? Can you talk a little bit about the relationship between insights and the internal clients?

Linda Pacheco
It is a little bit different than what I was used to when I was at Intuit, or Walmart.com. Walmart.com had 23 different departments, and I would periodically just work with the top four selling categories. Here, it is more of every day, I am in touch with either advertising or product development or content or the producers or the learning team.

It is just constant.  We are involved in all the meetings and there are times where I will actually say, “exclude me, I am not good at that. I am not good at brainstorming or being super creative.
Go talk to Steve.”  And I will send Steve or Alissa to that meeting, one of the other people on the team, because that is not my forte.

And so I pretty much have to limit the number of contacts they have with us because it would just be non-stop.

Gregg Archibald
So, in terms of this planning process that you mentioned, you got, from ideation to forecasting planning process built on a two-year cycle, but you are also running research briefs.  You are also getting research briefs from people that need to know something in that moment or as the business cycle has changed, or whatever that may be.

How do you balance this idea of a very clear learning agenda with adapting to the needs of the organizations, as it may shift from week to week or month to month?

Linda Pacheco
It is pretty well set up.  We know that October is the meeting where PD Managers have to present the ideas that will move forward into the April meetings, where they will actually decide on which products are going to be developed in the next year.  And then it goes into the plan, so we have a timeline that we have to follow.

The only time we get ad hocs is if it is something quick and dirty.  Otherwise, everything is pretty much planned out for the whole year as to what projects we are going to do.  And when it is ad hoc, they usually just come to me, because I can get something done a lot faster than anybody else on my team, just because I have been doing research for so many years.

So, if they say, “Hong Kong will not listen to us about this, can you do a quick study to find out which creative we should be using for our next Smartwatch?” I can get that done in 10 days.
So I will go out there and do it, and then they have something to go back to Hong Kong with instead of arguing with them, they say, “this is what the research says.”  And they pretty much use the research to make all their points.

Gregg Archibald
Let us talk about the future a little bit, and how things may change.  We know that there is a lot going on in the research industry, from the types of data available.  And the way usability testing is done, then the way in-home use tests are done.  Then, the idea of data democratization, getting as much information into as many hands as possible.  Agile methods, there is just a wide variety of really important trends.  When you think about your department three, four, or five years out, what would you like to see then that you do not see now?

Linda Pacheco
I love that question.  I have wanted to do a segmentation study to really understand who our customers are and how we can message to the different segments within there.  Right now most companies will look at demographics but demographics do not tell you anything.

I give the example of Sylvester Stallone and Woody Allen; they have similar demographics.   But I guarantee they buy different products.  And different messages will work differently for them.  When I say that, they [management] go, ‘oh, yeah, good point.’

I really wanted to do segmentation, but it is not something that anyone department sees as important.  It really has to be a companywide thing.  So, we have to do that on the side, and in seven years, we still have not finished it.  And I think it would be so powerful to have.

The next thing is a library.  We have no library where all the research that has been done in the past is organized, all past research that’s been done is literally just thrown on this one drive.  And when people want to do a study we can say, we did a study like that already, and we know the answer to that question, but it’s really hard to find it unless you have an organized library.

I’m getting started, I’ve actually got somebody on the team now that’s going to focus on that, as well as a newsletter, publishing what we learn every quarter, and what we’re planning on in terms of future research.  In this way, anybody who has questions that might be related to upcoming research can piggyback on and we can incorporate their questions into the same survey,  saving time and money.

So, more of bringing it together, so that everybody knows pretty much what we are working on, what we have done in the past, the value that it has had because they can see it from the sales side.  And then, also, where to find everything.

But I still think the key is segmentation.  And yes, we are still working on it.

Everyone agrees that it would be great if we understood our customers and the different segments that they are in, how they differ in their behavioral attitudes, and things of that nature, yet nobody is asking for it.  The fact is there is too much ad hoc research to do to even fit it in.

Gregg Archibald
I completely understand your dilemma.  I have worked on that.  I spent a lot of time on the client-side, some with more money than others, and I completely understand the dilemma, and good luck to you.

Linda, I want to thank you for your time here today, your thoughts and insights, and this has been wonderful.  I think we have covered almost everything that I wanted to cover or any other parting words of wisdom for us.

Linda Pacheco
Now, you just mentioned one thing that I remember, which is when I was at Walmart, it was Walmart.com. We had money like you would not believe, and we did a segmentation. And that is what brought us really almost on a par with Amazon.  That was about 11 years ago, and it was just so delightful to put out a survey and get 10,000 answers in about 25 minutes.  We just can’t get that kind of response rate like a Walmart. That is because half of the US shops at a Walmart, but not at LeapFrog.

Gregg Archibald
Thank you for your time.

Linda Pacheco
Take care.

 

 

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