Consumer-facing companies spend tens of millions of dollars each year on customer or consumer insights (CI) and commercial analytics (CA), two critical tools for any organization in pursuit of top-line growth. Despite these substantial investments, fewer than half of companies surveyed by the Boston Consulting Group regularly measure the return on investment from their market research efforts. Among those that do, approaches vary, along with maturity levels of the measurement functions.
At the same time, CI teams know how important it is that decision-makers and company leadership recognize the value generated by each research project and by the research enterprise. Unlike other functional areas, such as Sales, tracking and measuring ROI for research activities is not always a matter of linking expenditures directly to revenue outcomes. Additionally, research processes often generate value in non-financial ways.
Why Market Research ROI Matters
While measuring market research ROI can be challenging, avoiding measurement altogether can cause far-reaching problems for your CI team.
When ROI for research is not systematically addressed:
- It’s tougher for your team to manage priorities effectively.
- Company stakeholders tend to underestimate the value of the research function, leaving it vulnerable to budget cuts.
- Your team may struggle for a seat at the corporate table, making it less likely that insights will be used in business decisions.
The importance of demonstrating ROI is not unique to the research function, but it is challenging in specific ways.
- Research only produces a return if decision-maker(s) act on the findings.
- Actions are at the discretion of decision-makers, and different individuals may use the same insights to make different choices, with different revenue outcomes.
- Research may be used as a “reality check” to confirm something obvious, and therefore will not lead to a discretely measurable outcome.
- A set of research findings may influence multiple decisions, complicating outcome measurement.
But while your CI team might face some unique challenges when it comes to measuring market research ROI, there are still steps you can take to prove the tangible benefits of your research initiatives.
Begin Where You Are
Your CI team’s level of maturity for ROI measurement can be largely defined by the extent to which your research designs incorporate clear objectives and predictive metrics for success. Regardless of where your organization lies on the maturity spectrum, your CI team can proactively shape the research practice to evolve toward greater ROI maturity and, consequently, clearer and more concrete value for the organization.
Communicating the value of research does not only occur when presenting findings and recommendations. There are opportunities throughout each project, every time the research team and the stakeholders engage.
Ideally, an organization will designate a team dedicated wholly or partially to measuring ROI. Depending on the maturity of your CI function, this team may reside within CI or CA, rely on external providers and partners, or tap members of the broader marketing organization and/or business line functions, such as finance or testing.
If your company doesn’t have a dedicated ROI team, you should still approach every research project as if it did. Ensuring clarity, focus, and discipline in the research design and execution drives a better outcome in terms of actionable information and meaningful insights. That creates opportunities to reinforce your market research ROI anecdotally, even where systematic measurement is lacking.
First Things First: Objectives and Metrics
“We spent too much attention up front ensuring alignment with the organization’s business goals,” said no research team ever.
The gold standard for demonstrating market research ROI is achieving metrics that link to clear, specific business objectives and that are strongly predictive of success against those objectives. Even where systematic ROI measurement is not yet in place, connections to business goals should be incorporated into your presentations to underscore the project’s value to the bottom line.
The first step in designing an ad hoc or ongoing project is defining the business objective(s) it will address. Obviously, CI depends on business line managers for thorough and targeted briefings on project goals. Ensure research team members are trained to ask the right questions and probe for clarity to facilitate the process and help guide expectations for the business managers.
The second step is choosing metrics that link to the business objectives and will be predictive of success against those objectives. Again, this is a collaboration between the research team, the business line manager(s) with a stake in the project, and the ROI team, if one exists. The choice of metrics includes determining the appropriate baseline and calculation for each metric, and establishing the right time frame to measure, e.g. strategic/forward-looking, tactical/near-term, or operational/continuous.
Own Your Expertise
Your CI team knows more than anyone else in the organization about how to conduct research to optimize knowledge outcomes. Leverage that expertise to build credibility and authority by owning the function. Offer as much depth and granularity about methodology as stakeholders want to embrace. Many have at least some familiarity with the concepts and vocabulary associated with research, but it isn’t their core competency. Some are hungry to learn more, others may over-gauge their own expertise. Tailor your communication to your audience, and provide opportunities for interested stakeholders to learn more.
Keep an Eye on the Big Picture
Nowadays, the disadvantages of organizational silos are well known, and many companies have successfully eliminated that limited structure. Still, it can be quite challenging for business line managers to stay current on all information being generated elsewhere in the company that is potentially relevant to their responsibilities. This can create a role for CI as curator of the company’s knowledge about the brand, customers, product lines, competitors, and more.
When your CI function and individual team members have a grasp of “the big picture”, it acts as a force multiplier for the value of research. One of the most powerful tools in this regard is a knowledge sharing platform where anyone in the company can access “everything we know” about the issue or topic they are charged with addressing. In addition to putting resources at people’s fingertips, a knowledge sharing platform can help establish and showcase high standards of transparency and discipline for the research practice. It can also help prevent duplication of research, reveal potential opportunities for new research initiatives, and place any research project – and the associated business objective(s) – in broader contexts.
Research creates value via processes as well as outcomes. Placing information about research projects and results in a knowledge sharing platform– and clearly indicating how each project supports organizational goals– helps make your team’s market research ROI visible to the rest of the organization, while also increasing your ROI by making it easy for stakeholders to access and act on insights.