As marketing budgets are slashed, market research specialist B2B International examines how to maximize the return on investment of market research
All commercial organisations exist to make a return on their investment (ROI), and even organisations that are not commercial, such as government departments and charities, usually have to justify their investments.
Money is a scarce resource and it is therefore reasonable to question how well it is spent, and the most frequently sought justification is the ROI – the ratio of money gained or lost on an investment relative to the amount of money invested.
Market research projects should contribute to decision-making or solving business problems. When times are tough, market intelligence should be of even more importance. Whilst the output of research may be interesting per se, it should always go beyond providing insights and assist management in making more informed and intelligent business decisions.
Business-to-business market research agency B2B International has published a white paper which examines how to measure and maximise the ROI of market research.
Co-author is B2B’s business development and research manager, Julia Cupman, who believes that many marketers are too easily discouraged by the price tag on a market research project, which results in research not being commissioned and the potential ROI remaining unknown.
“market research is, in effect, insurance for reducing risk in business decision-making; all organizations take out insurance for other aspects of their business, so why not measure the ROI of market research?”
The paper examines at length the importance of measuring ROI, demonstrating:
- the role of market research in business decision-making
- how to measure the ROI of market research
- which types of research will generate the greatest ROI
Marketers appear to be taking the measurement of marketing ROI increasingly seriously, as a recent study of surveyed marketers has shown:
- 26% of marketers indicated that their companies calculate ROI for at least some of their marketing campaigns or investments, up from 18% in 2007.
- More than half (53%) of marketers indicated that their firms use ROI and profitability metrics to assess their marketing effectiveness.
- Almost two thirds of companies (61%) assess their ability to measure the financial returns of marketing either as entirely adequate or as a real source of leadership.
B2B International’s white paper discusses the types of market research projects which are more suited to the measurement of ROI:
Clear and immediate ROI – relatively easy to measure:
- Price sensitivity
- Ad testing
- Sales activity planning
- Market segmentation
- Customer satisfaction
- Retailer requirements
- Distribution effectiveness
Longer-term and not-so-clear ROI – difficult to measure:
• Consumer profiles
• Branding perceptions
• Channels to market
• Attitudes to products/services
• New product development
• Assessment of market size
• Competitor profiles
• Trends in the market
Cupman acknowledges the impact market research can make to the bottom line.
“Sometimes knowing yourself that market research is necessary is not enough; you may need to justify its value to your colleagues. In today’s climate, this means demonstrating the value of research, and to do this you must have a good attempt at measuring the ROI.”