Marketing research has always been considered an expense. The prevailing feeling is that the return on monies invested in research cannot be measured. Therefore, it’s easy to write off conducting research in favor of allocating funds to areas where measuring results are more precise.
Good research guides companies in making the best decisions possible. Research can determine which of say ten new products stands the best chance of success. It can determine areas where improving service will make customers happier. It can optimize advertising messages so that prospects would be more likely to buy. But these actions don’t often lead to precise ROI determination.
In fact, researchers haven’t been particularly successful in quantifying the dollar for dollar return resulting from well-designed surveys or focus groups into these kinds of issues. The real question, it seems to me, is could they? Perhaps more importantly, should they even make the attempt?
Advertising is an expense but many companies wisely increase their ad budgets when sales are soft. Sometime they don’t know if ad budget increases will help but they know losing consumer awareness is great way to watch sales spiral down even more. What they have is faith their advertising investment will produce a reasonable ROI.
Sale and promotion budgets are often considered an expense that is difficult to measure but research is usually ignored long before risking a cut in these areas. What isn’t ignored is faith that when conducting frequent sales and promotions, ROI will be justified.
Adding operations staff in order to better serve customers is certainly considered an expense, but there is faith that better service will lead to increased sales and the ROI will be easily rationalized.
For these areas faith is often good enough. But the black box mentality that prevails often prevents companies from allocating funds for research at the very time it can do the most good.
So, what is the ultimate ROI then in regard to research? Try this thought.
ROI on research comes from being smarter when making important marketing decisions about your products or services. When it comes to research then what you should be measuring is your ROI on wise decision making? Here’s an idea.
Take a product or service and study the devil out of it. Take a period of time, say 6 months, and have the foresight to let good research dictate your marketing direction. Take another product and service and cut the research budget to zero. Make decisions based on gut, intuition, and entrepreneurial spirit. If you do better without conducting research, you’ll have your answer.
Want to wager where you’ll get a better ROI?
I’d love to hear you thoughts on measuring ROI when it comes to research. Got a better approach?