There’s been much talk in recent years about the call for Consumer Insights (CI) departments to provide more value to the organization (with less in the way of human and capital resources). Moving forward, Insights Leaders will want to consider how they might begin to measure Return on Investment (ROI) in consumer research and use the information to “sell” the value of the CI function to the organization.
This quote from the recent Yale/BCG/Cambiar paper, “Building a Better Customer Insight Capability,” encapsulates perfectly the importance of thinking about and figuring out how to measure ROI: “In the low growth environment that has prevailed in consumer industries since the global recession of 2008 and 2009, many senior executives are unwilling to continue investing in a function whose return on investment is not measured… Elevating CI to a strategic position is not necessarily about spending more; it’s about spending smarter.”
That said, not one person at our recent Client Symposium – a diverse gathering of corporate researchers, reported that their CI team is currently measuring ROI. One participant recounted how they once tried to measure ROI based on Nielsen data – unsuccessfully. This is not uncommon, as very few CI departments in the industry have traveled down this path.
But, some are. And among CI departments measuring their ROI, there is a reported 400% return. While this number may be somewhat inflated (it is self-reported, after all), it certainly suggests that there is significant positive return on Consumer Insights investments! And, interesting (and maybe surprising too), ROI on consumer insights, when measured, is a magnitude higher than generally acceptable ROI from other investments in tangible (10%) or intangible goods (30%). We just have to start measuring!
Here are some tips for starting on the path to measure ROI suggested by Andrew Cannon, Executive Director of the Global Research Business Network and facilitator of our client symposium:
- Remember that you are unlikely to get a full, scientific measure, and that is OK. Something is better than nothing. Don’t head for perfection, just START.
- Engage the CFO or other financial professional within your company – they might not have the perfect answer, but likely will be glad to help and glad you’re making the attempt.
- Build a system, track core projects, and have a “3-year view”; be structured about it, but remain flexible.
- Engage your internal clients or finance department to help define the value of CI to an overall effort.
- Survey – or at least speak with your internal clients immediately after a project is completed, and again down the road, to understand the short- and long-term impact of each initiative.
- While ROI might be measured at the project level, it should be synthesized across projects and used to build a story of CI driving the business.
- Don’t fall into the trap of focusing only on tactical research (with clear action standards) just because ROI is “easiest” to measure on these types of projects.
- Create a brand action document that asks the brand team to indicate what will be done with the consumer insights gathered – and get the answer in both marketing and financial terms.
- Remember that ROI includes both upside value AND risk mitigation. What’s the value of stopping the company from making a bad or sub-optimal decision?
If you are not currently being asked to prove the return on Consumer Insights investments, why should you “go there”? There are, no doubt, risks and barriers for those who undertake this endeavor. It requires you to stick your neck out – taking both accountability and credit. The effort will likely be time consuming and may require some additional resources (which, one symposium attendee pointed out, are already stretched to the limit). However, when the C-suite does come around to ask for ROI on the Consumer Insights spend (and they will), it will be worth all your efforts to have a ready answer!