ROI for Marketing Research – Why it Misses the Point
My partner and I recently read an article about a group (some industry leaders backed by a big-name consulting agency) that was trying to tackle the problem of the valuation of ROI of research. And, of course, they were pursuing it with the desirable goal of increasing the perceived value of research projects and ultimately of the research function/industry.
Our initial reaction, however, was disappointment. While we understand that the desire to find a simple, quantitative way to value research keeps people searching down this path, the reality is that the value of information/insights will always be subjective, so the effort is, unfortunately, mostly fruitless.
This search has been around for quite some time now. In the late ‘90s, when I was working in Europe, I participated in a panel discussion among a group of Research Directors from across the continent who were asking this same question: “How do we get management to better appreciate the value of research?” Those gathered concluded that that they needed to do a better job of defining ROI and then explaining and selling the value of the results to Senior Management because Senior Managers “just didn’t understand/get it.”
At the time, I was younger (much) and less experienced (certainly), but I’d had some good mentors and so, while I was pretty sure the assembled panelists were wrong, I listened more than I contributed (rare for me). Today, I would have told them that when it comes to value of insights, “if you have to explain it or prove it, then the value isn’t sufficiently clear,” and that hasn’t changed in the past 20 years. Attempting to carefully measure or assign an ROI is not an effective approach.
So, what do we do instead? Embrace and own the reality that ROI is not the point, but rather… a research project’s value is based directly on the degree to which it is perceived by management (not researchers) to affect decision-making.
The implications of embracing this view are that:
– we measure value based on impact — any project that influences or affects a decision is at least a partial success; any project whose results are ignored and not used is a failure;
– it is SOLELY the researcher who is personally responsible for ensuring that his/her client perceives and embraces the project as adding value and a success; and
– measuring this value in dollars is only rarely going to be possible, necessary or useful.
Embracing this view has further implications on how to approach a research project. First, having clarity about the questions being asked is often not enough. The key to delivering value (and owning its delivery) is to understand the Business Context behind the project and the specific impact the project can have BEFORE the research project begins. If/when you cannot determine how the insights will be applied, and by whom, you should carefully consider whether the project should proceed.
It may come as a surprise to some that research is frequently perceived as failing to deliver value precisely because of, or despite, researchers’ focus on answering questions and providing insights – even, as a recent conference presenter put it, “great” insights.
Unfortunately, insights are not sufficient.
Too often, researchers do not pursue an understanding of the business context causing the questions to be asked, and in which the insights will be evaluated. (E.g., Who is going to need to be convinced? What are the political implications? What are the barriers to action? What has already been tried?) As a result, they may fail to provide the specific insights needed, fail to put results in the right context, or fail to provide the insights in time and for the right audience.
In other words, despite answering the questions asked, they are still not perceived to be adding value to the degree expected of them. This is because the fundamental idea, that the presence of an insight leads to decision-making, is false. Insights lead to action ONLY when the right insight is provided to a person who is ready and empowered to use it.
Management expects today’s researchers to know more than just how to create insights; they need to know how to influence the organization to utilize those insights.
Therefore, to deliver value, you must do two things. First, you have to proactively pursue and insist on understanding the business context in which the questions are being asked, and be willing to oppose doing the research when its impact is unclear. Second, you have to deliver the results in a concise format based on providing a POV on the topic/hypothesis decision at hand, and ensure they get to people who can act.
Tom Long from The Coca-Cola Company caused a bit of an uproar when he put this another way to the Global Research team sometime back in the ‘90s (before he went on to take over as CEO at Miller Brewing). He declared, “Your reports shouldn’t be delivering insights; they have to SELL your POV about what your client should do, based on the facts and data at hand.”
When speaking with young graduate students, I tell them “if your company starts trying to assess the specific ROI of research, polish your resumes and start to seek other employment.” Such effort usually means that the research department is already perceived as failing to provide the expected value.
Net, net, ROI is a canard; instead of ROI, focus on impact and perceived value. And in order to deliver value, become an assertive, constructive consultant to your clients rather than an information/insights gatherer/provider. Deliver more than just insights; deliver a coherent, relevant POV.
This is not to say delivering business impact is easy. It requires thoughtful partnering with our clients, helping them ask the right questions to get the right focus. And then leveraging that focus to choose the right methodology with the right target, leading to a well-thought-out, concise POV that directly addresses the business issue at hand. Research designed and results delivered in this manner provides clear value and inspires client confidence.
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