I had the privilege of attending the AMSRS State Conference last week and really enjoyed all the presentations and ideas put forth by the speakers. However, the one that resonated with me the most was the one by Duncan Rintoul on "The real value of market research". This is a fascinating issue and whilst there have been considerable advancements in measuring the value of 'marketing', the same cannot be said for 'marketing research'.
The concept of measurement is not a new one, and neither is the idea of measuring the value of marketing research. But the presentation essentially crystallized some of my own thoughts on this topic, and provided a framework for thinking critically about the 'net' value of the research we do for our clients, as marketing research consultants. I think Duncan's approach is an excellent one, and I must commend him for this; not to mention that the idea has actually sparked a lot of discussion both within the agency and the client-side on how this could be taken further and implemented.
The reason why I have inverted commas around the word measuring in the title of this post is because I wanted to differentiate between the notion of 'measuring the value of insight' versus 'evaluating the effectiveness of marketing research'. A research program is deemed to be effective if it enabled the company to make key decisions, which then translated in the achievement of broader marketing and corporate objectives. Measuring the value of marketing research, on the other hand, is quite different, and potentially more complex. It is about ascertaining the net dollar impact that the research had on the bottom-line of the company.
I think Duncan's presentation provides a good framework for evaluating if the research has been effective, but the point of my post is around 'measuring' the dollar impact of the research on key financial metrics. So essentially, it is the same idea taken to the next stage in the measurement chain.
So why is measuring the net dollar impact of research necessary? Why isn't ascertaining whether the research has been effective or not, enough? Well, quite simply put, it is because as a client, you are always contemplating between potential research proposals and programs. To truly extract maximum value, you need to select the research program that will deliver maximum net returns to the company.
Imagine this scenario: You conducted two separate research programs on brand tracking. Both programs provided insights that enabled in making key brand decisions and hence, helped in achieving your marketing objectives. But, which was more valuable? If you had to choose one over the other, from a purely financial point of view, which one would you choose? I think this is essentially the premise of my argument.
This is an issue which needs detailed explanation, and I am not going to give a magic answer to this, but I will end by presenting my framework:
I will be sharing my insights and ideas on how to interpret this framework and also on how to tackle the last level in the measurement chain i.e. financial impact, in my next post. So stay tuned for more, and let me know your thoughts and comments in the meanwhile.
The distinction between determining effectiveness and measuring value is a good one to explore. My only caution would be to consider which occasions will truly enable one to measure the value of the decisions made, especially in net dollar terms. Just as it's difficult to isolate the impact of advertising(other than Direct Marketing for example), the same is true of market research - probably moreso. Ultimately many things come together to influence an outcome. If we start by seeking to always consider how useful some research was, and then how effective it was, in some very specific cases we might even make an estimate of the dollar return.
ReplyDeleteI'm sure that the whole issue of value would be something quite open to debate on the client side, especially by the bean counters. If the research was being used to justify a go/no go decision on a new product launch that the value is quite clear, and therefore easy to measure. When the research is perceived to merely confirm something that the client already knows, then the true value would be something becomes very subjective. The challenge for the industry, both from an client and supplier side perspective, is to make an effort to move further up the decision making food chain with approach, methodology and outcomes to provide real, undisputed value into a business.
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