Determining the Value of Insights
With the value of Consumer Insights being questioned to justify ROI, the Market Research professionals need to figure out ways to quantify the value of those insights. Determining the value of insights is no easy task and requires focus on three key components.
Corporations have long invested in the practice of ‘market research’ as a means to identify or uncover ‘insights’ they can capitalize on to build a competitive advantage in the marketplace. However, Market Research departments are often perceived as a low value add ‘cost center’ to an organization, most likely due to a company’s inability to ‘act’ on generated insights rather than the inherent value of insights themselves. As a corollary, in the new age of rapid corporate cost reduction, Market Research departments are feeling the heat, and are being asked to prove their value in quantifiable ways, much like their peer groups in operations, sales, and supply chain have been doing for years. Therefore, Market Research & Consumer Insights professionals not only have to drive impact, but they have to prove this impact as well.
The reality of truly quantifying the value of market research has long been deprioritized or avoided for a very good reason. It’s hard. Being able to successfully connect an insight generated from a report to a decision made by a group of consumers that is different or better than the alternative is difficult exercise, given all the links in the chain, changes along the way, and potential for breakdowns throughout the process. However, research and insight departments can help add transparency to this by focusing on dissecting 3 key areas when investing in new research, analytic, or consumer insight related projects:
1. Insight Efficiency – addresses the level of insight output, as well as the activation rates of insights generated. Key questions to address include:
- How many projects / insights have we generated per $$ spent?
- What percentage of our projects have been activated over time? (full activation – leading to market action, or partial activation – leading to investments in new projects or questions)
- What is our average activation timeline per project?
- What is our ‘activation rate per $$ spent?’
2. Insight Effectiveness – utilizing advanced statistical modeling, determine the level of market impact a company’s research plan has driven. Key questions to address include:
- How impactful have our projects / insights been in driving sales across dimensions?
- What has been our sales lift across project types? (i.e. by brand, country, marketing lever, research instrument, etc.)
- How ‘effective’ have projects / insights been over time? (Lift / Spend)
3. Insight Quality – Determine the number of insights developed with the research plan and the impact on growth. Key questions to address include:
- What were the insights’ ‘leveragability?’ (what # of decisions were made?)
- What were the insights’ “actionability?” (what percent of projects were activated?)
- What decisions did they drive? (new market entry, product positioning, pricing, etc.)
- What was the overall ‘Insight Quality?’ (Actionability + Leveragability)
Getting to this level of understanding about how research, insights, and analytics makes companies tick requires a degree of change management and training. However, once the hard work is done to set the initial baseline of understanding around how a company is performing across these dimensions, it becomes part of the ongoing process to determine where and how to make smarter research investments in the future, and allows research and insight professionals to continuously quantify the value they are bringing to their respective organizations.
Colin Hare is senior vice president, growth solutions at 4i. He advises executives in the areas of growth strategy, innovation and marketing/sales across numerous industry verticals.
Bruno Melone is a principal at 4i. His focus is on driving client value through engaging them on analytic and organizational transformation solutions.
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