Market research plays a crucial part in business decision making. It identifies the functions and processes that are successful as well as those that require attention. It is key to effective market positioning and evaluation overall, as well as providing customer, stakeholder and staff opinions about product, service and experience specifics. Without the assistance of market research a company could quickly find themselves falling short of customer expectations or competitor standards and suffering as a result. But which market research methodology provides the highest return on investment?
Business Return on Investment (ROI)
Return on investment (ROI) is a business’ ratio of net profit to costs. The way it is calculated is different in every case, though it is usually based on fixed investments rather than day-to-day running costs. Every business uses the ROI ratio to gage performance, to answer the question, ‘Are we bringing more in from this investment than we are paying out?’
A recent study of surveyed marketers in B2B International has shown that:
- 26% of marketers indicated that their companies calculate ROI for at least some of their marketing campaigns or investments, up from 18% in 2007
- More than half (53%) of marketers indicated that their firms use ROI and profitability metrics to assess their marketing effectiveness
- Almost two thirds of companies (61%) assess their ability to measure the financial returns of marketing either as entirely adequate or as a real source of leadership
Market Research Methods
At the most basic level market research can be split in two ways; primary and secondary research:
- Primary: Gathering new data to meet new objectives; to understand behaviour and perception in a particular regard
- Secondary: The examination of existing data for insight into new objectives
Within each research category there are various methods that can be used for data collection. For primary research data collection methods include surveys, focus groups, interviews and observation. For secondary research, data collection methods include Internet research, magazine/newspaper research, organisational records and data that was previously collected for other research purposes.
In the same way as marketing, market research must provide a return on investment in order to justify its position within any organisation. This is not always in terms of profit directly; it may be a cost reduction, risk reduction, an increase in conversation rates, customer loyalty or brand awareness. Regardless, the return when equated to cash money must be greater than the investment; agency costs, staff salaries and/or overheads.
Primary Research ROI Vs. Secondary Research ROI
Both methodologies have their advantages, neither of which guarantees a higher ROI than the other. Secondary research methods are likely to cost less than any primary methodology. Primary research provides arguably more valuable insight with current feedback directly relevant to the chosen area of the business. The key to this puzzle is your research objectives, if your objectives are not met at the end of your research, your investment will not provide an ROI for your business no matter what the cost. The methodology you choose must allow for the exact and complete fulfilment of all research objectives. A combination of primary and secondary methods may well be the winning formula.
Qual ROI Vs. Quant ROI
Primary research methods are commonly grouped into quantitative (quant) and qualitative (qual). Qualitative methods allow in-depth feedback and individual or group discussion; these methods are typically run with smaller groups of participants. Methods include: diary studies, forum discussions and online focus groups. Quantitative methods give statistical results are typically run with larger groups of participants. Methods include: surveys and polls.
Costs for qual and quant research can vary depending on the duration of your research and the number of participants involved. The ROI for both method types will be at its highest when the right methodology is applied to the right business case in the right way. And more often than not when investigative qual is combined with mass quant. Qualitative collaboration for example is perfect for product development ideation but before a final product launch a market representative survey should be used to ensure scalability.
Pilot studies are a great way to dip your toes in the primary research water. From the results of a pilot on a specific area of the business, decisions can be made as to whether further research investment in that area is worthwhile.
Ad Hoc Project ROI Vs. Research Panel ROI
Online research panels contain research ready profiled participants. Investing in a panel reduces research project set-up and running costs as well as creating a responsive source of customer feedback capable of accommodating tight deadlines. For businesses with a continuous research schedule the ROI per panel project will be higher than that of ad hoc research project commission. Economies of scale are realised which will be even greater where the panel provider’s software includes the qual and quant research tools necessary to fulfil the requirements of all business departments.
A key consideration when conducting any market research, regardless of the methodology chosen, is participant engagement. Always make it as easy as possible for participants to give you feedback and make it fun to do so, that way you ensure maximum response rates and quality data. Mobile optimise online research for completion on the go at any time, present your questions in different ways using images and videos and vary methodologies to sustain interest in the topic. In the case of a research panel, adding a community function can increase ROI further - Ongoing engagement reduces churn.