Why CI Must Begin to Measure and Report ROI
There is a hard truth for insights departments not measuring the ROI of the insights they produce: fewer and fewer C-suite executives are willing to continue investing in a function whose return on that investment is not being measured and communicated. And, at the same time, competition for budget within organizations is increasing; specifically versus departments such as digital marketing and CX – many of whom present strong ROI-based business cases for investment in their functions and are often pulling from the same funding pool as CI.
Most Insights departments want to be seen as a “strategic consultant” to the business, yet too often the department is considered reactive and functional rather than strategic by its internal clients. That’s not necessarily because they are; it’s due at least in part to so few departments being bold enough to market the value they provide in terms of ROI to their organizations.
So it’s not surprising that a joint GRBN/BCG study conducted in 2017 showed that consumer Insights departments that ARE measuring and reporting the ROI of insights are achieving the highest levels of strategic competitive advantage. Insights has the opportunity to become the rocket fuel that drives the increasingly consumer-centric decision making environment. We just need to get better at measuring and communicating the ROI of what we do.
What ROI of Insights Is and Is NOT
ROI of Insights is not just about better, faster, cheaper. Saving 10% on the cost of a project might be beneficial, but it is not the kind of meaningful return on investment we are talking about here. Real ROI is about the impact your insights have on the business and, thus, what your company gets back from the investment it makes in you, your team and your research.
And because measurement requires action, it follows that insights are not really insights if not acted upon. Incremental revenue and profitability, or reduced costs based upon the actions driven or stopped by the insight you generate, is the return companies are seeking.
Consider All the Different Shades of ROI
The ROI of Insights is not just one number; it’s a story of the impact of insights on the business that takes many forms and can be told using a variety of metrics. ROI can be measured and communicated using financial metrics (such as profit or revenue growth), non-financial metrics that are meaningful in your organization (such as an increase in brand preference, improved NPS scores, or a decrease in customer churn), or even qualitative feedback on the impact of insights on the business from an important stakeholder on the initiative.
Start at the Bottom; Report at the Top
Determine the inputs to ROI at the project level, then aggregate those project-level measurements so you are reporting at the “business decision” level; ideally, tying those business decisions into a high strategic business priority. For example, don’t report on the ROI of Focus Groups conducted to get consumer input on an innovation strategy; instead roll those Focus Groups up with all insights initiatives that feed into the broader innovation initiative. Your ROI reporting will be much more meaningful and you won’t get stuck in a situation where a project just doesn’t have a measurable ROI (yes, that does happen!).
Find a Champion
The more strategic the research function within the organization, the more likely they have a champion in the C-suite. Most often this champion is the CMO, however if you can align with the CFO you’ll really have a powerful partner. Teamwork is your friend.
Engage Your External Business Partners in the Process
External agencies with whom you work can be strong partners in helping you measure ROI. To the degree that you can, include your trusted agency partners in the broader discussions around important initiatives so they, too, understand what success looks like. The more people invested in your success, the more likely you will be successful.
Measuring the ROI of Insights is closer to possible than you thought and so important to our future, why not get started today! For more information and help, check out the GRBN’s Invest in Insights Handbook.
Dave Rothstein, RTi Research
The Australian Market and Social Research Society is linked globally to 45 associations through its partnership with the Global Research Business Network (GRBN) and the Asia Pacific Research Committee (APRC). Click here to read about the AMSRS global network. This article is originally sourced from GRBN website.