Why measuring Return on Research Investment is good for your health

By Simon Chadwick, Cambiar Whenever the subject has been raised in the last few years of measuring the return on anything related to marketing, advertising or research, hackles would very often be raised and loud proclamations be made of why such a thing is not only impossible but possibly downright undesirable. Measuring the return on research, the mantra went, involved too many other variables that got in the way of linking research output and in-market performance. Distribution, competitive activity, recommendations not followed, changes in market dynamics. The list goes on. And, anyway, it’s not about the research itself but about what other people do with it. In sum, it’s not a good idea and it can’t be done. Well, it now emerges that not only can it be done, but measuring RoRI is actually highly beneficial to the research department, its place in the organization and the way research is viewed and used. A recent study of the management of consumer insights in major corporations – conducted by Boston Consulting Group, Cambiar and Yale – found strong evidence that measuring research RoI is good for you.1 Actual measurement of RoI is not only strongly correlated with a perception of higher return but also much greater and more intense satisfaction among users (senior and line management) with the return that they are getting from their investment in research. The fact that this is so should not really be a surprise to us. If you hide your light under a bushel, how are people to know what it is that you have achieved for the organization? If, on the other hand, you not only measure return but then market that information across the business, people are much more likely to have a favorable opinion of what you do. Seems pretty obvious, really. And yet only 30% of organizations that we studied actually do measure RoI on research – why? Most of the reason, we suspect, lies with the old mantra that it can’t be done. But if nearly a third of organizations actually are doing it, it obviously can be done! How? Here are some thoughts – the list is by no means exhaustive and feel free to add to it: 1. Quantitative in-market performance (awareness, familiarity, sales) – even if some things changed between the research and in-market impact, there is no reason not to claim at least some credit for positive results; 2. Cost reductions and process improvements – if the research pointed to ways in which efficiency could be improved, talk about it; 3. Speed in decision-making – talk about the way in which research has become more nimble and business-focused; 4. Point to key insights that improved understanding at a senior level and the consequences of that improvement; 5. Qualitative and anecdotal evidence for improved business performance. As a combined example of some of these, let me offer this anecdote: a consumer technology company’s brand tracker was showing all indicators going in the right direction – but sales were declining. At the initiative of the MR department, ethnographers went into retail stores and quickly discovered the truth: the competition was bribing stores to cover up the client’s goods and POS materials. Result: an increase of 20% in sales. Now, what are your stories? 1 The study was conducted in late 2015 among over 600 users and practitioners of research in over 90 major corporations. Simon Chadwick is the Managing Partner of Cambiar. Before founding Cambiar in 2004, Simon was Global CEO of NOP World. Simon was 2004 Chair of CASRO (the Council of American Survey Research Organizations) and currently sits on the CASRO Board; he has also been a member of the Board of Trustees of the Marketing Science Institute. He and his colleagues at Cambiar publish the Future of Research (FoR) annual study of trends in the industry as well as the Cambiar Capital Funding Index. In addition, Simon is Editor-in-Chief of Research World, ESOMAR’s global magazine, and serves on the Board of Directors of a number of research-related companies. Simon is a Fellow of the Market Research Society. He holds an MA in Philosophy, Politics and Economics from Oxford University, England and has done post-graduate studies at both Columbia and Harvard business schools in Change Management and Strategic Management.