There was a lively discussion on the live chat amongst the webinar attendees last week, and we thought it would be good to elaborate on some of the great points made.
The impact of ROI measurement on budgetary control can be significant
The research GRBN conducted together with the Boston Consulting Group (BCG) on the ROI of Insights, suggests that Insights teams, who are not measuring ROI, are more likely to have little room in their budget for discretionary spend. Some even had all of their budget firmly allocated before the year started, with business units having to ‘find the money from elsewhere’ if any unexpected needs arose. The result was often that potentially critical research was simply not carried out.
On the other hand, Insights teams, who are measuring their ROI, were more likely to have a proportion of their budget unallocated, giving them much greater flexibility to meet internal client needs, as well as to innovate. In fact, one of the Insights leaders we talked to has 30% of their budget available for innovation and experimentation, which is fantastic.
Fighting or working together with analytics
An observation was made by one of the attendees, that ‘Insights in general is losing the battle against Big Data and social media analytics’, and as a follow-up asked; ‘how do you prove impact/ROI vs. these types of analytics, or in partnership with these analytics?’
The short answer is that the companies doing well at creating and measuring business impact indeed tend to work together with analytics and not against them. There are clear advantages to be had if traditional Insights and Analytics are part of the same broader Insights team, but even where this is not the case, the successful companies are working together to both create and measure impact.
One of the key recommendations from the GRBN Invest in Insights Handbook is to report the ROI of Insights on a business decision level and not a research project level. Using analytics data to demonstrate the impact of the traditional research is an important part of this.
Here is a great example of the combined power of traditional research and analytics in the CX / Marcoms space:
- Use traditional research to generate a segmentation model
- Fuse the model with the customer database.
- Use traditional research to recommend changes to service delivery to, and develop marketing communications for, a specific segment
- Use analytics to track how the changes impact the segment in question in real time and to make changes to the marketing communications in real-time.
- Use analytics to measure the ROI of the Insights
As can be seen in this case, traditional research techniques are generally complimentary rather than competing with one another. Companies, however, need to have clear guidelines specifying which tools are to be used for which purposes.
Can custom research deliver a strong and measurable ROI?
This is a question posed by one of the attendees, who felt that ‘custom insights ROI is increasingly being challenged, especially for strategic/foundational studies.’
The discussions we have had with Insights leaders, who are measuring ROI, confirmed that these types of studies are often high value to a business, but present several challenges in terms of measurement, principally that their impact tends to be longer term and spread across the business.
In order to deal with the long-term impact issue, firstly the ROI needs to be forecast as well as actually measured. We recommend using surrogate variables such as Customer Lifetime Value and then modeling the forecast of the ROI. Secondly impact needs to be tracked over time and across the key business decision areas they are impacting.
One of the best ways to do this is to ensure that segmentation is part of the strategic / foundational research. This segmentation model can then be used as the framework against which many ad-hoc studies are conducted / business decisions impacted, and the lens through which ROI is measured. By measuring the ROI of each study and rolling them up, you can come to an overall ROI measure on the strategic/foundational research over one year, or even over multiple year, demonstrating the huge value this type of research has for the business.
The GRBN Invest in Insights Framework has been designed to help Insights Leaders overcome these types of challenges.
A big thank you goes out to everyone who attended the webinar and participated in the discussion. We will cover more of the points raised in future newsletters. You can access the recording of the webinar from here.