"Actionable Insights": Watchword or Buzzword?
This article discusses the measurement of the return on marketing research investments and what to with all the "insights" into customers and prospects.
"Actionable Insights": Watchword or Buzzword?
We're only one year into the 2010s, but we're already concerned that the term "actionable insights" is fast on its way to topping this decade's list of meaningless marketing buzzwords. Don't get us wrong, we love the sentiment behind the term—we're as frustrated and depressed as the marketers who paid for the study when research results end up gathering dust on a shelf because no one could figure out what to do with all the "insights" into customers and prospects. When recent discussion on the topic turned to the measurement of the return on marketing research investments, however, we started to worry a bit.
"Return on Investment (ROI) on research projects," predicts Bob Lederer, editor and publisher of Research Business Report, "is going to become a factor in the everyday functioning of client research/insight departments. It is already happening in a handful of companies. Many others see its inevitability [and] are beginning to think about it. Some expect it to materialize in the short term."
It's true, getting hard and fast ROI numbers for research certainly would help on many fronts. When Copernicus sat down with a group of marketing research directors at some of the leading companies in America a few weeks ago, most agreed that middle management submits "too many requests for small annoying projects" focused on nearer-term, tactical issues. Having some side-by-side comparisons of the ROI of frequently requested smaller tactical projects vs. more comprehensive, strategic assignments could help managers understand how to get more value out of the research they ask for and do.
Many of the back-of-the-envelope kind of ROI calculations we ourselves have used either reflect the risks inherent in not doing the research or the relatively minor cost associated with doing research that could produce a sizable improvement in marketing performance. Admittedly, this kind of ROI discussion does not necessarily make for the strongest business case for doing it in the first place. We agree that providing a number based on actual investment dollars and sales/profit results would be more in line with what a CEO or CFO would expect, and could certainly help when it comes to securing and protecting the annual budget.
Of course, we can forsee any number of difficulties in getting to that number. For instance, what happens when marketers implement a marketing plan different than the one the research supported? How can you reliably calculate ROI in that situation? Or in a larger organization, how do you isolate the actual financial contribution of a market segmentation exercise from that of, say, the advertising campaign to the performance of a new product?
Whatever the measurement system that does get into place, we can also forsee any number of difficulties resulting from that number. There's already plenty of evidence to suggest that the perception among marketers is a good deal of research produces insights of marginal value. For example, only 14% of senior executives who've done a market segmentation exercise in the past two years say they derived any value from it. Put another way, nearly 90% think they got little out of one of the most frequently done major strategic research exercises.
According to a recent Boston Consulting Group (BCG) study, just 41% of executives said marketing research was a source of competitive advantage and only a third said their company was above average when it came to turning consumer insights into innovative products or services. Only 34% of line managers agreed that their insights team consistently answered the question "so what," about the data they provide. Reported BCG, "money is spent on research reports that languish on dusty shelves because the data rarely yield actionable plans….The result is a low return on marketing research investment that can total hundreds of millions of dollars."
We hope for all the energies spent getting the metrics and measurement capabilities into place to evaluate ROI, equal or greater attention gets paid to what's driving the perception that many insights aren't actionable in the first place. While measuring the ROI of marketing research is certainly an intriguing idea and could help direct marketers to the kinds of strategic research that can have the biggest impact on performance, why wait to get a measurement system in place to ensure that marketing research is demonstratively useable and relevant to marketers?
No matter what, the outputs from the measurement system will only be as good as the inputs. If the ultimate goal is to deliver "actionable insights" and highly positive perceptions of value, improving the ability to assess ROI won't get us there on its own. Employing research tools and approaches that make it easier to connect insights to actions needs to play an equal part in the ROI effort.z