Online Market Research Surveys - Maximizing Your ROI

The current economic climate has caused some companies to defer or cancel market research projects. In many cases, a company may have correctly determined that the cost of completing a survey within the parameters required for actionable data is no longer possible given its current budget. However, defining exactly what those parameters should be is not always clear, and that is what mostly determines the project cost. This article focuses on the concept of incidence rates, which can be one of the most important cost considerations in designing market research surveys.

Pricing Components for B2B and Consumer Market Research Surveys

While online market research companies will each have their own formula for pricing business and consumer surveys, there are certain factors that almost all vendors take into account. These include:

• Survey Length (the longer the questionnaire, the higher the cost)
• Survey Programming and Hosting Services (the more complicated the programming, the higher the cost)
• Respondent Incidence Rates (the lower the incidence, the higher the cost)
• Number of Completed Surveys (the more completes, the higher the cost)

Other potential cost considerations are questionnaire design assistance (generally a low-cost item in relation to the overall cost of the study), and any additional reporting requirements such as banner tabulations, verbatim coding, or reporting (many vendors will include a raw data file, collated verbatim and a top-line frequency report at no charge or a minor charge, but there are many situations in which a customized written report involving significant professional time and additional cost is needed).
 

Impact of Incidence Rates

The term "incidence rate" refers to the percentage of respondents who qualify to complete a research study. Most vendors incorporate the incidence rate and cost of awards into a quoted cost per complete, referred to as the CPI ("cost per interview") or CPC ("cost per complete"). The lower the incidence rate, the higher the cost; with more pronounced increases as the incidence drops below 20%. For example, a B2B market research study with a 70% incidence might have a CPI of $7.00; while a study targeting high-level executives with a 3% incidence might have a CPI of $50.00. The CPI is then multiplied by the number of completes to determine the cost of sample for the project. As the number of completes increase, there may be a volume discount in the quoted CPI, but it is generally a small reduction (such as $7.00 for 350 completes and $6.50 for 600 completes).

From a cost perspective, online market research surveys are different from RDD (random digit dialing) phone surveys where the general population is randomly called and the incidence rate is simply the percentage of respondents who qualify. Most survey panels have hundreds of pre-identified information cells ("selects") of panelists and can target in advance participants who qualify for participation. This can result in significant cost savings, particularly in lower incidence studies.

When vendors quote an incidence rate for an online study and provide alternative CPIs for different incidence rates (such as a $12.00 CPI for a 25% incidence and a $16.00 CPI for a 15% incidence), the client might not fully understand how the vendor is defining "incidence". For example, if the targeted select for an online consumer survey is "Owners of 2008 New Ford Mustang Convertibles", and the vendor has "Owners of Ford Mustangs" pre-identified in its database, in theory the quoted incidence should be based on the percentage of those pre-identified Owners of Ford Mustangs who own a New 2008 Convertible. Yet, some vendors quote incidence based on the percentage of Owners of 2008 New Ford Mustang Convertibles within the general population, which is confusing since the general population is not targeted to participate in the survey.

SUGGESTION: For lower incidence rate studies, ask the vendor if the targeted select is pre-identified. Keep in mind that some vendors will list a select as being identified not because it is pre-identified, but because the vendor knows it can reach that select through a general population blast to its survey panel. However, the CPI on a pre-identified select is almost always less expensive in a low incidence study because there is less risk to the vendor and no need to blast out emails to a large portion of its database. The variation from vendor to vendor in the CPI could be $30.00 or higher depending on whether the select is pre-identified. Wide variations in quoted CPIs are particularly evident in B2B market research surveys.

To read the rest of this article on the Amplitude Research website, click here.

Marc I. Tillman is a member of the professional services staff at Amplitude Research, Inc., a full-service online survey company headquartered in Boca Raton, Florida.