Most of us would agree that when faced with critical business decisions, more information is better than less, and decisions that are made with clear-eyed insight will be better than those without it. However how do we know whether, and how much, our business has been positively influenced by an investment in market research? Market research can be pricey with one-time purchases and subscriptions reaching up to thousands of dollars. For many companies, especially small businesses, this is a significant bite out of a marketing budget! So how can we determine if we’ve netted a positive return on our invested dollars?
A positive return on a market research purchase can take many shapes. However, here are four ways to think about market research success:
- Identification of a New Area of Interest - This is one of the strongest definitions of success in market research. A new product idea, market segment to tap, or strategy that bears profitable fruit, which develops from reviewing current market data is a slam-dunk, knock-out victory for any company. Insights into the landscape can sometimes yield new ideas and areas of interest, and result in additional sales that previously were not on the radar.
- Confidence in Company Decisions - Many times, companies request market research to back up an existing strategy they have already conceived. They have a great new product idea, but they need the market data to sell the idea to others further up in the management chain. In cases such as this, detailed market data is critical to the process, without changing anything in the plan. The success is in the increased confidence in the product or strategy, which allows participants to get onboard and enthusiastically row in the same direction, saving you and your colleagues from headaches and time spent battling resistance.
- Avoidance of Pitfalls – How much does a damaged brand cost a business? How much does it cost when a team’s time and energy has been spent for little to no sales? Outside of wholly losing an account or client, we are often unable to calculate the exact monetary consequences of damaged relationships and a diminished brand from a poorly conceived product, implementation or strategy, but no would argue that it is small.
- Employee Opportunity Cost and Productivity – Market research can be done by almost anyone with enough time and energy invested into it. Calling and interviewing customers, suppliers and others in the market, and conducting other types of research isn’t necessarily difficult, but it is time-consuming and it can be slow and laborious. And if your study is not planned well, or the information is not distilled properly, it is time that was wasted. Purchasing market research frees up your employees or colleagues to do what they do best, where they can generate vastly more productivity for the organization.
Defining market research success can be clear in some cases, such as a dramatic increase in sales due to strategic positioning born from market insight, or tapping into a newly-identified customer segment that yields fantastic profits. In the majority of cases, however, the cause and effect may not be so clear cut. Market research can sometimes be a seamlessly-integrated cog in the wheel of a well-run business. So it can be difficult to tease out the outcomes that stemmed from insightful market research, versus the vision of the leadership and the execution of the entire organization. Everyone loves a knock-out victory, but as it so often happens in life, the definition of success sometimes is in the small details, and in avoiding errors and pitfalls which are harder to measure. It all depends on what your organization needs and where it wants to go.