Understanding the true costs and return of shopper research
To some extent, this is the same debate that affects all research. But the polar opposites of commercial impact range from projects that are seen to be ‘game changers’ and generate massive ROI, to those that perhaps never even see the light of day.
I was talking to a banking type recently, one who works with CEOs to buy and sell companies. He made an interesting comment: “I know this may sound insulting but from where I sit the entire research spend of most companies is a rounding error in the consideration of value creation for most businesses”. He is right. Compared with spend on factories, advertising costs, personnel, supply bases, customer contracts etc, market research is probably not even on the spreadsheet.
I am often told that research budgets are being cut, that research has to prove its ROI, or that in tough times research is a “nice to have”. And furthermore that “we are not even using the data we already have”.
So why, when research is such a small component of expenditure and doubtless has the potential to change the game why do we come under such pressure and why do research budgets cave in when times are difficult?
My guess is that it’s not so much the research projects themselves (doubtlessly well executed), but it’s the commercial context for that project and the management thinking that precedes and follows it. Fewer, bigger, better, is a common mantra. Fewer and better I am sure that should apply to research (not so convinced about bigger!).
Invest time in thinking to work out what data you really need and then make sure upfront that the plan is in place to apply that data. If that’s done then research can deliver huge returns (one of our clients reported delivery of £25 for every £1 spent on our data), but all too often all the focus is placed on the purchase (do I or don’t I buy that project/data) – whereas that’s probably the last and the easiest of the questions to be asked.
What’s your experience with battling for budgets?