I just returned from keynoting a conference on the ROI of Market Research in Chicago. Prior to going, I expected to walk into a minefield of very divergent views on how market insights professionals can show their value. Instead, what I found was a “convergent validity” of the views forwarded by Forrester on how to show and build the value of research and insights.
What this means is that there is a clear future path for market insights. Market insights leaders at companies such as Coca-Cola, Pepperidge Farms, General Mills, Schwab, among others, are already getting on what Forrester is calling the insights value path and are positioning themselves to be able to jump over a high performance bar. What do high-performance market insights organizations know and do?
Run market insights like a business. Be accountable to your funders, be focused on being a value-driver (versus a cost center), and show the value you bring to the company.
Use ROI to optimize the business. Use ROI to show value-add but also to optimize efforts and insights (which avoids waste and creates a competitive advantage).
Focus on relationships as well as formulas. Build perceived value of research (through relationship-building and delivering insights aligned to stakeholder needs) while capturing tangible value through ROI calculations.
So, I just got back from Forrester’s Customer Experience Forum in New York. This year, it was at the Marriott Marquis, right in the heart of Times Square. Now, if you’re like me and have lived in a rural (ok, backwoods) town for the past 10 years, Times Square can be pretty overwhelming. You feel like you’re wading through a sea of people with every step. You hear more languages and see more diverse cultures in a block than in an around-the-world trip. And the neon and pictures and street-hawkers and . . . and . . . and. It’s total information overload.
Even worse, I had arranged to meet clients in the middle of this chaos. I was lost and running late. The call was short but clear: “Can you hear us? We’re here. Where are you? We need to leave soon.”
For many market insights professionals, my experience in Times Square is a microcosm of reality. Many have been stuck in the back office, already struggling to meet present stakeholders' needs. Suddenly, you're thrust into an overwhelming sea of new data sources with an executive mandate to find the customers and figure out their needs. Worse, if you don’t do this quickly, your customers are going to leave.
Recently, I was researching how market insights professionals can enhance their internal position and have a greater influence on their companies’ strategies (for an upcoming Forrester Leadership Board exclusive research report). As part of the research, I spoke with leaders at the market insights and CMO levels to get their views on how market insights professionals can succeed, build internal awareness and reputations and be able to more effectively influence the company’s direction and strategies.
As I spoke to these leaders, I kept hearing things I had read years ago from a beat-up 10-cent book I found at the local flea market. That book was Dale Carnegie’s “How to Win Friends and Influence People”. It was published back in 1937, which was right about the time George Gallup (of Gallup Poll fame) founded the American Institute of Public Opinion, part of the growing tide of companies doing this new thing called market research.
For those who are not acquainted with Dale Carnegie’s book, it provides advice on how to make people like you, win them to your way of thinking and change them (without giving offense or arousing resentment). It even provides rules for making your home life happier! Salespeople swear by this book and I have to say that it’s been a great guide for me (and provided an amazing ROI on my 10-cent investment).
(Note: Due to concerns that the strong language of my original blog would overshadow the message, I have rewritten the first paragraph. The goal of this blog is to stimulate conversation – admittedly, through confrontation – in order to determine what correlation NPS really has and how to best use it, or not!)
As the Customer Satisfaction (CSAT) analyst in the Market Insights Team, I get a lot of questions about Net Promoter Score (NPS). As the “ultimate question,” NPS is being positioned as a cure to all business ills and a way to understand everything you need to know about your customers . . . with just one question. Most market insights professionals struggle with NPS as it goes against our training to accept data correlations which have not been proven. Presenting actionable insights tied to NPS when correlation has not been proven? It feels like selling snake oil and is likely one of the drivers for the view that “researchers hate this metric.”
Has NPS — like Britney Spears’ singing — been overhyped?
My professional colleagues — including Timothy L. Keiningham, Bruce Cooil, Tor Wallin Andreassen and Lerzan Aksoy (A Longitudinal Examination of Net Promoter and Firm Revenue Growth) and Jeffrey Henning (Net Promoter Score [NPS] Criticisms and Best Practices) — have already beautifully, and very analytically, dissected and disproven NPS. They are not alone in their views or criticisms. So, why do we still use NPS when there is no clear statistical conclusions as to its effectiveness?!
First off, this is not a personal question. It’s business. In fact, it’s the most important question in business — and executives are asking it every day.
How can you quantify your contribution to the business? And do you even want to spend your precious time on this? Based on Forrester’s research, the answer is pretty clear: yes. Within the next 3 years, more than half of market insights professionals expect to have to quantify their ROI to the business. Executives are pushing marketing to show its ROI and will soon put pressure on market insights. Are you ready?
Market insights professionals tend to see it as difficult, if not impossible, to quantify the value and ROI of their organization. How do you quantify the impact of an intangible service that is not sold? In researching the answer, I found a couple of smart approaches, like market insights soliciting bids on a project — which they intend to do internally — to determine the fair market value (FMV) of its service. I also found some questionable approaches, like calculating the theoretical opportunity cost of not doing research.
When looking at business impact, there are typically three types of measurements of success: 1) hard metrics, which have known links to revenue and/or profit gain; 2) soft metrics, which have known links to business improvement but unclear links to actual revenue and/or profit gain; and 3) the “halo effect”, a non-quantifiable gain that doesn’t necessarily translate into immediate customer action but can help drive business results incrementally and over the long run:
Tick, tick. Only two weeks left until Forrester’s Marketing Forum, and turnout is high for this strategic view into the next digital decade. Personally, I’m ecstatic that the Forum is in San Francisco. I lived here decades ago and can honestly say that I left part of my heart here (am I the only one old enough to actually remember this song?). You’ll come for the great presentations and, if you’re not careful, you’ll wind up staying for the amazing culture, cuisine and climate!
And speaking of great presentations, the team is pulling out all the stops to make sure that market insights (MI) professionals are ready for the next digital decade. Tamara Barber will set the stage with an overview of the challenges and opportunities facing MI professionals in the era of the Splinternet. Jackie Anderson has put together a great panel to give you a 360-degree understanding of doing research in the high-growth youth market and Roxana Strohmenger will take you to the cutting edge of emerging and innovative research methods.
As this is my first blog post, let me begin with a quick introduction. I’m Richard Evensen, the new senior analyst with the Market Insights (MI) group at Forrester. I’ve been working in market and media research for over 15 years. During this time, I’ve done M&A and joint venture assessments, multi-lingual media analyses, competitive intelligence, customer research, and complex market/financial modeling.
I’m happy to be part of the amazing brain trust at Forrester and will be supporting MI professionals with research and guidance on customer satisfaction (CSAT), competitive intelligence, emerging markets, and research best practices.
Over the past several decades, I’ve experienced significant changes in our profession. For better or worse, we’re nowhere near our steady state. Dimensions that have changed, and will continue to change, are:
Breadth. MI professionals cover an increasingly broad portfolio of responsibilities, providing insights across: industries, segments, geographies, product/service lifecycle stages, customers and competitors, and, now, real and virtual worlds. With high growth in emerging and online markets, competition increasing, and customers becoming more connected and savvy, MI professionals need to have very long arms and research reach.
Depth. Our industry has moved from providing data to research to insights. Increasingly, MI professionals’ clients want actionable recommendations, which require a strong working knowledge of multiple business areas. As these demands grow, MI professionals need to move up the value chain.