‘If you’re not systematically measuring the ROI of insights, and creating a compelling story about the impact of Insights for the C-suite, you’re risking budget, headcount, and even survival.’ GRBN’s Building Business Impact Handbook.
Just twenty years ago, the idea of measuring the ROI of insights seemed unrealistic, the domain of strange people who thought everything could be reduced to numbers. But now, these people run the show. As GRBN have pointed out, more and more companies are demanding that research shows the value of its contribution.
It is possible to measure ROI?
One thing that has held back measurement of the ROI of insights was the widespread belief that it was not possible. Most of the reasons for this belief relate to the mindset of the typical insight professional. Researchers felt that any measurement of their contribution would lack precision, completeness, and be premature. For example:
- If insight was one of several inputs into a business decision, how can we accurately calculate the exact contribution of research?
- The result of the business decision may only be known in the longer term, so how can we assess it now?
- The value from an insight might be more than just the specific result being requested. The insights might generate new learnings, new ideas and new opportunities, either immediately or at some later time. How are these wider ideas going to be accounted for?
But as James Wycherley points out in ‘Transforming Insights – The 42 secrets of successful corporate Insight teams’, measuring the ROI of insights is now commonplace. The process starts by being approximate and can improve over time.
Five Steps to Measure the ROI of Insights
Here are five steps you can take to measure insights:
- Understand the business outcomes that are being targeted by the people requesting the research. For example, is the project trying to increase volume, use, revenue, trial, profit or something else?
- Identify metrics that relate to the outcomes defined in step 1. For example, if the target is to get more people to try the product, pick metrics that relate to the value generated. Possible metrics include how many people tried the product (before, during, and after the activity). Money is key to ROI, so find out the value that the business has assigned to each new trialist.
- Bake measurement into the whole process. This typically means ensuring there is a before and after measurement in the mix, as well as a method of identifying where and when insights are being used.
- Ask the project team to estimate the contribution that insights made to the outcome. If the team say 25% of the value uplift was due to insights, and if the uplift was $1 million, then score the ROI as $250,000.
- Revisit the project after 3 months and 12 months. Calculate the total value created by the project. Produce two ROI values, the total value created by projects that leverage research, and the proportion given by using the estimates in step 4.
Are you currently measuring the ROI of insights?
If you are, we’d love to hear from you, so we can expand our knowledge of best practices.
If you don’t yet have a system for measuring ROI, get in touch with us, we’d be happy to help you.