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What is the RoI on qualitative research?

05 Jan 2022 | Research & Business Knowledge

Traditionally January is the time when re-focus on Business Development activity. In this discussion, ICG member Graham Booth helps us identify arguments to use with those clients who might need reminding that qualitative research can help them maximise opportunity. He writes …

As businesses emerge from lockdown and plot their journey out of the deepest recession of a lifetime, it has never been more important for them to understand customers’ needs and ensure that their brands and communications are connecting in the most relevant way possible.  But at the same time, there is huge pressure on marketing budgets, and many are cutting back on research.  How can qualitative research prove its return on investment?

No aspect of marketing services has a God-given right to fees without being able to prove its worth, but how to do so has long been a challenge.  Although the IPA has done great work in this area through its Effectiveness Awards, an advertising industry that turns over £20bn in the UK still struggles to convince many CEOs of its RoI.   

The brutal truth is, it’s even more difficult to measure the value that is added to brands’ success through using qualitative research to develop brand positioning and creative communications.

In fact, it’s impossible.  Qualitative development research is not predictive.  It cannot tell you definitively that your brand positioning will unlock the market opportunity for your brand through maximising its relevance and distinctiveness.  It can’t tell you that, if you run the second of the three advertising ideas you researched and follow the recommended executional development guidelines, it will achieve its objectives.  We are dealing with early stage ideas and their effectiveness will depend hugely on how they are realised and innumerable other tangible and intangible factors.  And once campaigns have run, we cannot begin to measure the difference that even the best qualitative development research has made to its success.

As it happens, quantitative pre-testing is not predictive either, much as people would like to think it is, but that’s another story.  

So why bother?  If qualitative research can’t prove its value, how can we justify it?  

Well, think about it.  At the simplest level, you have a choice.  

Does the business stake £millions on a new brand positioning or creative comms campaign based solely on the judgment of the marketing team and its advisors?  Or does it talk to the people whose behaviour and attitudes it seeks to influence in order to use the insight and understanding this provides to guide decisions about the best direction to follow?

To put it another way: would you rather stumble towards your destination across an unknown landscape in complete darkness, or have a torch so that you can at least see the different routes that lie ahead and avoid walking over a cliff?  

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Would you rather know nothing, or know something?

At the very least, qualitative research provides risk mitigation.  It can save you from walking over that metaphorical cliff by stopping you doing something that the consumer finds irrelevant or, worse still, alienating.  

However, good qualitative research does much more than reduce risk.  

Use the right practitioner and, rather than risk minimisation, you get opportunity maximisation.  The way your brand is positioned and communicated will be optimised, yielding a return that makes your research spend pale into insignificance.  Whether you are seeking a short-term sales effect or long-term brand building, the right qualitative research cannot fail to give you the understanding you need to make better choices.  This is what happened when BT followed my recommendation coming out of qualitative research to launch its hugely successful ‘BT Family’ campaign in the face of lukewarm Millward Brown pre-test results; when Aviva trusted the research that showed the potential of extending the Paul Whitehouse campaign into Life Insurance, yielding a significant increase in sales enquiries; when four stages of strategic and creative development research guided the creation of Britvic’s IPA Effectiveness Award-winning Tango campaign; or when the interviews I conducted with the heads of newsrooms around the world enabled Reuters to optimise its Connect news platform.

  • I confess to having been a little nervous about the risk in using an agency new to us on the communications strategy and components. But you did a really great job, bought into by all involved and guiding us through many issues. BT
  • It is the way Graham takes recommendations and brings them to life, with thoughts and provocations on how to position the communication in the real world, that makes him stand out from other researchers. Aviva
  • Your help was invaluable throughout the project and the clarity of consumer debriefs was second to none! Britvic
  • Thanks, this is great, very thorough and exactly as I had hoped. Reuters

In most cases, spending around £12,000 on a qualitative research project will buy you the insight you need to make well informed choices about the best way forward, and you would rarely need to spend more than £20,000.  This is a tiny price to pay when it enables you to confidently define the positioning upon which the brand will base all its activity over the next 5 years.  If it’s creative development research, you could easily be spending £1m plus on bought media or activation of any scale, so you would be buying the opportunity to ensure you maximised the value of your marketing at a cost of 2% or less of your budget.  Yes, you can’t put a value on the return you will get for the investment of that qualitative research fee, but if the insight and guidance provided by the research only improves your campaign performance by 1%, it has probably more than paid for itself.  

And you could spend even less and still get a disproportionate return on your investment.  For as little as £5K you can buy some research that will give you knowledge that you simply didn’t have before, which cannot fail to enable you to make better, more informed decisions.  I had a start-up spend this much on two groups that gave them the insight they needed to persuade investors to put £2m seed money into their business. 

  • The research far exceeded my expectations, it was incredibly valuable. Sherpa

However, I have been talking about qualitative development research as if it’s commodity, as if a £12,000 research project is always going to deliver the same incremental benefit.  But, of course, not all projects will.  

The ability of development research to provide RoI depends on the quality of the research and, critically, on the quality of the researcher.  The awkward truth here is that it’s not the research per se that will give you the biggest RoI, but the person you commission to carry it out.  

How do you know you have the right person on the project if you have never worked with them before?  

Frankly, in much the same way you do when you choose someone to make your kitchen. 

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When you choose a craftsman to make and install your kitchen (typically at a cost considerably greater than that of a substantial piece of qualitative research) you don’t know that they will do a good job or that the new kitchen will pay back through an improved user experience or your home’s enhanced sale value.  It’s a lot of money with no certain result.  So, how do you assess the chances of a ‘return on investment’ when you commission a kitchen company?  Answer: you do your homework and you ask smart questions.  

Do they come recommended, what do previous clients say about their work?  Crucially, when you discuss the project with them before commissioning, do they truly understand your needs and your concerns; can they cite examples of similar projects and explain how they have met those challenges; are they able to explain how their approach will give you what you need?  And are they willing to challenge your assumptions and propose a way forward that might better meet your needs than the one you had anticipated?

So, choose your researcher like you’d choose the person who will make your lovely new kitchen.  

Sadly, none of this matters if the supplier is being selected by the dead hand of Procurement – the beast that knows the cost of everything and the value of nothing.  And if you are fortunate enough to be able to commission your research partner yourself (note I say ‘partner’ not supplier, because that really should characterise the relationship), you may still have to battle with a sceptical marketing director or one who is struggling to preserve his budget in the face of a ‘cost-cutting’ CFO.  My hope it that this article has given you some ammunition for that argument. 

The question the business needs to answer is simple: do we decide how to optimise our marketing activity based just on experience and judgment, or do we inform our decision making with up-to-date insight and understanding?  When you think of it that way, rather than having to justify spending money on development research, the question should be: why wouldn’t we?

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