According to the Bureau of Labour Statistics (BLS), in 2017, Market Research Analysts make an average of $63,230 (just under £50,000) per year. Now, this isn’t an article arguing that Market Research (MR) or Insights professionals should be paid more, although I could certainly make that argument. Instead, let’s explore how much revenue MR/Insights professionals generate for companies.
Market Research produces Actionable Insights
To begin, let’s discuss what Market Research actually does. Market Research is a way to gather information about customer’s needs and desires, understand what types of products and services are used, and is used to understand customers work and lifestyles.
Insights professionals are hired to embark on primary or secondary research projects when a company wants to understand or solve a key business question. Primary research involves the active conducting of qual and quant research through online communities and panels, or the more traditional methods of phone and mailed surveys, in person interviews, or traditional focus groups.
Insight professionals are hired to embark on research projects when a company wants to understand or solve a key business question. The insights gained from this research contributes largely to revenue growth.
This decision of whether to use primary or secondary research techniques is based on whether the brand has resources to develop data collection methods in an objective and reliable way, take the time to gather the data, and then clean and analyse the data after it’s been collected. Alternatively, secondary Market Research allows research brands to purchase reports from companies that have already collected the data of interest to the brand. Prominent examples of this include the US Census Bureau information, and Nielsen ratings.
In 2017 the Insights Industry generated $45.83 billion worldwide and employed just shy of 600,000 people, and according to the BLS, the market is expected to grow 23% by 2026. This is due to the fact that the actionable insights gathered by insight professionals drives key business processes, such as product development, marketing strategies, and organisational changes, allowing the industry to become quite a large market.
Insight Professionals Deliver Beneficial ROI
It’s more interesting to understand what MR/Insights professionals do for Brands revenue-wise. For example, if you pay an MR analyst $63K, what do you get back in terms of ROI? According to The National Business Research Institute, management at organisations expect a 30% ROI on “soft investments” like MR/Insight Professionals. However, how do you measure the ROI? For example, the ROI will depend on what type of research you are conducting and who is conducting it.
Examples include advertising or promotional research, researching packaging solutions, pricing, channels, customer satisfaction surveys, insight communities, and so on. Also, if the objectives are vague or not specific, it can also be challenging to measure the effective ROI. The experience of team of MR/Insight professionals handling the project is also a factor in the project’s ROI.
In one example The Journal of Service Research (JSE) conducted a study to measure how post-transaction satisfaction surveys had a beneficial effect on the purchase amount and inter-purchase time until the next transaction. The JSE researchers used data from a North American car dealership and looked at what services customers used and how much a customer spent on them; they also analysed what kinds of contact a customer received between transactions, as well as the type of messaging they received in each contact, over a 39 month period. The Automotive Company that conducted the research to get this data spent around $10 per customer satisfaction survey and realised a 750% return on the research investment!
While this monetary ROI result is fantastic for the company, return on investment can also refer to the valuable insights that those who use the data will gain. The insight professionals analysing this data discovered that the customers who completed the survey spent more than those who didn’t!
They also uncovered how too many customer satisfaction surveys actually decreased the amount customers spent, concluding that cumulative customer satisfaction projects (no more than 2 surveys per year) work better in terms of customer satisfaction and overall ROI. In this case, investing in Insight Professionals led to nuanced guidelines for conducting research to maximise profits for the brand.
ROI through New Product Development
Besides directly measuring ROI from customer satisfaction surveys, consider the potential value of having a team of insight professionals helping uncover an entirely new product line and the revenue that it creates during its life-cycle.
Our own Insight Professionals at FlexMR achieve this with Isagenix, a company that creates health- and wellness-based products. Isagenix’s goal is to create the largest health/wellness company in the world, and the firm knew that understanding their customers was critical to their success.
Isagenix, in collaboration with FlexMR, built an ongoing community panel in which to conduct their research; the results of which are continually informing key decisions about product line and category expansion, customer engagement strategies, and international opportunities.
They designed smart research projects that included online focus groups, surveys, concept testing projects, consumer-led forums, and diary studies that allowed the brand to interact with customers directly, integrating the voice of the customer directly into every decision they make.
The highlight of this ongoing community panel was the launch of a new line of essential oils. The essential oil market is booming these days, you’d be surprised how many people are using them! It was a $6.63 billion dollar market in 2016 and is expected to grow 10% from 2014 to 2024. If Isagenix chose to partner with a less experienced group of Insight professionals to understand their customers’ needs and wants, they could have easily missed this new product line opportunity, thus missing out on a very lucrative market that is growing fast.
Let me share with you a little dose of reality; over 6.5 million businesses were born in 2017 and an average S&P company is now being replaced every 2 weeks. A Yale professor also claims that 75% of S&P 500 firms will be replaced by new firms by 2027. It is starkly obvious that the impact of the decisions a company makes could be the difference between profits or going out of business.
According to the AMA, the purpose of Insight professionals is to inform strategic decisions and the research they provide should be used as a blueprint to link information about products, customers, and markets to a company’s sales, margins, and revenues.
It’s tempting for companies to rely on gut feelings while pocketing the money ‘saved’ from their research budget. But why rely on gut feelings when there is an entire industry filled with professionals with a proven ROI ready to get you the real insights needed to grow the bottom line?
The original version of this article appeared on the FlexMR Insight Blog and can be accessed here.