Monday, September 26, 2011

What if we were paid for clients’ Return On Insight?

Last week I dreamt an unusual dream: I landed up in market-research-future-land...  
The market research world there had changed, everything was different. Much of the dream didn’t make pretty much sense to me from today's perspective
But one part of the dream I had to think about a little bit longer:

Like in today’s time ROI was one of the key parameters for the assessment and classification of success. At least because of this interesting post it becomes clear that it is not always easy to determine ROI as return on investment for market research services. But in my dream’s market-research-future-land however much more research activities were rated by clients on the basis of ROI considerations
How could that be?  
How did they resolve the problem of a clear definition and inter-individual clarity of what ROI means?

It didn’t last long until I realized that ROI wasn't meant as Return On Investment but as Return On Insight. What had happened?  
Central changes in the market research industry, which could be slightly observed and forefelt today, had been manifested in new concrete requirements and business areas.

Market research’s clients were no longer willing to pay for (high) expensive and highly specialized external service providers and service units. Shortage of information about markets and market participants became increasingly smaller, the value of the complex gathering and surveying of this information declined as rapidly as continuously

Most of the information and the most important parts of it for the companies were easily accessible via intelligent social media monitoring approaches and progress in the DIY market research without a large investment. The MR-agencies, which had focused on the information gathering, were caught in a negative relevance swirl and thereby lost income until they lost all of their justification they once had.  
Quality, efficiency, methodology and last but not least price had been arguments in which the MR-agencies did not differ a lot from each other
Consequently, the investment, which the purchasers of market research have issued to the agencies for the collection of data and information, had become vanishingly small.

Nevertheless, the industry had not disappeared from earth, but it had changed significantly. Insight became the central proof to evaluate the performance of market research. The generation of insights had detached itself from the value of data gathering, this was already re-integrated within the organization of commissioning companies. To connect relevance and significance to existing data and results had become the most important competence, and clients paid a lot for it and loved to do so.

What I especially liked about market-research-future-land was the fact that clients included Return On Insight as a flexible component into their pay. Only those agencies, that had been able to provide insights that were able to influence the client companies’ success in a positive way, were also paid with the flexible part of the fee.
I'm sure that Return On Insight for market research is as difficult to be determined as Return On Invest. But I'm also sure that the assessment of our performance by our clients via Return On Insight is trend-setting. For this we would be forced to:
- give up our silo-thinking,  
- deal with marketing and advertising in a more extensive way
- be less of craftsmanship and more to believe in relevance and
- ultimately be prepared for the future

We ourselves have not yet tried to agree with the client about a flexible part of our fee, depending on the quality of the Return on Insights we deliver. But we are thinking about it, and who knows, maybe it will happen soon that we are working with one of our clients on such a trend-setting model.

I'm curious how ROI will be discussed at The Market Research Event in Florida. IIR, USA, the conference organizers have put it on the agenda.

About the author: Christian Dössel is blogging about market research in German language here and here. After having worked for TNS, TBWA\ and other strategy and market research agencies he now holds the position of Senior Research Director at MM-Eye in Hamburg / Germany with special responsibilities for MM-Eye's new media and online research approaches.

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