What's In It For You?

• To test new product and service concepts/components/prototypes, new positionings for established brands and new communication campaigns
• To test distribution channels, target market segments, and other elements of a marketing plan
• To determine brand image
• To find out how customers feel about the products and services they are buying and the companies from whom they are buying them
• To find out how employees feel about their companies and managers
• To generate content for a publicity campaign
• Any other inquiry about how and why consumers or B-to-B buyers make purchase decisions

For each of these reasons there is a risk attendant with NOT conducting the research; a risk that may impact the marketing plan or the company's (or division's) entire business plan. In some cases, the risk has a specific dollar amount attached to it; in others, the risk is qualitative.

• A company that is rolling out a new product or service, or modifying an existing product or service, generally has a budget for doing so. Suppose that budget is $10 million (including production, sales training, marketing materials, and advertising); the risk of launching this product/service with serious flaws in the product itself, the marketing, or advertising can have significant financial consequences for the company or division involved. Would it be worth $25,000 or even $50,000 (no more than 1/2%) to make sure you have it right?
• According to the 80/20 rule, 20% of your customers account for 80% of your revenues. If half of those 20% were unhappy with your product or (more likely) their relationship with your company, the impact of losing even one in ten of those customers (1% of your best customers) could be severe. Would it be worth spending $15,000 or $20,000 (1% of sales if these customers account for $2 million in sales) to make sure your biggest customers do not leave?
• In recent years, companies have begun to realize that their brands are financial assets, in and of themselves. Consumers invest the brands with which they are familiar with qualities that promote loyalty and repeat purchase (or recommendation). If a brand's image is slipping--either because of competitive pressures, negative press, or neglect--sales will begin to fall. Would it be worth spending upwards of $30,000 to assess a brand's image and/or test a repositioning (0.6% of sales for a brand worth $5 million a year) in order to keep the brand fresh and responsive to consumer needs?
• Employee turnover can be expensive. In a service business, it can also undermine customer confidence. If you could find out how to improve employee satisfaction and decrease turnover, how much could you save in a year--$20,000? $100,000? More? It may be worth spending $10,000 or $20,000 to figure this out (depending on employee size).
• It is an ongoing challenge to find new ways to publicize a company or brand, and to do it in a way that conveys the key messages you prefer. "Research for Ink" is an inexpensive way (anywhere from $6,000 to $20,000 depending on whether it is a consumer or B-to-B audience) to gain thousands (even tens of thousands) of dollars of publicity.

I have literally seen companies spend upwards of $100,000 on research and then decide NOT to go ahead with the product rollout they were planning, thereby avoiding a multi-million dollar mistake. Rather than thinking of research as "nice to have" but not essential, think about the risks you are taking by being "assumption-driven" rather than "knowledge-driven."