Marketers need to better understand their existing and target customers and how to engage and sell to them. While you can rely on experience and intuition, data and insights are better.  Data can come from a variety of sources.  One primary source is customer and market research.

The additional insights and context derived from market and customer research provide in-depth knowledge about your existing and prospective customers and their buying behaviors.

Three Roles of Market Research

Conducting research entails planning, collecting, and analyzing data for the purpose of making product, customer, market, and other key business decisions. Research fulfills three functional roles: descriptive, diagnostic, and predictive.
• The descriptive function includes gathering and presenting statements of fact. For example, the size of a market.
• The diagnostic function is where data or actions of a particular target market are explained. For example, why one product is preferred over another.
• With the predictive function, is when the association of a product or query enables you to take advantage of opportunities as they arise in the ever-changing marketplace. For example, anticipating a service requirement such as online chat.

Each of these provides valuable insights. While it is possible to conduct research very affordably, it still takes investment.  Where is this budget, and how much should you invest?

Funding Customer and Market Research

Market research is typically funded out of the Marketing organization’s budget. We are often asked, how much of the budget should we allocate to research?  There are so many factors to consider to set an appropriate budget for research. There’s no one size fits all.  The methodology, whether focus groups, telephone interviews, online surveys, mystery shopping, and so on, impacts how much you need to invest.  We do recommend, however, no matter your size, every organization include research as a budgeted line item.

We realize the next obvious question is how much? We know you hate the answer, “it depends.”  Philip Kotler, author of Marketing Management: The Millennium Edition, recommends “companies normally budget market research at 1% to 2% of company sales.”

Conduct the Research Yourself or Use External Experts

This is often the next question and certainly impacts your investment level. If you have the expertise internally (whether within Marketing or some other part of the organization) to properly determine the methodology, develop the instrument(s), field the study, analyze, and report results, more power to you.  If not, but you plan to conduct research frequently, it may make sense to develop this expertise internally.  If you don’t have these capabilities, then outsourcing to an expert is the best option.

Purchase Your Assessment

In addition to expertise, external experts typically come without bias.  They have no skin in the game, and therefore, there is likely to be less bias in the results. If you’re not careful, internal biases can seep into a study and skew your findings. The Edward Lowe Foundation has a helpful tutorial on considerations when outsourcing your market research.

Before selecting an external research firm, have a clear idea about what decisions you hope the research will help you make, what information you need to make these decisions, and what you want to validate and what you want to know. There are many considerations when selecting a research firm, such as:

• their research experience – methodologies, instrument development, fielding
• analysis capabilities
• cost
• access to key talent within the organization
• consultative abilities for both the research phase and the post-results phase

Expect to spend at least $30K-$55K USD for any study conducted through a research firm; possibly more depending on the methodology, but this will give you a point of reference.

Being Data-Driven Takes Research

The bottom line – if you want to be a data-driven Marketing organization, you will need the answers to these types of key questions – and that takes research.
• What are the business issues and problems most impacting our customers, and how do we translate this knowledge of opportunities into action?
• What do we provide that is most valuable to our customers? How can we create more value?
• What opportunities exist for our company, and how do we target and take advantage of these opportunities?
• How can we best modify our marketing, products, and services to more effectively target the marketplace, acquire, keep, and grow the value of our customers, and accelerate our growth against the competition?

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