Clients ask me all the time how much it will cost to do market research studies, but I often wonder whether they consider the costs of NOT conducting research. How do you know when the time and cost of doing marketing research are worthwhile?
Mistakes May be Costly
The short answer to the question of whether research is worth the investment is, “What is the cost of a bad decision?” If a client is investing a significant amount of time and money in producing a new advertising campaign, for example, launching a new product, or undertaking a rebranding initiative, then the resources required to conduct research prior to implementation are likely relatively small compared to the cost of a bad decision. Especially if the consequences of a mistake involve starting over or changing direction later in the process!
Add to that the other risks of poor decision-making – sending the wrong messages, alienating current customers, failing to achieve objectives or missing revenue targets – and the possible costs can be formidable! In these instances, conducting the appropriate research early in the process may well be a very good investment indeed.
Weighing the Risks
But it all comes down to assessing and mitigating the risks. If the cost of a poor decision is relatively modest, and if recovering is relatively simple, then it could well be that the resources that would have been devoted to research could be better spent in other areas. It all boils down to assessing the impact of making an uninformed decision, and the importance of mitigating the risk that the decision to go ahead might not have been the right one.
Peace of Mind Needn’t Cost the Moon
There are many cost-effective approaches that can be used to quickly verify a decision and confirm that the target audience indeed feels the way about our intended actions that we think they will. Call it a “gut check”, a “disaster check”, or even “cheap insurance”, this kind of confirmation may well provide some inexpensive peace of mind.
Most of my clients have a pretty good handle on what, and how, their customers think. But sometimes our customers can surprise us. And the attitudes and motivations of non-customers or prospective customers may be a less familiar area. Confirming that everything is headed in the right direction, and that there won’t be any mixed messages or unintended consequences can often make a lot of sense.
Match the Methodology to the Decision
Quick and dirty “gut check” or full-on customer consultation? What is the decision that needs to be made? As always, defining the objectives is critical to selecting the most appropriate research methodology. Understanding the problem that the research is intended to address, and being clear about how the learning will be used, drives the process.
What You Don’t Know CAN Hurt You
There is an old chestnut about the downside of making assumptions. There are times (and from my perspective, more often than many might think) when what you don’t know can certainly hurt. Mitigating risks with a small expenditure of time and money in a well-designed market research initiative might be the best investment you can make in ensuring your next program is successful.
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