Proving ROI of Research for Professional Service Firms

15th September, 2015

Market research gives you an invaluable insight into the dynamics of the market. The Returns on Investment are both tangible and intangible.

Do you ever wonder why a host of mobile apps come to the fore every day and most of them get lost in the crowd the next day? Or why has the hospital next door suddenly become irrelevant even through it provides service in the same old way? Service industry has a single hinge on which its operations revolve – market conditions. How you handle this highly dynamic phenomenon, decides whether it proves to be a boon or a curse.

A surest way to stand adamant in this uncertainty is market research. Its need cannot be overstressed but can definitely be proven. There are intangible and tangible ROIs that can be fetched on market research.

What is the Investment?

Let us first understand what kind of investment one has to make on research. Though there are a number of parameters – the method of research, the extent of your targeted market, the sample size etc. – which define the cost, arbitrary figures can still be drawn.

  • Small Firm (Revenue $5 Million): $10,000
  • Medium Firm (Revenue $20 Million): $20,000
  • Large Firm (Revenue $200 Million): $ 40,000coins

It must be remembered that these expenses are for one round of research. So if you’re carrying out research every quarter (which is advisable), the expenses become four times for a year. If we look at this investment in percentages, it is roughly only 0.08% to 0.8%, yearly. Added advantage – bigger the firm, lesser is the percentage of investment.

Tangible ROI

One of the most extensive activities at the end of a quarter is statistical calculations. Two parameters that establish a company’s success are Net Revenue Increase and Net Profit Increase. This can simply be calculated by the formula (economic gain – total research cost). You can go in more complex methods by analyzing the difference between profits when market research was not done and when it was done.

The findings of one such research can be seen in the following table:

For Occasional Research:
  Net Revenue Increase (in Dollars) Net Profit Increase (in Dollars)
Small Firm 745, 000 412,000
Medium Firm 2.98 Million 1.65 Million
Large Firm 29.8 Million 16.5 Million

 

For Frequent Research:
  Net Revenue Increase (in Dollars) Net Profit Increase (in Dollars)
Small Firm 1.45 Million 735, 000
Medium Firm 5.58 Million 2.94 Million
Large Firm 55.8 Million 29.4 Million
Intangible ROI

Once figures and facts assure you of guaranteed outcomes, you also start looking beyond the tangible benefits. Market Research helps your enterprise in many ways and it contributes permanently not just to outcomes but to methods and procedures. The advantages are:

  • A permanent mechanism to understand the changing market situation
  • A system to decode and analyze market trends
  • A foolproof launch-pad for a new service
  • Organizational adjustments that contribute to efficiency

Market research ultimately becomes an inseparable part of your system. It works wonders when you internalize it and use it to set guidelines for your projects and organization.

The NorthPoint India  Institute in Lonavala hosts an exhaustive post-graduate course in Marketing Research. It covers diverse aspects of the topic and makes you a learned professional backed by expertise.

Posted in : All,Market Research
Posted by : Team Northpoint