ROI of Insights | Highlights 2017 Report

ROI of Insights Report NOVEMBER 20, 2017

Measuring the business impact of Insights is a must if Insights is to achieve a strong seat at the table. This report presents the key findings from the qualitative and quantitative research recently undertaken by the Boston Consulting Group and GRBN on the ROI of Insights. This research builds on the BCG, Yale CCI, and Cambiar 2015 Consumer Insights Benchmarking Study, which revealed as few as one-in-five Insights teams are seen as strategic partners in their organizations. Additionally, measuring the ROI of Insights was indicated as one of the key characteristics of an Insights function that is seen as a All rights reserved. strategic partner. The key objective of the latest research was to increase the level of understanding of About This Report the state of ROI of Insights measurement today and to suggest paths to better measurement tomorrow in order for more Insights teams to have that seat at the esearch Business Network. table. We hope you find the report both insightful and inspiring. The Global R eport The Boston Consulting Group, Inc. and Christine Barton Pierre Dupreelle Mario Simon Andrew Cannon BCG BCG BCG GRBN Senior Partner and Global Topic Leader, Global Topic Leader, Executive Director Managing Director Customer Behavior Consumer Engagement . 1 BCG GRBN - ROI of Insight 2017 Study RCopyright © 2017 by

• More mature Insights functions measure the ROI of insights investments • Those who measure ROI have found more of a seat at the table, increased budgets, and control • When Insights teams measure ROI they typically do so after All rights reserved. strategic and ad hoc projects. The reports are shared with the CMO and executive team; the most mature Insights functions are Executive Summary transparent with and engage the Board esearch Business Network. • Identifying success criteria upfront is key for post-project The Global R measurement and, more generally, the integration of Insights into business decision-making eport • Project criteria should be specific to particular business decisions being affected The Boston Consulting Group, Inc. and • Agencies / firms need to lead more framing value creation and return from CI investments 2 BCG GRBN - ROI of Insight 2017 Study RCopyright © 2017 by

•  By stage 4, companies almost always measure ROI, while only half do in stage 1 •  Key benefits of insights ROI measurement are a better seat at the table and increased control of the Insights budget •  Stage 4 companies also increasingly see impact across variety All rights reserved. ROI Measurement of decisions Landscape •  Industry-wise, retail is on the leading-edge of measurement, esearch Business Network. Key Take-Aways while professional services and health & wellness lag The Global R •  With senior executives on board and some process in place, key barriers remaining are addressable for Insights teams eport The Boston Consulting Group, Inc. and 3 BCG GRBN - ROI of Insight 2017 Study RCopyright © 2017 by

Key benefits of insights ROI measurement are a better seat at the table and increased control of the budget What benefits has the CI function experienced from impact measurement? Total Stage 1 Stage 4 It has helped us identify areas  69 All rights reserved. we need to work on CI has achieved more of a seat 59 at the table We've increased investments in, esearch Business Network. and expenditure on, CI 33 The Global R The CI function has been given control over more of the CI 28 budget It has resulted in more effective eport capital allocation 22 We've increased our CI  14 The Boston Consulting Group, Inc. and personnel headcount Indexed to total Indexed to total Source: BCG / GRBN ROI of Insights survey, May 2017 (N = 187) = Statistically significant at 95% level 4 BCG GRBN - ROI of Insight 2017 Study RCopyright © 2017 by

Qualitative Insights The research indicates that those Insights functions measuring the impact they are having on the business, are reaping significant benefits from doing All rights reserved. A Key Benefit of so. Insights ROI Measurement: Being “in the room” when important decisions are esearch Business Network. More Influence being made and being asked to input into those The Global R decisions are clear signs that the function is perceived as a strategic partner in their organizations. eport The Boston Consulting Group, Inc. and 5 BCG GRBN - ROI of Insight 2017 Study RCopyright © 2017 by

Qualitative Insights In addition to being more influential within their organizations, Insights functions measuring their ROI seem to have growing resources at their disposal, either in terms of budget to spend or headcount. In turn, many of Insights functions, which have not been able to demonstrate the impact they are having on the business, say they All rights reserved. A Key Benefit have seen decreasing budget and headcount over the last few years, of Insights ROI and also expect this downward trend to continue. Measurement: Almost all the Insights leaders we spoke to say that there is increasing esearch Business Network. demand for data and insights on customers within their organizations. More Resources Those Insights functions measuring ROI seem more likely to have the The Global R resources to meet that demand, whilst those who are not, are having to ask their suppliers to “cut corners” or say “no” to internal requests. In either case, there is a risk of decreasing satisfaction with eport the Insights function’s ability to serve the business, which could lead to a downward spiral of further cuts in budget and headcount. The Boston Consulting Group, Inc. and 6 BCG GRBN - ROI of Insight 2017 Study RCopyright © 2017 by

Qualitative Insights Insights functions measuring their ROI seem more likely to have control, at least jointly, on how to spend their budget, as well as to have the ability to set aside money within that budget for things like experimentation and meeting unexpected needs. A Key Benefit All rights reserved. of Insights ROI In contrast, Insights functions, who do not measure their ROI, seem Measurement: more likely to have someone else control the budget and to have that budget 100% allocated before the start of the financial year, making More Autonomy, experimentation with new tools and techniques almost impossible. In esearch Business Network. these companies, if unexpected needs do arise then the requester More Job needs to find the budget themselves, with the result that sometimes The Global R Satisfaction important research does not get undertaken. From the discussions with the Insights leaders, one gets the sense that eport those measuring their ROI have less negative stress at work and a higher job satisfaction than those who are not measuring their The Boston Consulting Group, Inc. and business impact. 7 BCG GRBN - ROI of Insight 2017 Study RCopyright © 2017 by

With senior executives on board and some process in place, key barriers remaining are addressable for CI teams What holds you back from defining success up-front, or measuring it ex-post, with more regularity and rigor? Largest barriers to measuring Secondary concerns Not a large barrier today All rights reserved. • Difficult to do – studies are • Consumer insights distant • Not required by senior used in many different ways from business decision-make rs executives esearch Business Network. • Difficulty in isolating impact • Business objectives not clearly • No agreed measurement of consumer insights defined pro cess The Global R • Time lag between insight • Insufficient staff to measure • Not a priority / don't see the delivery and business results value • Lack of alignment on eport important metrics The Boston Consulting Group, Inc. and Particularly challenging for Stage 1 companies Source: BCG / GRBN ROI of Insights survey, May 2017 (N = 187) 8 BCG GRBN - ROI of Insight 2017 Study RCopyright © 2017 by

Qualitative Insights Everyone we talked to understands that the measurement of Insights ROI is difficult to do, and for many reasons: Indirect impact, time lag, difficulty in isolating from other impacts. A Key Barrier to All rights reserved. Insights ROI The difference comes when one looks at how Insights leaders react to Measurement: the challenge. Put simply, those who measure their business impact have found ways to overcome these challenges. And there is not just one solution, rather each leader has developed their own set of esearch Business Network. It’s Difficult solution based on their resources, their organizational structure, and to Do culture. The Global R A good first step is to set up budget allocations by BU or function and eport horizontal topics and track them. Then, within BUs or functions, have alignment meetings around the timing of strategic planning and operating budgets. Educating the organization on thematic research The Boston Consulting Group, Inc. and and investing is a good initial step, too. 9 BCG GRBN - ROI of Insight 2017 Study RCopyright © 2017 by

Qualitative Insights Those Insights functions measuring their impact seem to be closer to the decision-makers in their organizations. In bigger organizations, A Key Barrier to they tend to have people embedded within business units and All rights reserved. Insights ROI established procedures in place to help them measure their ROI. Measurement: Two of these key procedures which enable ROI to be measured are 1) a good briefing document, which has a section on the business esearch Business Network. Distance from objectives and expected outcomes from the research, and 2) a good The Global R Decision-Makers feedback system, which enables them to measure the impact. One key success factor would seem to be that success is shared with eport the business owner, so that the measurement of Insights ROI also helps the business owner report upwards on their own ROI. The Boston Consulting Group, Inc. and 10 BCG GRBN - ROI of Insight 2017 Study RCopyright © 2017 by

Qualitative Insights Very few of the Insights leaders we talked to currently have any kind of framework in place for measuring the ROI and business impact of A Key Barrier to their work in a consistent manner. All rights reserved. Insights ROI Measurement: Despite not having a framework, those Insights functions measuring their impact seem to have realized that measuring the ROI of Insights is a “messy business”, requiring a mix of art and science. esearch Business Network. No Framework in Where it is possible to measure a direct profit metric they are doing Place The Global R so, but where they cannot, they are using a wide range of other surrogate measures to estimate the return on investment through business impact. eport The Boston Consulting Group, Inc. and 11 BCG GRBN - ROI of Insight 2017 Study RCopyright © 2017 by

• The first step to measurement is ensuring to set criteria beforehand, particularly quantitative • Beyond strategic planning and brand positioning, there is opportunity to better connect insights impact to key business decisions All rights reserved. How CI is Measured • Customer experience ROI measurement example: Revenue Today growth measured through growth in customer base and sales force effectiveness esearch Business Network. Key Take-Aways • Brand positioning ROI measurement example: Consumer brand The Global R equity measured through brand tracking, awareness, and even employee choices eport The Boston Consulting Group, Inc. and 12 BCG GRBN - ROI of Insight 2017 Study RCopyright © 2017 by

Qualitative Insights In companies where the ROI of Insights is measured, the internal briefing document is a critical instrument. As a minimum, it defines the business objectives, but even better the expected outcomes from the research. All rights reserved. How CI is A second important factor is to have strong modelling capabilities in order to both forecast and measure the ROI of Insights. For example, Measured Today in the area of strategic planning, a segmentation model is often used esearch Business Network. as the base for measuring ROI, since it enables easy comparison to what business outcomes would look like with or without the model. In The Global R the area of marketing allocation and tactics, media mix modelling is also an important tool, which Insights leaders are able to use to demonstrate a clear ROI, especially in terms of increased marketing eport efficiencies. Modelling is also important when trying to measure the ROI from pricing research. The Boston Consulting Group, Inc. and 0 BCG GRBN - ROI of Insight 2017 Study RCopyright © 2017 by

Qualitative Insights Companies, whose Insights functions are sophisticated in ROI measurement, also measure the ROI of Insights through measuring cost avoidance. This can be clearly demonstrated with respect to research carried out during new product and service development All rights reserved. processes, in such cases where the research has led to a project being shelved. In these cases, the company can easily estimate the How CI is cost savings made by not proceeding with the project as a Insights ROI measure. Measured Today esearch Business Network. In the customer experience space, one of the keys to being successful The Global R at measuring the ROI of Insights is the ability to isolate the change to be made to the process due to Insights recommendations. Once the change is isolated it is a relatively easy task to track the impact of eport that change on revenue growth and/or cost savings. The Boston Consulting Group, Inc. and 14 BCG GRBN - ROI of Insight 2017 Study RCopyright © 2017 by

The first step to measurement is ensuring to set criteria beforehand, particularly quantitative Those who explicitly set quantitative criteria Those who explicitly set qualitative criteria before projects begin before projects begin  % of respondents  % of respondents All rights reserved.  100  100  80  80  60  47  60 esearch Business Network.  13  40  40 The Global R  20  43  44  20  26  17  Always  Often  18 eport  0  0  9  Actively measure ROI  Sometimes or  Actively measure ROI  Sometimes or seldom measure ROI seldom measure ROI The Boston Consulting Group, Inc. and Source: BCG / GRBN ROI of Insights survey, May 2017 (N = 187) 15 BCG GRBN - ROI of Insight 2017 Study RCopyright © 2017 by

Beyond strategic planning and brand positioning, there is opportunity to better connect insights impact to key business decisions Business decision impacted by CI All respondents Stage 1 Stage 2 Stage 3 Stage 4 Key areas for potential  Strategic planning  72 59% 60% 84% 97% impact rarely seen in stage 1  Brand positioning 66 51% 64% 74% 77%  Pricing strategy and tactics  60 49% 57% 60% 80%  Marketing strategy, allocations, and tactics 57 46% 50% 66% 70% All rights reserved.  Consumer branding / brand equity 57 43% 56% 66% 60%  Customer experience 56 38% 50% 62% 80%  Promotional strategy, allocations and tactics 50 38% 50% 50% 63%  New product / service development and innovation 49 22% 43% 64% 73% esearch Business Network.  Communications / marketing messages 45 30% 40% 60% 53%  Customer service 39 35% 34% 42% 50% The Global R  Consumer engagement / relationship management 39 19% 40% 48% 47%  Market / category / format entry 37 22% 34% 42% 57%  Existing product /service improvements and category extensions 37 22% 34% 52% 40% eport  Portfolio strategy 35 27% 29% 46% 43%  Innovation / R&D priorities and pipeline 35 16% 26% 50% 53%  Advertising campaign development 35 38% 24% 44% 40% The Boston Consulting Group, Inc. and Respondents (%) Question: For which of the following business decisions are consumer insights – traditional research or commercial advanced analytics/big data – used today in an impactful way? Source: BCG / GRBN ROI of Insights survey, May 2017 (N = 187) 16 BCG GRBN - ROI of Insight 2017 Study RCopyright © 2017 by

Business decisions commonly influenced by CI are monitored through varying metrics, though primarily revenue growth Metrics to measure insights impact on business decisions Business decisions where Revenue Marketing Consumer Price Cost Employee CI has an impact today (top for stage 4) growth effectiveness brand realization reduction brand equity equity Strategic planning 77% 62% 50% 36% 33% 18% Customer experience 63% 57% 77% 31% 24% 26% Pricing strategy and tactics 74% 30% 28% 79% 28% 3% Brand positioning 56% 75% 77% 28% 15% 23% All rights reserved. New product / service development 82% 41% 46% 47% 25% 10% and innovation Marketing strategy, allocations, and tactics 67% 85% 59% 28% 32% 9% Overall average 65% 56% 53% 34% 29% 16% The Boston Consulting Group, Inc. # = % of respondents who use that metric to monitor and see CI having some impact on process today = 1 std. deviation above mean = 1 std. deviation below mean Source: BCG ROI of insights survey, May 2017 (N = 187) 35 17 20170717 ROI of Insight_draft_v23.pptxCopyright © 2017 by

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