• by Bill Alberti , Op-Ed Contributor, June 28, 2010

How do you value market research? How do you justify the investment in it or calculate an ROI for it? For a function that places such an emphasis on understanding and measurement, it's ironic the market research industry largely has failed to answer the question of how to understand and measure its own value.

The truth is, in most companies market research is valued far from the boardroom. This isn't a case of management's disinterest in consumer insight. Rather, it's a failure of both market researchers and management to establish a connection between consumer understanding and business performance. Without this relationship, market research has become marginalized as a practice of the business rather than valued as a driver of it.

But this wasn't always the case. Consider Charles Coolidge Parlin. Parlin pioneered the practice of "Commercial Research" in 1911 when he established the first formal market research department within the Curtis Publishing Company -- publisher of The Saturday Evening Post and Ladies Home Journal, among other magazines. Parlin sought "information that would break down barriers to consumption."

In his book, A New Brand of Business, author Douglas Ward wrote of Parlin, "He sought not to understand business, society, or the human condition as a means of intellectual exercise and a higher order of learning, but rather to help businesses to improve their profit margins."

While Parlin made the connection between his early practice of market research and business fundamentals, more of his legacy lives on in the methodologies and techniques he used (which are still in practice today) than it does in his "confident promise of steady profits through understanding consumer thinking."

Over time, the practice of market research moved away from the "promise of steady profits" and focused instead on the practice of validating, testing, quantifying and qualifying. As the focus changed, so did the value proposition of market research -- from one of economic and "boardroom level" importance to one of statistical significance, analytical precision and other industry-insider research metrics and methodologies. Market researchers began talking to themselves.

At its core, market research should have an infinitely valuable proposition -- i.e., the better a company understands consumers; the better the company can serve them; the better the company will perform.

This proposition establishes and brings to life the relationship between consumer understanding and company performance. It gets back to the roots of how market research was originally envisioned by elevating the conversation from the methodology used to the impact it has. It forces research to be more accountable for ROI and researchers to become stewards of the business.

Some market research purists may challenge such a proposition, claiming if the company doesn't act on the insight market research produces, the proposition falls apart. However, if the insight market research produces isn't being used, it's inherently not valuable to the organization. Therefore, it is incumbent upon market research to understand why and ensure its output is actionable for the business -- that the insight creates an impact.

Ultimately, the value of market research is in how it's positioned, executed and, most importantly, in the impact it creates. Parlin's work showed how consumer wants translated into corporate profits. Similarly, today's market researchers need to better connect the insight they produce with the impact they create for the business. Until they do, market research will fail in its attempt to breakthrough into the boardroom and be appropriately valued throughout the organization.