Many organizations neglect to effectively budget for research, which sometimes limits or even prohibits their ability to drive marketing and operations decisions based on real market data. If this dilemma sounds all too familiar, now is the time -- as the 2007 budgeting season approaches -- to give careful consideration to your research needs. To that end, here is some food for thought for ensuring your organization's research budgets are realistic:

• Identify the knowledge gaps relevant to the business objectives. Is your organization introducing new products or services? Entering new markets or segments? Repositioning itself after a merger? Launching a big ad campaign or road show? These are expensive undertakings. If correctly designed and executed, research helps shape the smartest approach. It reveals what will best resonate in the market in terms of message, execution, price, timing, channel strategy, and more. In fact, without research behind such endeavors, your organization is basically shutting its eyes and crossing its fingers that it will hit the mark.
• Remember the importance of benchmarking. Even if operations in the coming year will remain fairly status quo, don't assume everything is working well. For example, the branding campaign you're currently running may not be proving relevant to prospects' needs. Without benchmarking the campaign's performance, you simply don't know if you're moving the brand needle in the right direction and getting the most out of those precious marketing dollars. The same goes for customer satisfaction. Your organization's metrics may not identify brewing relationship issues that are about to cost you a multi-million contract, whereas research conducted by a third-party can reveal these subtleties before it's too late.
• Don't take a canned approach to pricing your research needs. The cost of market research is impacted by many factors and, hence, varies widely. It's critical to consider the entire process when budgeting for research, which entails defining the problem and approach, designing and executing the research strategy, collecting the data, analyzing the data, and reporting the results. Each phase has numerous steps that impact budgeting, which will vary based on the methodology, universe size, incidence rate, questionnaire length, and other factors. It's critical to be realistic and truthful about budget and timeframe in order to build trust with both management and your research partner regarding your ongoing research needs.

Most importantly, don't hesitate to ask for help in scoping and budgeting for your research projects. After all, you aren't a research professional. If they truly want to be your business partner rather than just another vendor, the management members of a capable strategic research firm should be happy to help you through this process.

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Common sense tells us that the harder it is to reach and complete surveys with qualified respondents, the more costly and time consuming the research project will be. But, how do professional research firms assess the required level of effort in advance so that they can determine the most appropriate methodologies and provide reasonably accurate project estimates and schedules? They establish an estimated incidence rate.

Simply put, an incidence rate is the frequency of something occurring in a given population. Specifically in market research, prior to a project we estimate the number of people who, once we get them on the phone, will not qualify for the survey, or will refuse to participate. This estimate helps guide the cost of the project. If 4 out of 10 people, once we get them on the phone, qualify for and complete the survey, the overall incidence rate is 40%.

The more specific your audience parameters or "screeners" are, the lower the incidence rate will be, thereby increasing the required number of people to be called. For example, the chance of completing surveys with 200 mid-level IT managers in organizations larger than $20 million is much better than if those same IT managers must be located in the northeast and use a specific brand of servers. Hence, the second sample population would require more money and time to identify. In fact, the difference of only 10 percentage points in incidence rates translates into thousands of more contact names and dollars required.

In addition, the quality of the contact list has a big impact on the incidence rate. Obviously, using a company's customer list to conduct a customer satisfaction survey will produce a much higher incidence rate than reaching out to prospects to conduct a market awareness study. And, of course, in-house lists that are highly targeted and frequently scrubbed perform better than lists acquired from outside sources.

Good research firms calculate the actual incidence rate for every study they complete. Then, when estimating an upcoming project for a client, they compare incidence rates for past studies that have similarities to the one at hand. They then factor in their experience with the market, the list source, the methodology (e-mail, phone, or mail), the subject matter, and so forth, to estimate the incidence rate. From there, the research pros can determine the required fielding resources, likely timing, and other project design elements in order to build a realistic research approach, budget and schedule. Equally important, they continuously monitor the actual incidence rate as they're conducting the study so, if need be, they can attempt to mitigate the difference.

So, unless you're repeating a study for benchmarking purposes, you're better off not making research budget and schedule assumptions in a vacuum. Instead, turn to a professional research partner -- with experience relevant to your specific market and needs -- and ask for an estimate and schedule based on an educated incidence rate.

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