How To Get Value Out of Your Research Budget

Summary: Research budget allocation is about investment decisions to support desired business outcomes. It often reflects how management values the research function and its customers. To get the most value out of the research budget, certain conditions are required.

5 minutes to read. By author Michaela Mora on January 10, 2023
Topics: Business Strategy, Market Research, Market Research Budget, Market Research Cartoons

Research Budget Planning

Research budget allocation is about investment decisions to support desired business outcomes. It often reflects how management values the research function and its customers.

Regardless of whether you are on the product or marketing team, your team’s research projects should support overall business goals if you want the research function to be relevant and be funded. As in the old times, all roads lead to Rome.

The challenge is to find a balance between strategic and tactical business goals due to time and budget constraints. Companies tend to value short-term goals more heavily, especially during hard times. As a result, research becomes more tactical or is simply set aside. Fueled by confirmation bias, gut feelings take over, and blind spots grow bigger.

Decision-Making Without Research

The most common approaches in decision-making when difficult times are expected are:

  1. Play it safe: Let the storm pass. Let’s wait and see, assuming the rest of the market will take the same position, customers will keep their needs frozen, and problems will be put on hold for the time being.
  2. Make changes as soon as possible: Let’s reinvent, assuming customers now have radically different needs, and behaviors and competitors are trying to get on it as quickly as possible.

Unless we do research, the rate at which customers’ needs and behaviors change is anybody’s guess. But unfortunately, research is usually perceived as a cost and not an investment to mitigate risks in decision-making.

Industry Trend

Looking at the growth of the insights industry in the past few years, many would argue that I’m wrong. Investment in research has indeed increased, but in reality, most of the growth has gone to subscription-based data collection platforms, both qualitative and quantitative. Alas, data is not the same as insights.

To generate insights, we still need humans, for now, at least. Unfortunately, as of 2023, research functions have been shrinking over the last 15 years. Companies with new (staffed by one or two researchers) or growing research functions (mainly on the UX side) are essentially hiring data collection managers.

Armed with a few DIY research tools, internal research teams often bring data collection in-house (mainly surveys or in-depth interviews, or both), working in silos, with little time to translate data into insights and even less time to become agents of change to help implement the insights across the organization. No wonder the research function is the first thing that gets nixed in times of budget cuts.

The expectation of doing all research in-house to save time and money is so prevalent that the idea of working with external research vendors that can bring different skills, and expertise, and even save money by expanding the team’s capabilities, surprises many when I ask.

The Road to Value Erosion

Here is a common pattern I have noticed. A company declares itself to be customer-centric and promises to invest in research. It buys the tools (often expensive ones) and expects them to provide them with insights with as little human intervention as possible (a la artificial intelligence mode). It hires “tool managers” with a mandate to run “agile” research faster and cheaper than ever. The methodology doesn’t matter as soon as it gives a “good enough” answer, which can be discarded at any time if it doesn’t conform to expectations.

Management will come up with many reasons why the research should not be trusted. Never mind if they don’t know the first thing about research fundamentals. No expertise is needed. They can always say, “We talked to users, but users don’t know what they want,” so why bother?

They may be right about not trusting the research if it is lacking in some way (design, sample plan, analysis) because of unwillingness to invest in good research (often more expensive), but they will not admit it.

Over time, the same type of research driven by tools continues to be done, and the research function loses value until it is closed. When a new year comes, management may announce the need for reinvention under new market conditions without considering using research to mitigate risks. It didn’t work before, after all. Hubris and gut instincts prevail. Outcomes are anybody’s guess. Costs are usually high. Ignorance is frequently expensive.

This is the bleak but completely avoidable outcome for the research function when companies see it as an investment unit that can add value instead of a cost center.

How to Get Value Out of Your Research Function

Still, there is usually a catch-22 situation for many research functions. They need to show the added value from research to get resources, but they can’t do valuable research without resources.

Companies can get the most value out of the research function (and its budget) when they:

  • Have a management team that believes in the value of research and is open-minded and willing to use the insights.
  • Foster collaboration between research teams (if more than one) and across functions to eliminate silo-thinking. Integrated research teams are better for the business.
  • Define clear short- and long-term business goals to guide research design. Goals come before methods.
  • Keep the research team updated about business goals changes based on operational, fiscal, and market conditions, so the research plan may be adjusted.
  • Have at least a trusted member in the management team who understands research fundamentals and how different methodologies support different types of decisions. No research method is perfect.
  • Hire experienced researchers and build a diverse team with different research skills and backgrounds. Sociodemographic diversity (age, gender, race, region, etc.) is vital for insights triangulation and bias mitigation.
  • Invest in human capital in the research function to avoid burnout and foster professional development.
  • Adopt a hybrid model of collaboration between the internal research team and external research vendors to expand capabilities, access expertise, and learn new approaches.

In Short

Before deciding where to allocate your team’s UX or market research budget for the new year, consider which short-term and long-term outcomes are more pressing for the business, given market conditions. It sounds obvious, but doing this requires more work than expected. It requires collaboration across functions and deep knowledge of the business. It requires a corporate culture that values research.

Investing in good research is an investment in customer knowledge that benefits both the customers and the business. It’s a win-win for all.