What is the return on investment of information services?

ROI, or return on investment, but what is the ROI of an intelligence project?

We start from the concept that intelligence should be part of the corporate culture and operational routine and therefore not necessarily measured on its own, as the yield of the resources used, but included within a more comprehensive investment concept. There is, however, a great debate on the actual need to measure the return on intangible investments such as marketing and intelligence services in particular.

We are facing a soft measure as the investment in marketing is intangible. In other words, there is no monetary measurement, straightforward and direct, of the investment but more than anything else of the impact this has had on the activities it has helped to fuel, to make it more congruent with the market, more efficient.

But performance indicators are possible. So what are the elements that make up the return on investment?

As always, first of all we are talking about certainty and reduction of risk both in small and medium-sized businesses and in large companies.

In this case, what is the extent of a return on investment? The measure is the possible cost of a wrong choice, inconsistent with the market and not sufficiently disruptive or innovative as not to cause the company to fall into a price competition.

Intelligence is insurance that protects us from going astray. Being able to plan, operate and invest on a schedule that does not take into account correct information on the market protects against unforeseen market events.

Conversely, if we want to talk about a real return with respect to resources, we are talking about a yield that is part of the advantage that the company acquires over competitors who do not do this exercise in a structured manner and measure.

The return on investment is given by the increase in the competitive 'Delta' between us and competitors, which also increases thanks to intelligence.

In this case we are talking about a medium-long term return, which concerns the strategic aspect and planning 2-3 years from now. In fact, when we talk about strategy and strategic planning, we can only expect our investments to have a return that occurs over time, over several years and not immediately. The measurement must therefore take this timing into account. 

Secondly, we are talking about a functional and operational performance that 'increases' the activity of those who perform a function linked to strategy, planning and marketing in quantity, quality and efficiency. Here the measure lies in the increase in productivity, in the reduction of time and costs. Strategic marketing supported by updated and well-made reporting does not have to work on information collection, analysis and interpretation. It already has tools at its disposal to carry out its specific work. A good management who has to make decisions does not have time to look for the information on which to base their choices.

Finally, the return is success with the customer from the point of view of finalization and the success of the commercial approach. We are talking about a short-term return in this case that is paired with a tactical rather than strategic approach aimed at supporting the daily choices.

What is the return measure in this case? The measurement in this case is faster, easier. It is part of the success of an approach with the customer in terms of sales, arriving at proposing what he expects by having in advance information on his expectations, on what he expects from a product or service, on how much he intends to spend for the our product and service.

Here we are in the territory of small and medium-sized enterprise, which do not have an internal organization capable of creating strategic marketing and which for DNA are strongly oriented towards commercial activity with immediate return.

Adding these three measurement criteria and looking back, we can think more or less in these terms:

'If I hadn't made that investment in market insights I would not have been certain from the beginning of the road to take, I would have had more difficulty planning, rescheduling would probably have been numerous, I would have been less productive and it would have taken longer to operationally build the my initiative with the obvious consequences in terms of a competitive disadvantage '.

I am very convinced that if we looked upstream of the process that led to the success of a market initiative that started with an intelligence activity, at that point we would be convinced that that investment and that experience were part of the positive elements that have contributed to the achievement of the objectives.

It is obvious that the more the company embraces this approach internally, the more progressively it will be able to fuel the comparison with the past and with the phase before the watershed given by the start of this path. At that point, the introduction of operational measurements will become simpler and more automatic, especially in the case of internal indicators that prove the advantage in terms of operations as well as success in the market. The more this approach is followed, the more in fact the return takes on a double role, internal, towards the internal stakeholders of the company, and external in comparison with the external market context.