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What is your Next Decision?

At D&M Research we understand that at the end of every research project lies important decisions. Quality research therefore should deliver more than just great insight, it should increase the odds in favour of the decision maker, you! That’s why we strive to ensure that the knowledge and insight we deliver on every project is decision focused and informs the best decision possible.

Renowned for our professional approach, we consistently look deeper into each business problem to better understand the decisions that need to be made on the back of our research. We then match our approach, analysis and interpretation of data to these decisions. Under these conditions we believe that research becomes not only sharper, more relevant and a better ROI, but also the stuff of a truly brilliant decision by you ‐ our client.

What is your next Decision Worth?

In February 2009, D&M surveyed 200 business decision makers (BDMs) across a range of industries and enterprise sizes. The study aimed at understanding the value of decision-making; giving it a dollar value.

Last Significant Business Decision

Respondents were asked in which area (Sales & Marketing, Advertising & Marketing Communications, Operations, HR & Staffing etc) their last significant business decision was made. Overall results showed that around 1 in 3 significant decisions related to Sales & Marketing (18%) or Advertising & Marketing Communications (15%). Advertising & Marketing Communications was highest amongst businesses with turnover $1m to $5m at around 1 in 4 (24%). Sales & Marketing in general was highest amongst those with $500K to $1m turnover at 29%, followed by those with more than $5m turnover at 18%. Across the sample other key areas were Operations (17%) and IT (15%), followed by Legal & Accounting (9%) and HR & Staffing (8%).

How much is your next decision worth?

Business decision makers were asked to estimate the value of their next big decision, in terms of the likely dollar amount the business stood to gain or lose depending on the outcome. The chart below shows the average "range of risk" by business size, and the gain-to-loss ratio, in terms of the size of gain compared to the potential loss.

As can be seen, making the right decision is likely to really pay off for businesses.  Potential good decision gains for businesses were significant, ranging from an average of $150K for small operators, up to over half a million dollars for companies with turnovers of $1m or more.

Almost 1 in 10 (9%) put the value of their next decision as having a potential gain of over $1m if they got it right!

The price of a bad decision

While it's easy to be focussed on the rewards of a correct decision, making a bad decision was also likely to have a significant financial impact.

Smaller businesses estimated that a poor decision would cost them around $100K, while potential loss for those with revenue over $1m averaged around half a million dollars. For around 1 in 14 (7%), a bad decision could potentially cost the business over $1 million!

Gain vs Loss

It is interesting that the size of the potential gain relative to the estimated loss remains similar even as business sizes increases, except for medium firms with revenue between $500K and $1m. Here average gains are predicted to be more than 2 times that of a loss.

Across all business decision makers and sizes, averages by key areas were:

  Gain Loss Ratio
Ad & Marketing Communications $606k $255k 2.4
Sales & Marketing $480k $209k 2.3
Operations $451k $353k 1.3
IT $366k $463k 0.8

As can be seen from the table above, the relative predicted pay-off from a good decision against potential losses is biggest for the areas of Advertising, Sales and Marketing.

Getting it right

How can key decision makers ensure they get it right? Traditionally the areas of Advertising and Marketing are best supported by sound market research, which makes sense if potential gains are likely to be more than 2 times losses. Consider how businesses might increase their chances of making the right decision, via careful planning and research.  Of course D&M offer the full range of research-based decision support solutions to put you in the most informed position for making the best choice for your business.

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