Home » Insight Collections » The B2B Market Intelligence Playbook: Chapter 1
THE B2B MARKET INTELLIGENCE PLAYBOOK
The Business Case for Market Intelligence
Summary
- This guide is designed to act as a primer for executives in smaller or fast-growing organisations interested in better informing their MI approach. This section focuses on building a business case for MI—why, when, and how much to invest, measuring success.
- Market Intelligence can have an impact across an organisation, but for smaller organisations, we recommend splitting Strategic & Operational needs and aligning the business case with a functional area, such as Revenue, Solutions and Risk.
- Generally, we advise that organisations developing an initial Market Intelligence budget should seek to spend 1-5% of Decision Value (annual cost + revenue uplift) and grow from there as metrics are achieved.
Jump To Section
Why Invest in Market Intelligence?
What the Data Says
AMPLYFI surveyed 1500 knowledge workers about the role of information in their decision-making. They told us…
say decision-making was negatively impacted by difficulties in searching for information.
say there has been a time where greater access to information could have prevented a business risk
of decision makers believe that investments in information access could yield additional benefits
Market Intelligence is fundamentally about enabling organisations to use information (in this case from external sources) better. With the average knowledge worker is spending 1.5 hours per day, just searching for information, investment can have a two-fold impact of saving time and increasing performance of various business functions.
Business Functions that Market Intelligence Can Impact
Market Intelligence is not the first function you should create when building a business. This is because the actual value of Market Intelligence has to be seen through the lens of other functions, and without this connection, Market Intelligence is just a cost centre. When executed correctly, though, the value of investing in Market Intelligence can be disproportionate to the costs – good insights can create exponentially better decisions across your organisation.
For early-stage organisations, we define the functions of a business into three categories – Revenue, Solutions and Risk. This gives a good starting framework to measure where Market Intelligence can have an impact – creating insights and influencing decisions.
AMPLYFI Tip: We tend to focus customers on “Actionable Insights,” those that can be used to create measurably better decisions, as opposed to “generally interesting” things. Framing it this way forces the question of “what is actionable” and “how can we measure it,” which, we believe, leads to better use of Market Intelligence.
Market Intelligence influences Decisions
It is also essential to define the kinds of decisions that Market Intelligence will first impact – to understand the cadence of the value and type of Market Intelligence solution that will best fit. We define two types of decisions in organisations:
- Strategic – fewer, larger, complex and expensive decisions
- Operational – more frequent, smaller, generally similar decisions
AMPLYFI Tip: Most organisations have some elements of each of these areas, but one dominates right now—its best to start with the area with the clearest value, that you can solve. This may not be the “most valuable” as sometimes harder problems require more mature MI solutions. For example, if you are writing a business plan to raise money, investing in Strategic MI first will make more sense.
Strategic Market Intelligence – Driving Change
Strategic Market Intelligence tends to reside with leadership, rather than a dedicated strategy team, in smaller organisations. It is most valuable when an organisation or the markets it operates in are in a state of change, driving new commercial Opportunities and Threats.
A large modifier of the value of Market Intelligence is whether the strategic decision is a “one way, or two way door”. One-way doors are decisions that are too complex, expensive, or conceptually complicated to undo. For example – if we commit to building our solution with this technology, we are locked in for the long term. Two way doors are more easily reversed. Market Intelligence has a larger value applied to the former. If an organisation faces many “one-way doors” in its strategy, then the case for investing is usually more significant.
Two good signs that Market Intelligence can have an impact on your strategy:
- Missed Opportunities – Competitors taking market opportunity earlier than your organisation can react
- Avoidable Threats – Market Changes punish organisations that fail to move fast enough to avoid threats
Opportunities and Threats are often connected. For example, climate change presents an existential threat to many organisations, but early adopters of Clean Tech can use this to drive market share in the shorter term and cost efficiencies in the longer term.
AMPLYFI Tip: Strategic decision-makers prefer summaries over raw information and are often more time-poor than operational teams. Therefore, Strategic MI Solutions often benefit from being consultative, such as regular analyst briefings or insight emails.
Operational Market Intelligence – Getting Things Done
The earliest forms of MI encountered in organisations are people analysing as “part of their day job” – though ironically, this is often work left to evenings and weekends or rushed at the end of a quarter. This never fully goes away; however, resourcing these users and potentially professionalising the process can have disproportionate benefits. It is key to listen for the signals in your team, one clear one is them saying:
We call this the “Research Execution Paradox” – to do a good job requires more research time, but that time does not exist, so everyone carries on doing a sub-optimal job. This is where Market Intelligence can have a strong impact, improving the quality of insights, whilst also increasing the teams capacity to apply them. This can be seen through various metics:
AMPLYFI Tip: Operational Teams investing in MI should never be 0; however, these are signals that your teams need better insights but are unable to serve themselves – this can be through outsourcing, upskilling, building teams or investing in tools that enable the process.
Calculating the Business Case for Market Intelligence
Market Intelligence & Decision Value
The case we make in this section is based on the idea that Market Intelligence drives improved decision-making around Revenue, Solutions & Risk, which in turn impacts:
- The effectiveness of your salary costs – “I can do the job I am good at with better insights”
- The effectiveness of your resource costs – “We spend money more effecively, based on better insights”
- The impact of these two things on your revenue – “We align better with customer value and increase income, based on better insights”
- Thus impacting your profitability – “Our cost/revenue ratio changed, due to better insights”
So, if Market intelligence is all about making better decisions, valuing those decisions and their potential improvement is critical to valuing Market Intelligence. To value market intelligence, you need to:
- Understand the current value of decisions
- Understand the potential value of better decisions
- Estimate the impact Market Intelligence can have on that change
You can think of this as a simple formula that helps to “right size” your Market Intelligence Investment:
Value of Better Decisions * Impact of Market Intelligence = Market Intelligence Investment
There is an argument here to just use “potential profit” as a metric. This may be right for your organisation, but often, smaller organisations are sacrificing their profit for the sake of growth, meaning a more nuanced approach can help strengthen the business case.
Calculating the Potential Value of Better Decisions
As a guide to calculating the Value of Better Decisions, we use current operational costs + revenue growth, think of this together as “Total Decison Value”. To explain this thinking:
- Cost – relates to spending decisions you are committed to making that can be improved, think of these in two buckets:
- Salaries – the decision makers in your process, who are often also burdened with Market Intelligence work
- Resources -everything else you spend on that could be impacted by better decisions
- Revenue Growth – is the impact of those costs that can be improved by selling more of what you make, this requires you to consider:
- This Year Revenue – you can use trailing 12-months, yearly projections or the last complete year, depending on how you want to project next year
- Next Year Revenue – think of this as from the point when Market Intelligence starts working, say three months into investing, when processes are established, it can be next calendar/fiscal year or just 12 months ahead
To repeat, we avoid using just “profit” as a shortcut here, as some companies are making losses as they grow. We also avoid purely using Revenue Growth, as some companies are stable but wish to become more efficient. But you should feel free to take any shortcuts that help you.
Calculating the Impact of Market Intelligence
Even perfect decision making will not remove all costs, or drive all revenue growth – the business case for Market Intelligence is therefore fractional to “decision value”. A logical approach is to break out the potential impact by the areas we defined as “Decision Value” earlier and ask “what is the minimum expected, and maximum possible impact of good decisions?
AMPLYFI Tip: These numbers are highly business model-dependent. Consultancies are not the same as Heavy Industries. Consider these numbers as a tool to draw out the real metrics for your unique business case, as it is often easier to improve than create.
If this sounds too complex for an initial business case, then we suggest a simple compound percentage solution:
- 1% x Decision Value – low, best for stable organisations
- 5% x Decision Value – high, best for disruptive organisations
This means that a larger, more stable organisation may invest less than a smaller, more dynamic one. But when you are driving for growth, making good new decisions are more valuable than making repeated proven choices.
Estimating an Initial Market Intelligence Investment
Bringing all the concepts together, you get this formula:
(Cost + Revenue Increase) * [1–5%] = Market Intelligence Investment
In short, when the cost of MI is lower than the impact of the gains it creates, invest. To demonstrate some examples:
Of course, no simple formula will give you all the answers. Some things to bear in mind when using it:
- A Guide – this is just a starting point to estimate the business case, reality in your organisation may mean that costs are unaffected by MI, but revenue growth is, the math should be adapted as you learn
- At Scale – for larger organisations 1-5% may be too aggressive a number, but at this scale it is also likely that MI will be applied more individually to Revenue, Solutions and Risk
- Just Core – this should be dedicated Market Intelligence, with some MI work still handled by other teams – but with reduced emphasis and increased support
AMPLYFI Tip: You can apply the same calculation to a department and a whole business. This can be useful for some larger organisations underserved by centralised MI Functions.
The Impact of Market Intelligence Beyond the Business Case
While making a strong financial case is key to building a successful Market Intelligence function, other benefits exist. Namely, other teams get to do what they do best, but with better information. Here are the kinds of statements we hear from teams before and after Market Intelligence functions were built:
Conclusion
You are Started!
Now you have the tools and frameworks to develop a Business Case for Market Intelligence – one that is pragmatic and sustainable over the longer term. Market Intelligence can add value to any organisation, but much like with any business function, building knowledge and capabilities can take time.
Actions Checklist
To make it simpler to action the advice here, we have created a simple checklist and framework that you can download to develop your business case. It forms the first section of our B2B Market Intelligence Playbook.
