Hidden Benefits of Paying Higher Focus Group Incentives

February 26, 2015 Author: Roy Eduardo Kokoyachuk

The payment to respondents (also referred as the honorarium, incentive, payout, or reward) is a sometimes frustrating topic for clients. When budgets are tight – which is almost always -- and an organization wants to conduct research, cutting the incentive amount is often the first item on the client’s target list. For instance, a client may ask us, “instead of paying out $100 per person to our four 12-person groups with a total of potentially as many as 48 focus group participants, can we pay out $75 each and save ourselves $1,200?” On the surface, it seems like an easy cost-savings solution, but in reality, it is not necessarily a smart move and here's why...

When a market research firm bids to recruit focus group participants based on pre-determined screening criteria by telephone, the call center recruiting team must estimate a cost-per-recruit. This CPR is determined based on several variables including the topic of the research, length of screener, IR, and the incentive for participation. Changing any of these variables will impact the overall estimated CPR for the project, either positively or negatively.

With a prospect of earning $100 rather than $75 in honoraria, more people are interested in participating and spending the time to complete the sometimes-lengthy telephone recruiting screener without dropping out. That means the CPR may be $110 with a $100 honoraria or a CPR of $135 with a $75 honoraria. In this scenario, the combination of CPR and incentive are identical at $210. However, clients do not pay for honoraria of no-shows, whereas they do pay for the CPR of no-shows. Thus, with a possible show rate of 9-10 for a group of 12 recruited, clients save $50-$75 in honoraria per group. With four groups, that equals a savings of $200-$300 for the project. Therefore, when compared to the smaller incentive, a higher incentive actually results in project cost savings.

Another benefit of higher incentive is that the show rate tends to be higher as well. At ThinkNow, we sometimes recruit 11 potential participants instead of 12 for 8-10 to show. Doing so saves additional money, in this scenario, 4 times $135 for clients -- $540 saved.

So, the next time you are trying to work under a budget on your market research project and need to reduce costs, don't always jump to reducing the incentive amount paid to respondents.