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The use of Causal Research in making Business Decisions

Market research 04 12
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Table of Contents

01

What is Causal Research?

Causal Research1

Causal research involves the investigation of cause-and-effect relationships between two variables. It helps identify the extent and nature of these relationships and can be used to explain the patterns within these relationships. The most popular primary data collection method while studying causal research design is through experiments.

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02

Components of Causal Research

There are three important components to causal research, and they are:

  1. Temporal Sequence: The cause must occur before the effect. For example, an increase in profits cannot be attributed to an increase in advertising spending if the increase in profits occurred before the advertisement aired.
  2. Nonspurious Association: The covariation between a cause and effect relationship must be true and not due to another third factor that may relate to both.
  3. Concomitant Variation: The variation between two variables must be systematic. For example, if a new NPS program is not implemented, an improvement in customer experience cannot be caused by an NPS program.

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03

How can Causal Research be used Effectively?

Causal Research2

The goal of causal research is to prove the cause-and-effect relationship between two variables. It is very important to plan the parameters and objectives that make up your research plan. Without a good research plan, findings may become unreliable and may have high amounts of researcher bias, making it harder to prove the causal relationship. Descriptive research or exploratory research can be used as a tool to base your research plan on.

Once you’ve clearly outlined your objectives and your research plan, you can begin to set up your causal experiment. The following are a few conditions that your causal experiment must meet:

  • Variables that are being tested as “causing effect” and variables that are being tested as “being affected” are clearly defined.

Before the experiment is conducted, it is vital to define which variables are being tested as dependent and which variables are being tested as independent. For example, let’s hypothesize that the rebranding of your product will lead to increased sales. In this case, rebranding can be thought of as the independent variable (causing effect) and the level of sales is the dependent variable (being affected). 

For the experiment, you would first have to measure the current rate of sales of the product in question and then rebrand it. After the rebranding is implemented, you can then measure the new sales numbers and compare the two data sets to study the effect of rebranding on sales.

  • There must be no external variables that can cause changes in your results.

In order to be certain that the independent variable being tested is responsible for the effects that are being measured, it is vital to account for any and all possible factors that may affect changes within the dependent variable. Therefore, it is pivotal that while creating your research plan, you ensure that your experiment occurs under similar conditions as when the normal results were measured. 

  • The cause-and-effect relationship should be able to be proved or disproved by the experiment.

Although this condition may seem obvious, it is important to ensure that the research plan and the experiment directly tie into the objective of your research.

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04

How can Causal Research be used to achieve Business Goals?

Most organizations can benefit from the use of causal research, regardless of which industry they’re in. It allows companies to understand whether certain strategies will work and can even help identify the source of an issue. These are a few goals that can be achieved using Causal Research:

  • Increased Customer Retention

Causal research can be used to identify customer concerns, and the different causes for customer attrition. Once the root causes of customer attrition are identified, measures can be taken in order to increase customer retention.

  • Can outline Effective Advertising Strategies

Causal research is commonly used within advertising in order to test ad campaigns in small areas before expanding across different locations. You can do so by measuring an increase in sales or public interest after the advertisement is aired. 

  • Community Initiatives

The success of community initiatives is often measured using causal research. After a community initiative is implemented, surveys can be used to measure its effect on overall satisfaction levels within the community.

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