In marketing research, as well as other forms of social, economic and business research, interval and ratio data are king.
Yet there is much that can be done with nominal and ordinal data. What makes interval and ratio data exciting is that they support a full range of statistical tests and transformations.
The difference between interval and ratio data is simple. Ratio data has a defined zero point. Income, height, weight, annual sales, market share, product defect rates, time to repurchase, unemployment rate, and crime rate are examples of ratio data. As an analyst, you can say that a crime rate of 10% is twice that of 5%, or annual sales of $2 million are 25% greater than $1.5 million. Ratio data can be transformed using logarithms, square roots, etc. to create ‘normal’ data.
Interval data lacks the absolute zero point, which makes direct comparisons of magnitude impossible (e.g. A is twice as large as B). We can utilise averages and standard deviations with interval data, but again are limited in our ability to references magnitude. Speaking of intervals, there is a debate regarding psychometric scales and whether or not they are interval or ordinal data. Purists argue they are ordinal, but many marketing researchers have accepted them as interval, thus allowing the use of multivariate statistics.
Survey tools offer several ways to capture interval and ratio data. For example, we can ask a respondent to state their income or, in a B2B environment, a company’s annual sales. These figures can range from zero to infinity, which gives them ratio properties. Numerical data collected in this fashion can be categorised making it easier to create groups. For example, income collected on a survey in numerical fashion can be collapsed into equal groups (e.g. deciles, quartiles or terciles). Data collected in categorical fashion, however, cannot be broken out.
Online survey platforms, allow survey authors the ability to generate scales (e.g. Likert) where categories are assigned values from 1–5, 1–7, 1–9, etc. Given the argument listed above, one can consider this data to be either ordinal or ratio. A recent development is the use of scales that range from 0–10 or 0–100. These scales are commonly used to measure satisfaction, willingness to recommend (e.g. Net Promoter Score), or perceived economic conditions.
There are multiple question formats which can be used to generate interval and/or ratio data. This data is rich in potential for insight, but must be thought through carefully before deploying them on your survey.
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