ROI Measurement and Expectation
In the current economy, everyone wants to know, “What am I getting for my dollar?” The advent of the internet and other new technology are creating a world of new marketing opportunities and ways of conducting business practices that lend themselves to an undefined return on investment (ROI.) Currently, each business defines its own definition of ROI, as no established process exists. The unknown sometimes lends itself to fear, resentment, and distrust of unmet expectations. How do you manage expectations when a standard form of measurement does not exist, and culture is conditioned to follow a course of standard measurement?
The best part of undefined rules is that you get to customize the rules to your own goals, comfort level, and strategy. Don’t be afraid to use new technology or new marketing practices because no concrete ROI exists, as now is the opportunity for you to capitalize against those who are hesitant to create change. Just be sure that everything makes sense within your overall goals and strategy. Many people ask, “Should I use Twitter?” but what people really need to ask themselves is, “How will Twitter increase business?” Here are some steps that will help you focus on how to use ROI as a tool to your advantage:
Step 1: Track your customer behavioral patterns (both positive and negative.)
Track and respond to your customers’ positive and negative reactions; soon you will see a pattern. As in any relationship, you react to social cues, so why should the relationship with your customers be any different? Eventually, you can develop stronger ROI, make wiser spending decisions, and know when to trigger critical marketing efforts with the use of observed consumer patterns.
Step 2: Identify your ROI comfort levels.
Establish what your comfort level is for optimal ROI. For instance, if you plan to spend $1,000 on a postcard awareness campaign and you expect a profit of $5,000 from the campaign, but you only get a return of $500, you have a problem.
Step 3: Define your realistic ROI goals, timeframe, and measurement techniques.
The key to this entire process is the dreadful word “time.” The ROI process can be quite involved. Use ROI as a tool to capitalize on observed consumer patterns, not as a “be all, end all.” Used properly, ROI will help your marketing efforts in the long run. Initially, you will have to use your best judgement about the experts’ suggestions against your competitors’ activities. Isolate variables as best as you can to get a clear picture.
Step 4: Set your budget against your ROI goals.
Decide what resources of human capital and monetary assets will be dedicated to the observation of ROI. Good measurement of ROI takes money, people, and time.
Step 5: Communicate clear responsibilities and accountability.
Establish expectations. Make sure that everyone understands your comfort level, ROI expectations, goals, and method. You cannot receive clear reports unless all parties understand their responsibilities and direction.
Step 6: Activate marketing program.
Let the plan roll.
Step 7: Measure, adjust ROI strategy, measure again.
Be prepared to adjust ROI strategy to accommodate the affect of external and internal circumstances. Has the government enacted a law that affects the variables? Are there strange weather patterns? Does a different variable exist for better measurement?
If used properly, ROI is an outstanding tool, as it gives you the opportunity to see efficiency and effectiveness within your strategic goals. However, don’t let ROI hold you back. Use your arsenal of tools, techniques, and strategies to get the best customers for your business.
More Effective Acronyms For Measuring Marketing
Most people preach ROI, but there are several factors why you shouldn’t put too much stock in your Return On Investment. I’m not saying disregard it entirely; I’m just saying don’t let it be your main focus when you measure your marketing efforts. Using financial advisor marketing services to help you produce brand-boosting financial seminars might not initially net the ROI you were looking for but it improves your brand visibility, other metrics matter. There are much more effective acronyms (method) for determining how your marketing mix is working, and it’s called ROO, or Return On Objective. ROO isn’t a term you hear very often, and even in my industry – where it’s of the utmost importance – hardly anyone talks about it.
I like a good ROI as much as the next guy, but it’s just not adequate for truly measuring marketing success, and that’s because not everything has an immediate dollar value attached to it. For example, a Facebook post, tweets, and product package design really don’t show you a return in actual dollars.
So, stop measuring your marketing only in terms of ROI. To see a truer value of your marketing efforts, start using ROO. First, start asking yourself what you really want to accomplish with your campaigns. Maybe your goal is a better or new image, larger customer base, fresh design, more social media followers, or a combination. Then collect several pieces of data to determine the effectiveness of your efforts. The measurement data is another acronym I like to call the SCAPES – Sales, Conversions, Awareness, Perception, Engagement, and Satisfaction/Retention – and are explained a little further below.
Sales. Take a look at your sales numbers before, during, and after your campaign. An uptick suggests a positive response to your efforts.
Conversions. Measure how many people are inquiring, visiting, and buying as a direct result of your campaign. Gathering this information is of vital importance because it allows you to interact with (see Engagement) and receive input from clients and prospects directly. Getting it straight from the horse’s mouth is always best.
Awareness. Examine how many people are aware of your product or project before you began a marketing campaign, during your campaign, and after the campaign. An increase in consumer and/or market awareness for you and your business can and should be considered a success.
Perception. There are several factors to the way you and your business are perceived. They include customer experiences, design of your packages, website, materials, appearance of your location and employees, attitudes and moods of employees and patrons, This one can sometimes be a little tricky to measure, as people may not be up front with you to your face, unless you’re one of two things: extremely fantastic, or very terrible. Make sure your people, location, and marketing materials are looking good and that your customers always have a positive experience when they work with you, and chances are you’ll do well with perception.
Engagement. How much time to people spend visiting your location, website, social media sites? Are they retweeting or sharing your information with their social circles? Are they leaving comments or asking questions face-to-face or through your website? If the answers are, a lot, yes, and yes, then your marketing efforts are on the right track.
Satisfaction/Retention. Are those who bought from you happy with what they got? Are they happy with how they were treated? Would they buy from you again, or are you losing customers? Would they refer someone to you? The answers to these questions are very important to your marketing efforts.
The factors that relate to ROO also relate to your ROI. Think of the SCAPES as a series of funnels that feed into a cash reservoir. Consistent positive results will help raise the money level, while negative results will cause it to drain.
The SCAPES are factors that are almost 100% influenced by your marketing efforts. How much money you got back for making your investment won’t tell you what people think of you, how much your sales increased or decreased, what kind of experience your customers had, or how many of them got involved via your website or through social media. The SCAPES will affect your Return On Investment while providing results that truly show the big picture of your marketing efforts.
Start tallying your SCAPES to get an accurate picture of your Return On Objective. Your business and customers will be better off for it, and so will your bottom line.