If you can’t measure it, then there’s no value in doing it.
Or so goes the case for measuring the return of our investment, whether in dollars or time, for any given marketing activity.
And while I have always advocated for gathering data and making measurement a part of your regular marketing activities, advances in technology have made it possible to measure things at such a microscopic level, that I wonder if we’re losing sight of the bigger picture.
There has been a lot of talk among marketers lately about the value of Relationship Marketing and measuring its ROI.
Ted Ruben recently coined the phrase Return on Relationship™, or #RonR, in referencing the “value that is accrued by a person or brand due to nurturing a relationship”.
Return on Relationship™… simply put the value that is accrued by a person or brand due to nurturing a relationship. ROI is simple $’s and cents. ROR is the value (both perceived and real) that will accrue over time through loyalty, recommendations and sharing.
– Ted Rubin
Mark Schaefer often writes on the subject: The ROI of Twitter, Explained (which I’ve referenced before) and more recently, On Twitter’s birthday: How Twitter changed my life, which highlights some of the lasting relationships he formed in the early days of the platform.
And many more have started writing about the importance of building relationships over time.
Still, others hold tight to the idea that the primary goal of any marketing program should be generating revenue. If you can’t measure the return on your investment in dollars, then the program isn’t worth doing.
Marketing ROI: Then
It used to be that a company would engage their advertising agency to create an ad campaign to either increase brand awareness or promote a product/service/event. The campaign would run. The company would track how many inquiries, sales or attendees they received. They’d measure that against the cost of the campaign and voila, you’re ROI.
And when looking at an individual media campaign, still relevant.
Marketing ROI: Today
What’s the ROI of a smile?
May seem a pretty silly question to ask. But, an employee smiling at a customer doesn’t cost anything. And yet, it can go a long way toward that customer’s loyalty.
In the same vein, what’s the ROI of a tweet, a comment, a share?
Is my time spent on social media engaging with those I’ve chosen to follow and sharing my latest content worth it? Can I prove the return of investing the value of my time?
My answer today might be different than my answer tomorrow (or even three years from now).
As an example…
Say you share an interesting piece on LinkedIn about career growth. A colleague shares it. One of their connections likes it and begins following you on Twitter. A year (or more) later they’re tasked with bringing someone in to lead a series of training seminars for their company. They choose you. Which leads to several referrals and repeat business.
As Schaefer points out in A Guide to Social Media Marketing Measurement, when you measure can be just as important as what you measure.
It may take four to five years before finding financial returns.
Social Media has turned ROI measurement topsy-turvey. It’s not as clean as measuring a traditional media buy. Not as obvious as determining profits made from your big annual event.
The impact of social is cumulative.
If your focus is on measurable short-term financial benefits, you’d be better off running a PPC (pay-per-click) ad.
Measuring ROI Today is Complicated
While most of the conversation has centered around social media and building relationships, I’ve begun questioning whether there is a bigger, systemic marketing issue at hand.
The marketing landscape today is drastically different than it was just a few short decades ago.
How customers get exposed to brands and where they get their information today is now vast and fragmented.
Some find your website from a search online. Some ask for feedback from their Facebook or LinkedIn communities. Some decide to try something new simply by walking down the street. While others still become familiarized with a brand from more traditional things like radio, magazines, billboards and, yes even those coupon mailers.
The customer experience has so many possible touch points today that it almost seems impossible to measure a true financial ROI.
For instance, if you run a Facebook campaign that doesn’t yield the results you were expecting what was to blame? Was is the Facebook ad? The targeting? The landing page (or lack of one)? Your website? A piece of bad press that hit the week before?
Good marketing is integrated.
An integrated marketing plan accounts for these various touch points and the complexities involved in establishing a solid brand across all platforms: website, social media, pay-per-click ads, brochures, office/store décor, customer service…. you get the point.
So, just as it may be tough to pinpoint what went wrong with an online campaign, it can be just as mysterious to pinpoint what went right.
Was it the ad?
Or was it the cumulative effect from all of that content you’d published, the podcast you did, the likes/shares/comments on social media that finally hit a critical mass, so that enough people were already familiar with you when that Facebook ad hit that they followed through to a purchase?
Measuring Marketing ROI: Good or Bad?
If you strictly use revenue as your metric for any given marketing activity, I think you’re going to wind up with a lot of missed opportunities and short-sighted decisions.
Measuring, analyzing, using data to make informed decisions is all still valuable and necessary. ROI is a great tool in helping to guide us in deciding what to tweak, how to move forward, what next step to take.
And that’s just it. It’s a guide.
Yes, measuring the dollars and cents for ad spends, event planning, etc. still makes sense.
But in an era where marketing is more integrated and complex than ever before, it’s important to not measure every marketing activity in a vacuum.
Because focusing too closely on all the microscopic details doesn’t always tell the whole story.
It reminds me of an old client of mine, Jimmy. Jimmy built a thriving business here in Canada. His books were a mess. I asked him, “How do you know what your profit is?” His answer follows…
“I came to this country with the shirt on my back and $50 in my pocket. Now, I look at the business, my house, my cars, my bank account. Then I take off $50.Then I take off my shirt. That’s my profit”
Sometimes a direct return in revenue can’t be measured in the microscopic details.
Sometimes it’s just obvious.