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IHAVEANIDEA.ORG > articles >  Why Marketers Can’t Deliver R.O.I.


Why Marketers Can’t Deliver R.O.I.

Posted on October 4, 2011 and read 1,340 times

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bernarddahl Why Marketers Can’t Deliver R.O.I.Bernard Dahl
Founder
PRESENTIS


R.O.I.
Return-on-investment.”

A dirty, dirty word for many marketers, who have been coerced into including this measure into pitches, tracking it during campaigns, then merging it with Key Performance Indicators (KPI) to wrap things up and report. Yet many clients, accountants and CFO’s remain unconvinced. There is a very simple explanation for this.

R.O.I. is an accounting term. It is not a marketing term.

Think about it. Why should advertising be an investment? Is a lottery ticket an investment? Is a 3D television an investment? No sir, these are expenses. Still not convinced? Answer this: what is the R.O.I. of leasing an expensive car, when a smaller car or bicycle would do? What is the R.O.I. of having flowers in the lobby? What is the R.O.I. of having a lawn in front of the building, when asphalt would be less expensive, less maintenance and longer lasting? What is the R.O.I. of taking an existing client out to a great lunch, when he is already your client? Or, as Gary Vaynerchuk puts it, “What is the R.O.I. of your mother?

Those are not investments, Holmes, they are expenses. Great news: there is nothing wrong with that. In fact, expenses are normal.

Let’s look at it from another angle; when you do the groceries, are you investing in food? Of course not. Groceries are an expense, and an extremely useful one at that. A salesperson’s commission? Buying an awesome bottle of wine to wow your guests? All expenses, baby! On the other hand, if you are speculating on the wine’s future value, with the intention to sell it for a profit, that would be an investment, and the R.O.I. would (roughly) equate to the difference between the buying price and the selling price, minus the cost of preserving it in a cellar and the cost of selling it – provided its value would increase. And that’s just not what we marketers do, is it now?

Did you notice how natural “cost of selling it” felt, just there?

The problem is that expense and spending feel like bad words in everyday business talk. People avoid these words because no one wants to be the one “spending,” generating “costs”…right?

What clients want most is value. They want/need to know that what you are doing for them will improve their situation, their reality. That might be generating leads or sales, but it could also be recruiting better talent, finding investors, (re)building a reputation, helping them influence behaviour or creating needs (hopefully for the better. Big Pharma, I’m looking at you.).

Our agency made 21% of its 2010 revenue by helping clients with damage control and crisis management. What is the R.O.I. of your negative story NOT making the news?

R.O.I. is just a convenient way for clients to ask “what am I getting in exchange for this money?” A fair question, which every client is entitled to ask, and it is our job to provide them with an answer.

Strategy first.

Before any discussion even mentions dollars, let alone expenses, (fine… R.O.I.), I always ask, sometimes more than once, “What is success in this case? What EXACTLY are we trying to achieve here, with this activity, and where are you guys heading as an organization?” Basically, what will tomorrow look like and how will THIS help you get there? Be prepared though, not everyone has an answer to this question. It might be a part of your mandate to help define the answer, but then again, it might not. I have personally lost contracts – on which we didn’t bid – because the client had no clear definition of success for the idea we were supposed to pitch for.

Simply put, there is a difference between visualizing/creating the iPad, and marketing/selling it.

Educating an employee on Pay-Per-Click optimization, which creates value for the organization, is an investment. Investing in Adwords? Come on.

But, but, but… why can’t marketers deliver on R.O.I.?

Because it is not up to them, it is up to management. Marketing must, however, deliver results, and make them quantifiable, constantly highlighting how (or if) the actions and initiatives it undertakes will help management to achieve its goals for the organization.

It’s the smartest way I know to make marketing a worthwhile expense.





  • http://twitter.com/maxrivest Max Rivest

    Great article.

    I face this issue everyday. I’m the Maketing Director for a 30-person finance business that has no clue what marketing really is and everything is approved by the CEO who is an extremely analytical ‘numbers’ guy who doesn’t have a sense for ‘feel’ or ‘experience’. All I hear is ‘What’s going to be our ROI?’ and I have no clue how to answer this in numbers because I am pretty new to the game. Even if I list off the brand’s ‘soft’ benefits from our proposed initiatives, they still aren’t convinced and want forecasts, because otherwise they ‘don’t have money for advertising’.

    What’s a guy to do??

  • http://www.presentis.ca Bernard Dahl

    Hi Max,

    I feel your situation, one that I think many of us are confronted with at some point. I find that our clients are happiest when we set out clear objectives from the start, which have a numerical value (be they sales, leads, traffic, inbound inquiries, publishing stats, media mentions, requests for information, applications, etc.).  

    I often start by identifying the desired end result, then work backwards until I can identify the “next step”. Make sure you ask the boss, from the start, what is the end result he is aiming for. For financially-oriented managers, the answer is often increasing sales. Working your way backwards, the step before sales may be providing prospects, or providing better leads; eg: leads that are now familiar with the brand, which allows the sales people to pitch the service instead of the company, etc. Just throwin’ ideas out there.

    Whatever it is, you need to measure from the start and provide numbers to assess progress. 

    The again, the worst vice is ADvice, so… try this at your own risk… ;-)

    Cheers!


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