Marketing ROI Is a Broken Metric

Marketing ROI MathYour marketing makes me dislike you. In fact, it makes me, once a potential customer, reconsider if I should even do business with you.

However, your marketing performance measurement doesn’t capture my disdain. I am simply one more individual that did not buy. I am just part of your standard drop-off rate.

How many more people like me are out there? More than you realize.

  • How many other people are tired of your spammy keyword autoresponder on Twitter?
  • How many people are tired of your creepy retargeting ads?
  • How many people are tired of the fine print on your offers that get them in the door only to find it doesn’t apply to them?

Quite simply: you don’t know. Marketing ROI measurements are woefully incomplete.

Marketing mix models and attitudinal studies can capture major shifts but they cannot associate those shifts with the smaller tactical decisions made in marketing every day. Amidst the overall trend, the smaller elements get lost, or are not even considered in the model.

Online marketing, although offering a flood of granular data, focuses primarily on directly attributed positive outcomes. It misses the majority of both offline results and negative outcomes.

The Solution

Measured ROI is just one indicator. A significant portion of the impact of your marketing will not be directly measured. It is on you, not your reporting, to make sense of the whole package.

  • Listen for Anecdotes: Do you get feedback from sales discussions or your partners that your marketing is helping (or hurting) their efforts? Hang on to these anecdotes from the front line, they are a key part of the missing picture.
  • Consistent Correlation is Your Friend: Is there an increase in ecommerce sales when you launched an insert program driving people to your locations? See if it repeats over time, you may have identified another element of return you can begin to measure.
  • Put Yourself in Their Shoes: Take off your marketing hat, drop your instinctive negative reaction to your competitors content, marketing and site, and spend time in your audience’s shoes. Study your personas and attempt to go through the research and buying process the way they do. If that is too hard…
  • Ask Customers and Prospects for Feedback: Dropping your biases and putting yourself in their shoes is hard. Instead, go talk to them. Get their perspective on the market and on marketing. When you talk to customers in order to understand the return on marketing, you will be surprised by what you learn.

Understanding what your ROI measurement is missing is an art, not a science with a formula you can simply repeat over and over again. So keep your eyes and ears open, consider your prospect’s perspective and salt your ROI reports well before reading.

Your Turn

How do you understand the positive and negative impact of your marketing that isn’t reflected in your ROI reports? Share your tips in the comments below or with me on Twitter (@wittlake).

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  • http://twitter.com/dschulenberg Dara Schulenberg

    Erik: Great food for thought for all marketers here. My thoughts are that ROI is not just a marketing ‘problem’ (as the post title may indicate) but rather a larger business issue which stems from the age-old problem of reporting without the required analysis.

    If you are simply reporting facts – without considering the multitude of soft influencers and conditions – you’re potentially missing the key drivers in your business model. This is the very basis of a whole industry segment in business intelligence which attempts to solve the business problem with sophisticated analytics tackling today’s big data.

    Knowing there is no one-size-fits-all answer to this challenge means we marketers have to exert diligence in analyzing both quantitative and qualitative data points to make better business decisions.

  • http://www.retargeter.com/ Caroline Watts

    I love this post Eric, particularly your point about empathy. I think this is one of the biggest mistakes marketers make–seeing audience members as data points and forgetting that they are first and foremost, humans. The ultimate litmus test for any initiative should be: how would I react to that? Would I feel creeped out by these targeted ads? Would I feel frustrated by this email unsubscribe process? It sounds so simple, but it’s so often overlooked.

  • http://www.buyerology.com/ Tony Zambito

    Eric, good effort in pointing out that it is not all about just the metirc. Customers have a mind and heart that numbers can not tell you about!

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