BY MICHELLE THOMAS – DIRECTOR, INTEGRATED MARKETING
Early in my career I worked for a well-known online retailer who was an early adopter of all things digital marketing. At the time, I was managing direct/variable channels and operated in a world where we had no benchmarks, no budgets, and a handful of channel reports. What mattered to the business was doing cool things for the customer, whether that meant being first to market with a new technology or idea, the ability to disrupt the online shopping experience, or a culture of constant innovation. Accountability was an art, failure was an option—it was a marketer’s dream!
But times changed, management philosophies changed, the industry changed, and boom, it hit us. We needed to become more data-driven in order to prove ROI.
Fast forward to today. As marketers, we’ve been trained by business managers and thought leaders to not invest the time or energy into initiatives unless they can sustain a certain ROI. That comes with an opportunity cost—the impact on your customers. Experimentation is another opportunity cost. This means nothing risky ever gets tried, and sometimes there are big ideas in there! Customers don’t care that your email is operating at almost 100% efficiency. What they care about is that the email that you sent them is relevant and useful, but how do you measure that?
A couple of years ago I was interviewing for a job at a CPG company to be the Brand Manager of a beverage line. One of my favorite interview questions that they asked me was “if you could change anything about the industry today, what would you change?” My answer is what I think ultimately landed me the job. I said, “I wish that we would stop having to prove an ROI on efforts that are truly meant to build relationships with a customer.” At the time, I was really thinking about social marketing, but upon reflecting on what I said, I think the answer applies to much more than social channels.
Don’t get me wrong, there is a time and a place for efficiency-based channels, but being able to complement them with channels that focus on relationships is really integrated marketing at its finest. Knowing the purpose of a channel and being able to play to its strengths and weaknesses is the core of omni-channel marketing.
But why are we still locked in the notion that we have to prove an ROI on every decision we make? ROI is a short-term lens that often times puts unnecessary pressures on marketing teams preventing innovation, growth, and learning. If we are tasked with impacting behavior changes over time by curating a seamlessly orchestrated experience across marketing channels and touchpoints, is ROI the right metric?
It’s time to move beyond ROI and start measuring Return on Objectives (ROO). Objectives allow marketers to think longer-term, think more holistically about their customer portfolio, and move beyond siloed efforts to an aggregated measure of success.
The challenge we face as marketers today is not in putting data to use; it’s more about thinking beyond what the data tells us by putting ourselves in the customers’ shoes. We’ve got to understand both sides to know what behaviors we want to shift and/or change and then use the data to help generate marketing objectives. Worried about measurement? Don’t fear! One of my favorite ways to do this is through migration analysis, which allows you to track the “hidden” benefits of those relationship-building efforts over time. The best part about it is that it is tied back to measuring objectives!
As marketers who are responsible for building customer relationships, how can we be effective when our efforts are always driven by a short-term financial metric when we know that relationships often return larger long-term results?
The ROI metric had its run, but I think it’s time we laid it to rest. If we focus our efforts on ROO in 2017, I have a feeling this will indeed be a happy new year—both for companies and customers. Who’s with me?
Is ROI a Dying Metric?
BY MICHELLE THOMAS – DIRECTOR, INTEGRATED MARKETING
Early in my career I worked for a well-known online retailer who was an early adopter of all things digital marketing. At the time, I was managing direct/variable channels and operated in a world where we had no benchmarks, no budgets, and a handful of channel reports. What mattered to the business was doing cool things for the customer, whether that meant being first to market with a new technology or idea, the ability to disrupt the online shopping experience, or a culture of constant innovation. Accountability was an art, failure was an option—it was a marketer’s dream!
But times changed, management philosophies changed, the industry changed, and boom, it hit us. We needed to become more data-driven in order to prove ROI.
Fast forward to today. As marketers, we’ve been trained by business managers and thought leaders to not invest the time or energy into initiatives unless they can sustain a certain ROI. That comes with an opportunity cost—the impact on your customers. Experimentation is another opportunity cost. This means nothing risky ever gets tried, and sometimes there are big ideas in there! Customers don’t care that your email is operating at almost 100% efficiency. What they care about is that the email that you sent them is relevant and useful, but how do you measure that?
A couple of years ago I was interviewing for a job at a CPG company to be the Brand Manager of a beverage line. One of my favorite interview questions that they asked me was “if you could change anything about the industry today, what would you change?” My answer is what I think ultimately landed me the job. I said, “I wish that we would stop having to prove an ROI on efforts that are truly meant to build relationships with a customer.” At the time, I was really thinking about social marketing, but upon reflecting on what I said, I think the answer applies to much more than social channels.
Don’t get me wrong, there is a time and a place for efficiency-based channels, but being able to complement them with channels that focus on relationships is really integrated marketing at its finest. Knowing the purpose of a channel and being able to play to its strengths and weaknesses is the core of omni-channel marketing.
But why are we still locked in the notion that we have to prove an ROI on every decision we make? ROI is a short-term lens that often times puts unnecessary pressures on marketing teams preventing innovation, growth, and learning. If we are tasked with impacting behavior changes over time by curating a seamlessly orchestrated experience across marketing channels and touchpoints, is ROI the right metric?
It’s time to move beyond ROI and start measuring Return on Objectives (ROO). Objectives allow marketers to think longer-term, think more holistically about their customer portfolio, and move beyond siloed efforts to an aggregated measure of success.
The challenge we face as marketers today is not in putting data to use; it’s more about thinking beyond what the data tells us by putting ourselves in the customers’ shoes. We’ve got to understand both sides to know what behaviors we want to shift and/or change and then use the data to help generate marketing objectives. Worried about measurement? Don’t fear! One of my favorite ways to do this is through migration analysis, which allows you to track the “hidden” benefits of those relationship-building efforts over time. The best part about it is that it is tied back to measuring objectives!
As marketers who are responsible for building customer relationships, how can we be effective when our efforts are always driven by a short-term financial metric when we know that relationships often return larger long-term results?
The ROI metric had its run, but I think it’s time we laid it to rest. If we focus our efforts on ROO in 2017, I have a feeling this will indeed be a happy new year—both for companies and customers. Who’s with me?
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