Marketing ROI: 4 Steps Between the “R” and the “I”

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marketing ROI
Marketing investment. Understanding marketing ROI

The task of tying marketing ROI to business return is not a straightforward concept.  A decade ago few were paying attention to the need to connect marketing investments to business performance.  But now,

The concept of ROI analysis is straightforward.  ROI determines whether various investments of resources will yield a return to the company versus other uses.  Conversely marketing effectiveness does not neatly fit into a framework of ROI analysis.  Marketing effectiveness requires consideration of strategy intent of marketing investments.

There are considerable fundamental marketing responsibilities between the “R” and the “I” that cannot be precisely stated.  Consider today’s key marketing tasks like creating brand meaningfulness, customer consideration process and providing the right customer experience for purchase.  All of these require investment before the revenue of return begins to happen.  Several marketing processes have to be developed and expanded, on various time frames, in order for them to lead to customer selection, revenue and profit.

Linking marketing to financial performance is only one of several steps in the journey.  It cannot be solely about return on investment.  It needs to be about improving marketing effectiveness in the organization and aligning the efforts of the marketing levers of advertising, promotion, pricing, sales and service to the strategies and financial objectives of the business.

Clearly it is not an easy assignment to establish ROI and marketing effectiveness process.  But, without taking the first steps there will be little to no advancement in achieving alignment of marketing effectiveness to the company.  So what are the first steps?

  1. Keep it simple
    • Define what marketing ROI means for your company.
    • Be inclusive of sales, service and finance.
    • Apply realism to the process time requirements and resources, by taking winnable first steps.
  2. Clearly articulate anticipated gains that will result from this effort
  3. Separate goals from the noise
    • Odds are there are no new data sources to provide you with the information to develop rapid achievement. Identify existing sources and other easy cost effective sources that are relevant and explore basic models of marketing ROI and effectiveness.
    • The direction and success is a company culture decision. It depends on stakeholder expectations, understanding, and your ability to clearly communicate your plan.  It is important there is agreement on language and process understanding.
  4. Reporting of the progress and results. Ensure stakeholders are provided with timely information by clarifying metrics or models used, return or lack of return based on your measurements, provide actionable takeaways and most importantly, keep the presentation simple and understandable

Most company exectuvies and owners are aware of the challenges of marketing ROI development and the risks than they are given credit. They will be able to see parts of the plan that are working and will most likey build trust in how you are managin the marketing return on investment.

Tom Angelis is Managing Partner at Angelis Consulting Group.  ACG brings a unique set of entrepreneurial, marketing, financial and business process skills to assist companies achieve profitable growth.