Soulati-'TUDE!

Turns out the commenters over at Spin Sucks who didn’t know how to define ROI as based solely on dollars are not far off from many a marketer, according to a study by the Columbia Business School Center on Global Brand Leadership and the New York American Marketing Association.

By way of background, my friend Jenn Whinnem who is a contributor here and member of this community wrote a guest piece for Spin Sucks about the Connecticut Health Foundation and which metrics they tally that contribute to campaign success.

A major side conversation in her post’s comments ensued about whether metrics not attributable directly to dollars should be referenced as ROI at all. About 85 percent of commenters favored ROI as strictly dollar oriented while a portion of those who spoke up wanted to honestly know why ROI couldn’t be oriented to other types of measurement, as well.

In the March 12, 2012 Advertising Age, the cover story, Marketers Don’t Practice ROI They Preach, informs about results of a study that suggests marketers aren’t as buttoned up about ROI as the commenters in the Spin Sucks community would have you feel.

The major outcome of the study taken directly from the Ad Age article is this:

“For all marketing’s obsession with ROI, it’s not used to set budgets.”

and

 “The state of the art remains surprisingly primitive.”

Interesting, eh? The discussion at Spin Sucks was heated yet collegial. Had I had this article tapped, I could’ve pulled it in to the conversation in comments (or, because ROI wasn’t on my radar until now, I wouldn’t have!).  Let me share a few more bits of data from the survey as detailed in the magazine:

• 22% of respondents use the most basic measure — brand awareness — to gauge marketing ROI without necessarily determining even whether the awareness is positive.

•  50% of respondents didn’t include any financial outcome when defining marketing ROI.

Brighter Light Bulb

Don Sexton, marketing professor at Columbia Business School, stated in the article that “a lot of people…don’t have a clear idea of what marketing ROI is. A lot of them use metrics that don’t measure finance at all.”

These other metrics used to measure ROI by more than 1/5 of marketers surveyed (243), according to the Ad Age article are:

• Brand awareness
• Boss’s satisfaction
• Reach and frequency (regardless of whether it affected sales)

(Social media data (in spite of mass quantities) isn’t being used to measure financial metrics said the survey.)

Conclusion

The pulse of the Spin Sucks community on the definition of ROI seems to represent what this article and the survey results speak to.

• There is absolute confusion about how to implement marketing ROI and align it back to dollars.
• There is absolute confusion about the definition of return on investment.
• Somewhere along the way, use of the term, “ROI,” loosened to include metrics not associated with dollars.

ROI of a Webinar

Let’s take a look at a mini-campaign — a webinar to generate sales. In between the start and the end point are customer touches that influence sales and hopefully generate a purchase at some point in the sales cycle.

• Webinar invitation list to prospects and current customers
• Follow-up post event with a survey
• E-mail marketing push with the on-demand webinar
• Content to further interest the prospect in a product
• Sales team queries to webinar attendees
• Product demonstrations completed
• Customer buys the product (at some point)

There are many opportunities in this scenario to track metrics that help influence sales:

• Number registered for webinar
• Number that attended
• Number of completed post-event surveys
• Percentage of positive survey responses
• Number of product demos scheduled

But, the only true assessment of ROI for this webinar is whether a customer bought a product — that is pure and true ROI. The total number of dollars exchanged to make a purchase is what defines ROI. The other numbers, as suggested above, are metrics that contribute to the success of the campaign and help measure its effectiveness or influence on sales.

What is your opinion about ROI and how it’s used or defined in your organization?