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Marketers Are Confused About ROI, Are You?

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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?

 

 

Should Health Of Blog Community Align To ROI?

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I had a post all ready for today, and then @TheJackB spat all over my blog in comments. I could not let that slide, so this post is a compilation of his musings and mine. (You get co-authorship, TheJack, but just not in the byline…heh.)

The Sales Lion wrote a post yesterday about why community is not Holy Grail of blogging that I’m sure is creating a slew of comments, not the most of which is Gini Dietrich (although I’ve not been over to comment myself). Marcus said something to the effect that “Gini shocked the blogosphere admitting her business almost went bankrupt in 2011 in spite of her healthy blog, Spin Sucks, and its huge community with lengthier commentary.” (paraphrase)

IMHO (In my humble opinion), Arment Dietrich is a service firm; it delivers professional services and seeks clients to pay it to stay viable. Gini is the point person, face, poster child, CEO, founder, biz dev artist for her firm, and, oh, yeah, she’s chief cook and bottle writer for her highly popularly ranked and accoladed blog, Spin Sucks. Her new product, Spin Sucks Pro, for which peeps will subscribe to content and teachings via webinars and writings from around the ‘sphere, launches soon (after a one-year delay during which she had to fire a tech team and start from scratch). (Never write sentences like these two.)

When you’re running a successful digital marketing/PR shop with staff and expensive headquarters near the Merchandise Mart in Chicago, and you’re launching a brand new online moneymaker that fails and requires an immediate new investment in tech dollars and clients refuse to pay you for six months and the economy sucks (like Spin), then what’s so surprising about a firm nearly going belly up (in spite of a successful blog and community)?

This dilemma is one many successful entrepreneurs face —  how to clone oneself. We are the brand and brain power clients wants, hire and require. Using Gini Dietrich was a poor example to showcase that a profitable business has nothing to do with a healthy blogging community, and here’s why:

The target audience for Spin Sucks Pro are PR, marketing, social media peeps; a healthy community of such is required to ensure that Gini’s new $ venture succeeds. Can you imagine if she had attempted to launch Spin Sucks Pro without putting all the sweat and tears into building a healthy and growing community at its precursor? Right.

 

Here’s what THEJACKB had to say in comments here yesterday:

Yep, I commented on Marcus’s post. I was half awake at the time and uninterested in picking that post apart but I am not convinced that there is a relationship between Gini’s biz and comments.

Fact is that if you can demonstrate to brands that your blog reaches the eyeballs that they want to get in front of then you can make money blogging. It happens, and any one of us has the opportunity to make it happen. It might not make sense for some of us to pursue that path but the opportunity is there.

Let’s circle back to comments and community. You and I (Jack and Jayme) have talked about this, and I’ll repeat that I don’t see comments as being currency. They aren’t always useful social proof for whether a blog is popular, influential etc.

But that doesn’t apply across the board. Fact is that many of the people that speak at blog conferences get their positions as faculty because of their community and the comments. It is not impossible to get a gig without, but it is much easier when you have it.

Data mining is useful for bloggers. When you start to break down who your readers are you can learn all sorts of interesting things. During the past four days more than 4k uniques took a moment to read my post.

Two PR agencies and several brands were camped out on that post for extended periods of time. I don’t believe that they hung out there solely because they loved the writing. There is something more going on. My job is to figure out why. Maybe it is because they are looking for a writer or maybe it set off a keyword alert, but I’ll put money down that there is a money making opportunity tied into it.

Let’s circle back to the question of can you make money and approach it in a more direct manner. Let’s pretend that blogger XYZ has a product/service that they sell and that there is a valid value proposition tied into it.

Blogger XYZ needs to learn how to close. Ask for the order. Stop pussy footing around with “you might be interested or want” and ask for the sale. Remember Alec Baldwin in Glen Garry Glen Ross- “Always Be Closing.” (Excuse me while I reconnect the IV, the coffee drip just ran out.) (Indeed, Friend, you exhausted yourself with that spittle.)

What say you? (This is edited; thank you, Marcus.) Are business success and community related? Need you have a thriving blog community to also have a thriving business?

 

Calculating YOUR Social Media ROI

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Inspiration for blog posts comes from such odd places; I glommed on to this one as it rolled off my tongue on a call. I told a colleague Twitter had saved me from a slow death in a dark office. My love of Twitter is no secret:

A global community of intellectuals

  • New friends with whom to banter and pose odd questions

Information and collections of learning for my professional development

A network of experts on chats, like #SBT10 with whom to ask basic questions without fear and so much more.

My colleague then said, “You be careful, Jayme. I hope you’re making money as a result?” And, I said, “Nope, I haven’t asked. ROI on Twitter isn’t always about money.”

That’s when I realized the nugget for this post. How do you define your social media ROI? Forrester  is selling a report with nearly the exact same title. (Promise, I didn’t know it until seeing the direct e-mail in my box after I wrote my headline and post.)

ROI comes in various shapes and sizes.

My friend Mark W. Schaefer who writes the amazingly successful {grow} blog with a hyper-engaged community states it wisely, “There are many business benefits that come from Twitter. It could be information, competitive intelligence, a new supplier or partner, a deal, a link, or yes, even a sales lead.” (I encourage your perusal of this link to Mark’s blog regarding his post today about the power of Twitter consumers.)

Defining ROI is usually akin to financials i.e. revenue and profit. For me, social media (Twitter and blogging) have always been defined as brand development and thought leadership. One would argue these are metrics… exactly…because return on investment is about measurement via metrics that may not always directly correlate with the bottom line and profitability. 

If you’re a SMB (small-to-medium business), determining how social media influences your business is easier to ascertain, and you can create your own value-based metrics that align directly to your business model and culture.  

How about these as examples:

  • A re-tweet 40 times of a blog post announcing a product or service leads to five inquiries on your Web site. (That’s ROI.)
  • A new person you met on Twitter becomes your next employee because you developed rapport, engaged in conversation over time, and took a chance on hiring. You saved money with no job listings, no recruiters, and communicated directly with the candidate. (That’s ROI.)
  • A blog post written by someone at the company garnered a call by a respected partner in your vertical market interested in collaborating on an upcoming project. (That’s ROI.)

I may’ve backed myself into somewhat of a corner trying to define ROI via measurement values versus dollars, but who are we to tie a bow around a box and define it traditionally? Social media has spawned out-of-the-box thinking and so, too, should it pave the way for  creative definitions of ROI suited to your business.

However, when you’re not the boss, perhaps it’s safer to get out the box with the pretty ribbon?