ROMI. Return On Marketing Investment. If I drop a coin into something, what do I get out of it? Many marketers, like myself, have a love/hate relationship with measuring ROMI. We are unsure about what to measure, how to measure and how much weight to give to what the data tells us versus our gut feeling. The question pops up every day when we ask ourselves how to spend our budget. But, there are two big problems with ROMI today. The first is that understanding how effective your marketing tactics are, is a humbling experience. We like to think that we have massive impact on the market but the reality is that we do not. Marketing is about giving nudges here and there. While these nudges and small pushes are very important to start moving a mountain, you will most likely start small. Truly changing preference is a long term and difficult challenge and short term impact measurements are often very sobering. So it takes a certain kind of attitude to appreciate what ROMI measurement will tell you. Not everyone is ready for that.
The second problem is that marketers don’t always know what to measure. The reality is, marketing in the digital age allows you to measure just about anything. But if you don’t know what you want or need to measure – you won’t learn anything from all the available data. There are also many examples where marketers or agencies will simply take the numbers that look best on paper and use them to explain to their boss or client that they have been doing an amazing job. If none of the parties involved want to or can understand the numbers, this type of behavior will allow them to pretend all is great for a while. Allow me to introduce a rule that works very well when starting out with ROMI: “Isolate the effect of what you are doing to the nearest possible point of impact”. When you know what the customer journey is for your product or service, think about how far your marketing tactics can help your potential customers along on that journey. Start measuring the journey to the nearest possible point of impact. If your end goal is increased sales but you don’t have the ability to tie everything to closed deals, work with an assumption on conversion of leads to closed deals and measure the effectiveness of your marketing tactics in the number of leads you generate. While this is very straightforward advice, it is astonishing how many marketers choose to overstretch and try to measure much more than really makes sense. The result is that the contribution to the business of marketing tactics remains fuzzy at best.
Another important thing to keep in mind is to not give up when your data set is incomplete. While it is true we can measure so much more than our colleagues in earlier times could, we still may have holes in our dataset. Don’t let that stop you from using what you do know. If there is no or untrustworthy data available – take a wild guess, start executing and fine-tune your initial guess as you go along (Bayesian method)
I found there are two types of marketers when it comes to ROMI. One group, the ‘learners’, will embrace what analytics are telling them and adjust their tactics to be more successful. The other group, the ‘confirmers’, are only taking data serious that confirms their conviction about the success of certain tactics versus others. They will dismiss any data that tells them otherwise. Obviously, if you see people in your environment that are a member of the second group, I advise you to help them find a career elsewhere. ROMI is about learning, if you don’t want to learn anything then you might as well not measure anything and save yourselves a lot of money. Ken Robinson once said “If you are not prepared to be wrong, you will never come up with anything original”.
After reading this post, take another look at how you are measuring the effect of your marketing tactics. Are you really interested in the outcome or are you looking for confirmation of your existing convictions? And are you really measuring to a point that makes sense or are you overstretching?
Good luck letting your potential customers tell you how much they like engaging with your marketing tactics through ROMI data. And let’s make sure the Love part wins out in the end.