Monday, February 13, 2006
ROI: Act now before your competitors do
byHow can you turn a “I wonder how that campaign did…” into a “I know what that campaign did”? How can you confidently approach your senior management with additional marketing funding requests based on solid results? What steps can you take today to start quantifying exactly what your marketing programs are doing? The experts say, “Stop talking and just start doing something about ROI.”
ROI guru, consultant and author Jim Lenskold offers up Three Easy Lessons for More Effective ROI.
The underlying suggestion of this article seems to point out that even if it means crawling before you walk, and walking before you run, doing something about marketing ROI now will help you get ahead of the competition. Core to this is accepting that, as companies need to make more money than they spend, senior management needs to have greater confidence that marketing can deliver. How can you provide them with this confidence in marketing ROI?
Lesson One, according to Lenskold, is to prepare for a journey. Much like we’ve written about in earlier posts to this blog, Lenskold too asserts that there is “no single solution or quick fix for implementing ROI.”
He says that an ROI framework helps bridge marketing strategy with measurements and financial outcomes. A good place to start, says Lenskold, is to quantify how different levels of marketing investments (or “spends” as finance calls it) paired with marketing strategies can influence different customer segments and lead to incremental sales. This is great time to dig our your trusty spreadsheet and run a bunch of “what if” scenarios. Either that or make friends with finance in a hurry.
According to Lenskold, Lesson Two is keeping your eye on strategic insight. Don’t use ROI as the Pass/Fail test; instead, use it as a way to see how strategies and tactics can be improved to “move the needle” and increase profitability, while gaining key data and insights into customer value, retention, transaction profitability.
Level Three, says Lenskold, is to measure smarter, which is admittedly hard to do with the ever-present pressure to rush to market instead of testing and assessing projects on a smaller scale, and then measuring what matters most — instead of measuring every possible item from every possible segment, including unprofitable ones.
Summing it all up, what is the bottom line to ROI? Start with six easy letters to guide you: A-C-T N-O-W! Because if you don’t, Lenskold says your competitors will, at your expense.
