“I know I waste half the money I spend on advertising. The problem is, I don’t know which half.”
John Wannamaker, founding father of modern department store retailing
ROI Marketing has been talked about for several years, but what does it really mean? I can’t argue that one should know what marketing works and what marketing doesn’t. But everyone seems to have an opinion about exactly what to measure. Here’s a recent laundry list of many of the various metrics being touted — some “classic” measures, some newer to the scene:
Share of Market
Share of Voice
Share of Wallet
Cost Per Thousand
Cost Per Lead
Cost to Acquire
Customer Lifetime Value
Lead Per Sales Rep
Price Per Transaction
The articles that I have seen have high-profile MBA professors and high-profile consultants all talking about what they think should be measured, but it really depends on what you are trying to accomplish. Measuring any of the things on those lists is admirable, but it may be completely irrelevant to your particular business. You must first look at what your objectives are, then figure out a way to measure whether it is accomplishing that objective.
The most important learning to be taken from the concepts of ROI Marketing should be: measure something. In order to avoid Wannamaker’s malaise, don’t just blindly spend money without knowing if it is returning anything to you. Put metrics in place to measure it!