Marketing ROI

Posted by Rahna on December 10, 2007 under Uncategorized | Be the First to Comment

“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

Response Rates

Active Share

Purchase Frequency

ClickThru Rates

Event Traffic

Cost Per Thousand

Cost Per Lead

Cost to Acquire

Order Value

Customer Lifetime Value

Brand Equity

Lead Per Sales Rep

Campaign Payback

Lead Aging

Prospects Generated

Price Per Transaction

Churn Rate

Awareness

Persuasion

Net Advocacy

 

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!