In my previous post, I committed to a course of having “the serenity to accept the things than cannot be changed” – at least as regards the loose use of “ROI” as a catch-all for marketing accountability.
You might therefore be interested to learn how I responded to a client’s suggestion about incorporating “ROI” measurement into our messaging assignment.
The points I made were as follows:
- It is a great idea for us to discuss how we can explicitly articulate the commercial benefits that we expect to accrue to your company as a direct result of this assignment
- There are a number of ways of doing so, including an actual ROI calculation or a formal brand valuation
- In my experience, what the senior leadership actually values is a simple model showing how our work is aimed at changing external and internal perceptions and behaviors that in ways that result in changes to the growth and cash flow of the business
- Such a model has three benefits – it communicates that we care about the business, not just marketing; it clarifies our hypothesis about how marketing works (this can be debated and tested); and it demonstrates that marketing is about more than just the short-term response to changes in communication
- The best starting point for developing this causal model is to ask the senior leadership about the changes they would like to see in terms of perceptions and behaviors (internally and externally) and how they believe that the achievement of these changes would translate into improvements in revenue, growth, margin and volatility
- This model would deliver two benefits: consensus at the senior level of the company about “how marketing adds value to the business”; and as a roadmap for defining the quantitative and qualitative research necessary to measure progress on the key dimensions identified
- This, in turn, would lead naturally to the creation of a marketing scorecard
- The process might culminate in a formal financial calculation – either in the form of ROI or brand valuation – though such point measurements typically only justify their costs if you are using the results to inform your actions in a merger, securitization, trademark infringement or licensing transaction
I will report back on the response from the client. I certainly felt more “serene” in crafting this response rather than one that directly addressed the misuse of “ROI”…
