The Real Question Underneath ROI

Here’s a thought for you the next time someone asks you about the ROI of any given marketing method. There’s a secondary, implied question beneath the question of ROI, and that question is simply, does this marketing method work? Will it help us to meet our business objectives?

When you think about the equation of ROI – (earned – spent)/spent – it’s actually fairly unhelpful for making strategic and tactical marketing decisions. Because it relies on the computation of all value produced down the entire value chain, from audience generation down to closed sales, it’s subject to a lot of interference. For example, you may have an effective marketing program or an effective PR program, but an ineffective sales program. Thus, your ROI can be negative even if you’re doing your job as a marketer superbly.

If you can provide objective, actionable marketing metrics that have a line of sight to revenue and real business objectives, chances are you can make the requestor just as happy. ROI is only applicable in financial outcomes, which means that a lot of marketing activities that are not directly linked to sales will not have a direct ROI, so other performance-based metrics such as lead generation will tell you more about what you have to improve about your marketing.

When is ROI an ideal measure of marketing performance? Simple: when you are in charge of the entire organizational funnel from top to bottom, such as when there’s no sales department. For example, if you run an eCommerce website that is entirely self-serve, meaning that your customer comes to the site, buys, checks out, and pays without interacting with a system that’s not under your control as a marketer, then ROI is a great measure of your marketing skill because you’re in charge of everything, and can make system changes to improve performance.

Another example would be when you’re a sole proprietor, where you’re marketing, sales, service, and PR all at once.

When someone asks you what the ROI of something is, chances are good they’re really asking you if something works, and if this is covered:

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(in case it’s not obvious, that’s a donkey, or in other parlance, an ass)


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How do you know when you’re overanalyzing marketing data?

Tableau_-_Bollinger_Bands_example

During last week’s MarketingProfs B2B Forum, Tim Washer asked forgiveness on stage from me and other analysts in the crowd for lambasting over-analysis of data as one of the top obstacles to creativity in business. The thing is, he didn’t have to apologize: he’s totally right.

The logical followup question then is, how do you know when you’re overanalyzing marketing data?

The answer to this comes from what I call the Marketing DAIS.

Data is the stuff.

Analysis tells you what happened.

Insights tell you why.

Strategy tells you what to do next.

You are overanalyzing when you keep going back for more data, and more data does not change the analysis substantially.

You are overanalyzing when you know what happened and you haven’t made progress on knowing why.

You are overanalyzing when you haven’t made the transition to what to do next.

That’s it in a nutshell. You are overanalyzing when you keep treading water, when you fail to move forward beyond the data and the story it tells you. We all love a good story, but if that’s all you ever do, then you’re overanalyzing.


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I’d buy that for a dollar!

Anyone remember the Bixby Snyder character from the original Paul Verhoeven Robocop movie?

buy that for a dollar

He’s the subject of an inane TV show set in the Detroit Robocop dystopia whose punchline is, “I’d buy that for a dollar!”

As silly as the character was, it raises a fair point when it comes to your media, your content.

Would any of your corporate marketing content sell for a dollar?

Think about that question carefully. Would anyone pay money, even a dollar, for the content you’ve published today, this week, this month? Could you convince any of your customers to buy that press release you just sent out? Would they buy this week’s email newsletter? If you were to put your eBook up on Amazon or your webinar up on Gumroad, would anyone purchase it?

Here would be the challenge to you. Catalog all of the marketing content you’re producing, then put it up for sale right now, for the next 30 days.

  • Publish your email newsletter to Amazon’s Kindle Singles program for 99 cents.
  • Publish your corporate white paper or eBook to Amazon’s KDP program for 99 cents.
  • Publish your next webinar to Gumroad for a dollar.
  • Publish the press release you’re going to send out to Scribd’s store for a buck.
  • Publish your next product announcement to iTunes as an MP3.

Wait 30 days. If you can sell one of any of the types of content, then you know you’ve got something worthwhile. Jay Baer often says in his book Youtility that your content should be good enough that people would want to buy it. Take the next step and actually put your content up for sale to see if anyone WILL buy it.

If it doesn’t sell? You need to take a long, hard look at whether it’s any good.


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