Over the past 20 years ROI has been a measure of successful marketing. Many management teams want to see the ROI of each sucessful campaign. Seth Godin (sweet Red Saber post BTW) has argued for a long time that this is the “safe” path, and will ultimately lead to your destruction. If you only make the safe choices, somebody that you compete with is going to take a chance, and will eventually send you back to asking customers if they “want fries with that?”
So how do you get around this? It may be impossible if your management team is already expecting ROI on everything you propose, but you need to change the ground rules. View all of your marketing efforts as a whole – given your entire budget, how many leads do you pull in? How good are they? How many close, and for how much?
With metrics like this you can determine a cost per lead, and determine how much revenue each lead generates. Now you know the overall ROI of your marketing programs. You can see how every program performs in both terms of cost and quality. You’ll be able to make some informed decisions such as – perhaps Google clicks are not worth the huge dollars and you don’t need to be spending so much there. Are yahoo clicks worth the same amount as those from google? Which trade shows are worth going to?
The end result is that if your overall activites are generating a positive ROI you now have an excuse to to some R&D, and you should refer to it as such. Now you don’t have to try and make up numbers about what a YouTube video might do for you, or some other program that you’ve never tried before. You just say that this is an experiment and it may fail, but we will learn if it’s possible for it to generate enough return to add to our marketing mix. The great part is that as soon as you get the data you’ll be able to compare it to the rest of your programs.
The Evolution of Marketing
I’m thinking about the evolution in Marketing as an organization grows. As an enterprise is born marketing exists to serve as lead generator. As the enterprise expands, the earlier sections of the sales cycle can be outsourced to Marketing Automation. Ultimately Marketing moves into branding if it becomes necessary to influence the public, shareholders, or other groups that are not directly purchasing the product. Different skills and toolsets are used during the evolution. I’m too tired to ponder upon this more. Good night…