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The Problem With ROI

"What is your ROI on that campaign?" This is one of those questions marketers often dread to hear from their CFO or COO. They dread it, because whilst the question is simple, the answer is somewhat more complex. Nonetheless, giving a simple return on investment(ROI) figure is what the bosses want. After all, the marketing budget is a big expenditure, sorry investment. But instead of focusing on ROI, marketers should focus on Return on Objectives (ROO). With a bit of internal communication, internal stakeholders will be appreciative of this. Let's explore this quickly.

The Complexity of ROI Working out an ROI for your marketing activities is complex. It's complex because there are so many factors that influence the success of your marketing. Some of these you control, some of which you do not, such as:

  • How long the initiative has been running

  • The strength and level of your brand equity

  • Your pricing strategy

  • Competitor activity

  • Message execution

  • Customer service

  • The role of your Sales team

  • Your sales funnel

  • The economic environment And lots more.

I’m Not A Fan of ROI When it comes to calculating ROI, I would say only try and do this when you can tie in your contribution to revenue growth with your marketing activities with absolute confidence. And I mean absolute confidence.

Any doubts that your show with your modelling, and the CFO will smell blood. And only use ROI when you have absolute confidence with measuring the whole concept of the customer lifetime value. And that you have very sophisticated attribution modelling going on. Use ROO instead of ROI From my experience, your CFOs will ask about ROI as they know not what else to ask. And in this new mortgage market, you will get challenged on this more and more.

Get on the front foot. Don’t get obsessed with ROI, get obsessed with ROO - Return on Objectives. This is where you align your marketing goals to that of the business. These goals have measures of success, which may include lead and lag metrics. It is these that you should obsess with. Goals such as:

  • Increasing NPS

  • Increasing brand salience

  • Increasing unprompted willingness to recommend Increasing sales enquiries or website traffic

  • Increasing overall brand engagement

  • Increasing market share

  • Moving prospects through the funnel

  • Retention

Be Goal Focused and Outcome Led

You have goals. Measurable goals. Show how you are contributing towards these agreed goals through the desired outcomes you are delivering against. Focus on delivering ROO will deliver greater ROI. then you can show how you are contributing to the ROO. So forget ROI and focus on deliver-ROO (apologies for that). More to follow on this.


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