ROI is not a budget issue. It’s a program issue. And it’s more than leads.
I spent this week working with a couple of clients on their 2011 budgets and inevitably the discussion turned to how to measure return on the IMC investment (ROI). I found it interesting that ROI was the last consideration when it should be the first discussion point. ROI, you see, is a program development issue as much as it is a budget issue and here’s why.
Return on investment, properly executed, should measure how effectively and efficiently the IMC program met its stated objectives. After all, objectives are the program’s “return”. Therefore, the investment should tie to pre-determined and measurable expectations. So here’s some basic tips on how to structure, define and answer the inevitable ROI discussion.
1. Make your objectives SMART objectives. SMART is the acronym for simple, measurable, achievable and timely. A SMART objective might be: “Establish the market perception of XYZ as a leading edge supplier over the next 12 months” or “Increase the perception of XYZ as leading edge supplier in the ABC market space by x% over the next 12 months”. These objectives are simple. They are measurable, they are achievable and there is pre-determined time frame for success.
Here’s a public relations example: “Increase share of voice by x% in 2011.”
2. Leads are good. But leads aren’t the sole success index. Way, way too often the only objective of a marketing program is leads, leads, leads. I’m going to be a contrarian and state that generating leads is a sales not a marketing function!! Marketing is responsible for the entire relationship with the market place. It responsible for the entire adoption process … awareness, interest, evaluation, trial, adoption, and reassurance (or repurchase). Leads …. real leads … are the third and/or fourth step in the chain. Leads don’t just happen. They are developed (by you or your competitors over time) by understanding that IMC programs address each step and move individual decision makers along the adoption process. Basically, there should be an IMC objective for each step in the adoption process.
3. Achievement is important. State the goal not just in terms of quantitative achievable terms but also by stating indices that IMC can achieve. Can an IMC program achieve a sales uptick? By itself, no. It is part of the process. Can it improve margins? By itself, no. Can it increase interest as measured by visits to specific landing pages? Yes. Can it measure interest by measuring intention? Yes. Can it measure awareness? Yes. Can it measure predisposition to re-purchase? Yes. Define objectives to which you can assign a quantified accomplishment (i.e.; return).
4. Allocate a small percentage of the budget to research and measurement. Five to 10 percent will do. The rational is to spend a small amount of money to make sure that 90-95 percent of your resources are being effectively and efficiently invested.
5. Get management concurrence on objectives first. Management approval of SMART objectives makes it easier to get concurrence on how to define and measure success.
Clearly, defining ROI indices requires increasingly sophisticated measurement methodologies. Let me hear from you about how you measure IMC ROI.