The New ROI
Things were much simpler way back when—in the day, as it is said. Marketing had few options to consider: print, TV, direct mail. Calculating the ROI (or attribution) required two numbers: incremental revenue and ad cost. Think of a race with a handful of runners. It was easy to identify the winner. But things have changed.
ROI is not just one number
Today the race is more like a marathon with runners coming in and out of the race. Some runners are on relay teams, but passing the baton to teams you don’t know and can’t control. Calculating performance or attribution is impossible. Perhaps old-time comedian Fred Allen described the situation best when he said that advertising is 85% confusion and 15% commission. Today, we are glad if racers run in the same direction.
Stick with what is known: Status quo bias is a preference for the current state of affairs. Any change is perceived as a loss. The bias interacts with other cognitive processes such as loss aversion, existence bias, endowment effect, longevity, mere exposure, and regret avoidance.
Showing the big picture to the CFO
A CFO can take a rational position to stick with what is known—direct mail, for example—until things settle down. But social media can be very effective, and some, almost free (consider the ALS’ #icebucketchallenge). Also consider the competition, which may have 500K followers!
Let’s keep in mind that CFOs like to keep track of what is spent and relate it to revenues. They want to hear which channel is converting and do not want to waste resources on what doesn’t convert. CFOs often remind us that half the ad spend is wasted, but which half and on what? Gary Vaynerchuck says that trying to measure ROI is sometimes like calculating the “ROI of your mother.”
Your audience is social
It’s not that hard. First, define your audience and choose your media channel appropriately (e.g., don’t use LinkedIn for B2C or Facebook for B2B). Then build and engage with your audience. They will tell you what they like, and those that convert will define your strategy and approach. The hard part is finding the content that deepens, broadens, and diversifies your audience.
The right answer is not merely to post relevant, quality content regularly, at the best times of day or day of week. It is not just to employ quality images and videos, trending hashtags, or current content. Perfecting each skill can lead you down a different rabbit hole. It is better to marshal your marketing frontline -- anybody and everybody directly or indirectly in touch with your customers. They are aware of different themes, topics, subjects your customers want to learn about. Ask them. Make it easy to share their ideas and suggestions. Use them. Report back how the audience responded, engaged. Repeat.
ROR – It’s not a typo
Once you have created a process and an audience (10K, 100K, or 500K), build on the relationship(s) and determine how audience members are engaging with the brand. We can’t ignore ROI, but in social media, before we figure out ROI, we need to calculate ROR, or return on relationship. This a term that Ted Rubin coined:
“ROR isn’t a new concept in marketing; it’s the value that accrues over time through loyalty, recommendations, and sharing. It’s a back-to-basics measurement that calculates how well brands create authentic connection, interaction, and engagement with customers — and it’s time to relearn the concept.” ― Ted Rubin
You can monitor ROR by looking at a few numbers over time: # of fans, contributors, page views, posts, participation, reach, and traffic.
The customer’s journey from awareness (top of mind awareness) to purchase can be treacherous. Some readers or viewers never finish, lose interest, postpone the purchase, explore alternatives, or buy from the competition. Make sure that your audience becomes part of your team; they pull your brand along.
Forging a path: Our To-Do list
Recognize that more data doesn’t indicate greater accuracy, only more variables. Use the 80/20 rule to manage time and expectations:
1. Identify the KPI’s relevant to your team and market.
2. Understand the stages of the customer journey: awareness, research, choice reduction, purchase, brand advocacy, and determine how they can connect.
3. Establish an expected return for each channel—some will be known, others mere guesses.
4. Calculate the ROR, the engagement, of each channel (e.g., Facebook 3.4%, Twitter .02%)
5. Optimize each media, select one at a time.
6. Schedule when your team will re-evaluate both ROR and ROI.
Contact Yves at [email protected] or Thad at [email protected] and request a 30-minute, no-obligation, totally free phone or Skype consultation.
















