Improving Marketing ROI Measurements

Measuring and improving marketing return on investment (MROI) is a process, not a one-shot deal. There are no magic formulas; no one-size-fits all solutions. Instead, think about your MROI along a seven-step continuum.

1. Marketing Activity (How much marketing did we do?)
The best place to start is with an account of what you’re doing (output) to remind yourself how hard you’re working (or not working). The total cost of each effort is an investment and serves as your denominator when it comes to calculating MROI.

2. Placements (How successful are your media efforts?)
Next, measure the “outcome” or results from your activities. Start by looking at all of the places that helped “amplify” your message, such as the media and the mail carrier.

3. Awareness (Did anyone see our communications?)
Then use surveys and other tools to see if you captured anyone’s attention.

4. Attitude (Did your activities change anyone’s opinion about anything?)
Now you’re ready to figure out if what you said shifted, reinforced or changed anyone’s attitudes in any way. A great technique for gathering feedback quickly is something I call the snapshot survey. By asking a handful of people highly focused questions, you can get directional feedback. You don’t need to survey 300 to 1,000 people every time. Instead, 50 interviews are usually enough in most marketing situations.
I used a snapshot survey for a large software manufacturer to evaluate an industry event they created. We interviewed 50 attendees before and after the event, and the results clearly showed improvements in awareness, understanding of key messages and other measures. Talking with more people would have been a waste of time and money.

5. Contacts (Did our messages motivate anyone to do anything, like call an 800 number or respond to an e-mail offer?)
Tracking “contacts,” such as call-ins or requests for information, is usually easier than awareness or attitude assessments, because this type of behavior takes place right in front of you—in your store, on your phone, in your mailbox.

6. Sales (Did we get any new customers as a direct result of our marketing efforts?)
The process of further qualifying prospects and converting them into new customers follows something I call the “sales cookbook.” This approach gives you a recipe for mixing the right ingredients in the correct order: from contact to appointment to sale. Obviously, the more people you move through your pipeline, the greater your overall results. And slight improvements in your closing ratios (between each step of your process) can dramatically improve your results.

7. Lifetime Customer Value (What is the value of a new customer over the lifetime of its business with our organization?)
A lot of marketing focuses on finding new customers. It’s an acquisition mind set, hard to sustain and can trick managers into thinking that the faster they acquire, the faster they will grow. The “lifetime customer value” philosophy says you should focus marketing on all that a customer could represent to your organization: revenue, referrals, advice on new products, help in defining your brand image and much more.
You can’t measure all facets of your marketing. If you tried, you would spend all of your time and money collecting data and do little to market your products. It’s better to pick a combination of metrics to focus your MROI and use the Snapshot Survey to collect the right amount of feedback to measure and maximize your results.

The Snapshot Survey: Quick, Affordable Marketing Research for Every Organization is available at www.kaplanpublishing.com.