Are Your Marketing Efforts Helping or Harming ROI?

Are Your Marketing Efforts Helping or Harming ROI?:

First, do no harm. This well-known aphorism is fairly easy to understand as it applies to medicine: Don’t make the patient any worse off than he or she already is. But in marketing this is a little harder to explain. To say that, “communications programs should produce results at least as good as if nothing was done at all” is a start. But most marketers would want to go beyond this to say that for the dollars I invest in marketing efforts, I expect a positive return on that investment, because otherwise I would be better off doing nothing at all. Because ROI is the definitive measure of success in business and the Holy Grail of marketing, all of us had better make sure we can measure it accurately.

A recent study conducted by IBM reports that almost two thirds of CMOs think ROI will be the primary measure of their marketing effectiveness by 2015. But how do we measure this? I’d add to that and say, “With a control group!” Every campaign or program should incorporate a control group into its design. The control group is a randomly selected measurable percentage of customers or prospects who met all of our selection criteria, but we did not market to them because we wanted to benchmark the rate of returns, in the form of purchase dollars, had we not done any communications to them at all. This allows us to determine the incremental revenue created by our communications and marketing efforts.

Another way of saying this is we factor out sales and revenue that would have occurred anyway, enabling us to attribute the increase in sales to our marketing program. The colloquialism that is sometimes used here goes like this: “Even a blind squirrel will find a nut sometimes.” Translation: the number of nuts that a blind squirrel might find equals the number of sales that would have occurred without any marketing effort (i.e. sales that occurred in the control group). The control group is key here and we spend a great deal of effort convincing our clients to incorporate a control group into their programs.

If your organization has adopted a measurement philosophy, then you probably already design control groups into your campaigns or the campaigns you design for your clients. If you do not, you will be faced with changing the culture of your organization toward one of analytics and measurement. Measuring your marketing programs is the only real way of knowing whether your efforts are improving ROI or harming it.