It’s Time to Rethink Marketing ROI

Strategy

ROI - Risk vs Profit

Let’s say a customer, we’ll call her Mary, redeems a 20% off coupon you mailed to her. Your ROI report is going to attribute that sale to the mail campaign. Get enough of those redemptions and you might just decide your mail is working so well that you reallocate budget dollars to mail.  But, is that a good decision? In yesterday’s single-channel marketing world, it is. In today’s multi-channel world, though, it could be a mistake.  Here’s why…


In this scenario, your ROI report doesn’t reflect that the 20% off offer you mailed might simply be a “collateral redemption” driven by a different channel.  It could be that your Facebook marketing delivered a “like” from an existing customer who happened to be “friends” with Mary. When Mary saw the “like,” she visited you on Facebook to learn more. She liked what she saw, but wasn’t ready to buy so she didn’t pay much attention. A few weeks later, Mary was online researching something when she saw your pay-per-click ad. She remembered the “like” on Facebook, so she clicked the ad and visited your website where she opted in to receive special offers.

Two weeks later, Mary saw that another Facebook friend “liked” you and thought “I should try that, it must be pretty good.” Mentally, she made a note to stop by the next time she was in the area. Coincidentally, she made this mental note on the same day you dropped the mail piece with the 20% offer. Your mail piece arrived four days later — the day after Mary scheduled an appointment near you and made a note to swing by and check you out.

So, what was it that drove Mary’s response? Was it your direct mail, Facebook, or search marketing? If you’re still measuring ROI as if you’re marketing in a single-channel world, you’d answer direct mail. This scenario reveals that’s likely not accurate and might just send you on an unpleasant trip down the proverbial rabbit trail.

Redemptions are an important analytic, but in today’s multi-channel world they don’t provide a complete picture of your ROI.  To get that you’ll need track customer behavior, not just redemptions.

  • Tom

    So, what is the answer? How do I measure ROI? How do I allocate my marketing/advertising dollars?