Return on Investment Measures Even Great Marketers Forget to Analyze

Chief marketing officers are facing pressure to deliver results. Unlike those in the past, today’s marketing leaders must directly enhance sales and show clear outcomes. One of the toughest challenges they face is consistently proving return on investment. This puts marketing executives in a position where they must frequently justify their choices and requests for funding.

Ironically, not every marketing decision they make gets a lot of attention: Trade show budgeting often goes unnoticed in terms of ROI, even with a poor return. Eventbrite states that 55% of organizations reported maintaining their event spending (including what goes to trade shows) steady. It’s important to note that digital spending is also increasing.

Here’s the real kicker, though: Initiatives like trade shows and digital marketing efforts don’t always offer clear-cut ways to measure ROI. Just over a fifth of marketers tracked trade show attendance rather than sales (even though generating sales is the primary driver for exhibiting at those shows in the first place). Likewise, a recent survey of CMOs concluded that businesses still toss dollars into social media despite being unable to explain whether it works.

It’s a definite Catch-22 for anyone who’s supposed to defend the marketing department’s preferred vehicles. The only way to solve the problem? Figure out what ROI actually means.

Measuring the Right Metrics

If I asked you to provide the value of a bag of Granny Smith apples, how would you do it? Would you weigh the bag? Look at the apples’ retail price? Calculate their collective volume? In reality, you couldn’t provide an answer unless you understood what “value” truly meant. The same goes for ROI in business.

Measuring ROI involves collecting and analyzing plenty of metrics. In experiential marketing, for instance, key measures include engagement, impressions, consumer comments and feedback, and many others.

This is also true for “return on experience” — a relative newcomer to the ROI universe. ROE is the emotional connection a brand makes with consumers simply by telling a story in an evocative, engaging way. Think of Trader Joe’s with its free samples: The company invests in sampling instead of traditional marketing precisely because it believes in ROE. However, it’s safe to assume that the grocery behemoth knows how to track that metric.

Although ROE might seem challenging to quantify, anyone can figure it out by separating an event into two buckets. The first bucket looks at the “wooing” phase, which focuses on RSVPs and attendance. The second bucket focuses on what happens during the event, including social reach and shares, time spent at the event, and other factors. After gathering raw numbers, the CMO and team members can use predetermined formulas to quantify the ROE into a numerical ROI.

ROE has gained momentum as marketers become more skilled at attracting audiences emotionally. When it’s expertly measured, ROE leads to high customer lifetime value and more trust-enhancing word-of-mouth marketing. After all, 42% percent of shoppers distrust brands, and 69% aren’t moved by classic advertising gimmicks. Fortunately, we’ve known for a while that they’re much more open to WOM content generated by friends and influencers.

Never Settle for Vague Measures

Marketers often become stuck trying to validate their efforts using financially-based ROI measures that are difficult to pin down. Give these modern success-trackers a try. You’ll approach your marketing — and see your results — in a much more relevant way.

1. Determine ROE. Again, ROE begins with the buyer’s journey and lasts far beyond the purchase decision. It tracks the consistency of experience and offers chances for you to turn happy buyers into raving fans. Because it’s still misunderstood, plan on educating your C-suite and colleagues about ROE to make sure everyone understands how to track its power.

2. Measure brand awareness and purchase intent. Brand awareness looks at recognition and recall. Generally, it’s best measured through research techniques. However, the trick here is uncovering the relationship between awareness and purchase intent. After all, you might know that Ford trucks exist, but that doesn’t mean you’ll buy one. This means you’ll have to create a way to link awareness and subsequent purchases. For example, you could develop a ratio of expected purchases once your brand awareness reaches a certain level.

3. Track WOM. You win the golden ticket if you can get people chatting about your brand without prodding. Hitting the WOM jackpot doesn’t require magic (though it can seem that way). You just need to think creatively and strategically, à la Dollar Shave Club. The personal grooming company receives 50,000 WOM referrals monthly — all because it has generated such a tight-knit community of advocates. Consider how your brand can also develop more fanatics.

4. Evaluate brand affinity. When it comes to brand affinity, Ben & Jerry’s is a quintessential role model. Ice-cream lovers buy its cups and cones not only because they love the flavors, but also because they share the company’s values. Though Unilever now owns Ben & Jerry’s, the company still places 7.5% of its pretax dollars into corporate social responsibility efforts. Can you leverage your cultural values in certain campaigns? Consider how CSR could play a bigger role in your marketing.

5. Gauge each customer’s lifetime value. As you cull and register customer data, you’ll get a bigger picture of the lifetime value of your customers. This is certainly easier for online companies because they naturally have data right at their fingertips. However, any brand can figure out this metric. Of course, if you’re still having trouble, you can look at your Net Promoter Score, a buyer-engagement measure that predicts how apt a customer is to recommend your services to others.

The next time you’re asked for your marketing ROI, make everyone take a step back. Determining what ROI really means — especially in a digital- and experience-based world — is a critical first step. Then, come to a consensus on how you’ll track and measure your results to better determine next steps.

Want to learn more about efforts that make the cut in today’s competitive marketing arena? My book “Brand Experiences” explores this in depth. Download your free chapter here.