Posts Tagged ‘metrics’

ROI Is King

Tuesday, June 29th, 2010

At least that’s what “roi” means in French, “king.”  What does “ROI” mean to marketers?

I just saw the term used loosely again, in a feature article of B2B magazine.  A sophisticated marketer referred to his program to measure marketing effectiveness as his ROI program—you know, click-throughs, webinar sign-ups, landing page hits.  Aaaugh!

Why do marketers insist on using this term incorrectly?  It has a very specific meaning. Basically, ROI is the profits generated over and above the initial investment and expressed as a percentage of the investment. It’s a financial gain—not an increase in awareness, not market share, not the number of leads you get or click-throughs to your web site.

As marketers, we should be aware of the importance of language.  We should understand that precise wording makes meaning clear.  We should know that it’s critical to be accurate with words if we want to communicate with the best possible results.

Yet, we continue to misuse this term, Return on Investment.  Worse than sloppy language, its misuse demonstrates—no, trumpets!—our ignorance.  We must use the term carefully, because we need to interact with people in our finance department if we want to calculate ROI according to best practices in our own company. We need guidance from finance to determine what constitutes gross margin, how to define what our investment is, and so much more.

How can we ever hope to work with our finance department if we persist in using finance terminology incorrectly?  It’s a problem I’ve been kvetching about so long that I wrote a book, www.marketingroitruth.com.  Okay, I’ll get down off my soapbox.  For now.

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EMS Outsourcing and Trust

Tuesday, May 25th, 2010

Circuits Assembly recently had a couple blogs with some interesting topics:

1)  Nokia is outsourcing again after a year of pulling the work in-house.  This can only be good news for our business.

2)  Some opine that it’s best to manufacture electronic products in the region into which the product will be sold.

And what about outsourcing in the region in which electronic products will be manufactured?  Isn’t that a good idea?

With all the talk about globalization, do things just come down to the fact that people like to do business with their neighbor?  Is there some kind of comfort level we have when we deal with people in our own region?  Is there greater trust?

Because, in fact, trust is everything when you’re doing business.  Recently some financial and petroleum companies, among others, have seen trust in them erode.  It would be interesting to determine how lack of trust has affected their bottom lines on a case-by-case basis.  Because surely it has to some degree.  I’d like to see how much.

Then we could quantify the importance of trust and reputation.  And then we’d have an idea of the value of maintaining that reputation.  Which would make all of us in PR breathe easier.

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Chicken or Egg Metrics

Monday, April 26th, 2010

Which came first, easily measured marketing or a mandate for metrics?  It seems there IS more measurement just because there is more online marketing, where every transaction or event is trackable.

What has always worried me is that people are not necessarily engaging in the best integrated mix of marketing tactics, but rather, are skewing their mix toward online marketing because it’s easily measurable.  At least it was easily measurable before social media.

But in fact, I think people are skewing toward online marketing because it’s comparatively cheap.  And that’s not all bad.  Every indication is that traditional print and broadcast advertising—and also collateral material—is declining significantly as a percentage of marketing budgets.  These are historically high-ticket items that are also difficult to measure.

But even though online marketing is trackable, it’s still not that easy to collect pertinent data, analyze that data and apply that analysis to helping you achieving your objectives.  In other words, using data to help you move the needle.  Because data, we got.  Lots of it.

But do we have it for social media as well as web sites and e-mail campaigns?  Can we identify useful data and discard the rest?  Do we know how to use data to integrate our picture across all online channels?  And if we can get that picture, just how do we make it work for us?

If we can get those answers, it probably doesn’t matter which came first, the chicken or the egg.

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