Steve, I liked the concept of RoW. Many times we're trying to quantify things that elude quantification, especially because as you point out, cause and effect (with hundreds or thousands of variables) is so hard to determine. Like you, I agree it's important to quantify where the marketing function is driving value, but it's pure foolishness to draw a correlation of 1 of our marketing efforts to sales, customer sat etc...

I suppose it is probably a bit expensive but if you can have the coolest coffee cup in someone's cabinet that changes when hot coffee is poured in, then they will think about your brand every day.

Alternative, would be a very, very cool design on the coffee cup. Anything to get it to be the favorite.

Is everyone like me and has a favorite coffee cup?

And, agreed, no way to quantify it but if you have cooler swag the world will beat a path to your door...

But you will not be able to measure it.

Neil - Maybe it's still early or maybe I'm easily confused. I'm not sure, but the points you make constantly return to ROI.

I think what you're getting at is refining how we define the return. Rather than looking at ROI immediately, we need to stretch the timeframe. Every good endeavor ends up on the balance sheet. As you point out: business opportunities down the line, better customer engagement, happier employees. They all boil down to growing companies.

While these efforts may be the right thing to do, they are determined to be right because they grow the business. Everything ends up on the balance sheet at some point or another. We just don't often know how.

@cory - you've got it exactly. Growth comes from a multiplicity of factors, endeavors, and variables. Over the long term. You have to be a marketing marathoner, in it for the long haul, doing a lot of things right over and over again. You'll have measurable success, but it's a Return on Everything.

Thank you, Steve. "Growth comes from a multiplicity of factors, endeavors, and variables." It's akin to saying that we can pinpoint exactly what makes us grow as individuals. Sure, there are specific events we can think of that gave us a boost, if you will, but overall the way we end is how we live our lives.

Yes the Chick-Fil-A example is a good example indeed.

Please tell me the return on investment for a logo. Return on Whatever should rarely be used in marketing, especially for individual tactics. You were spot on Steve, when you asked, “WHEN IT IS POSSIBLE to actually show that a specific endeavor led to a specific business result?”

Calculating RoW makes marketing a strictly numbers game and the practice leads to the fragmentation of your marketing plan. Is this part working? Is that tactic working? Success is not based on an individual factor but is based on the effectiveness of your plan as a whole.

I think that, frankly, there are many things in business that are not measured at all or not measured well. Even in, gasp, accounting...

That is the nature of business. However, accountants have come up with more officious sounding ways to deal with ambiguity (not ROW type things) so marketers need more serious sounding ways to deal with ambiguity.

We could learn a thing or to from the accountant...

Excellent points Mr. Woodruff.

It all comes back to the famous John Wanamaker adage about half the money he spent on advertising being wasted. (He just wasn't sure which half.)

Someone is always trying to figure out a way to "prove" that advertising work. But outside of certain types of direct response efforts, it's an incredibly inexact science. The more we try and make it exact, the more foolish our actions.

I often use the example of the one storekeeper who spends his days tyrannizing customers who try and grab a free peanut or grape from the barrel-- with big "No Sampling" signs everywhere-- and the storekeeper who freely lets customers sample, figuring that if they like it, they'll buy it-- or at least feel guilty after a while and try some.
And while the former is breeding resentment, the latter is building good will. But will customers choose him even if the price of his goods is a few cents more?
I'd like to think so, but can't say with certitude.
Though I'm sure he's a happier person and sleeps better at night.
Which is ROI in and of itself.

ufff.. good example other way to make good business is with good advertisements and in a correct way.

Regards,

Hardy Hernandez L.

Good stuff Steve,
I guess the answer lies in the fact that a single measure is impossible when measuring a multidimensional organism such as a business. For some reason we often want to know THE answer or THE best measure. In my view this over simplifies the real situation. I've sat in many management meetings trying to get to the bottom of performance only to find that it isn't a single answer but a kaleidoscope of actions which need to be viewed together to understand the mosaic of that business

@andee: "it isn't a single answer but a kaleidoscope of actions which need to be viewed together to understand the mosaic of that business" - well said!
@Alan: a fortune is waiting to be made on the "which half" issue!!
@jay - I wonder, though - can marketers make an effective pitch for business based on abstract concepts like "faith" and "excellence" and "multi-channel long-term effectiveness" - or is the nature of the beast that they/we are forced to appeal to short-term metrics in order to secure the investment?
@Neil - I suspect that accountant types really would dislike any mention of "ambiguity"!! No such cell in the spreadsheet!

"You have to be a marketing marathoner, in it for the long haul, doing a lot of things right over and over again." We need to turn all of this on its head and look at it from the customer persepective. When I worked for Peppers and Rogers Group, we talked about Return on Customer. Looking at customers as an asset, then measuring how that asset value grows or shrinks based on what we do in marketing with or TO the customer, can really help us keep our eye on building long-term relationships that will bring us business success.

I firmly believe that looking to the long-haul helps companies stay the course better, especially in this climate.

Great post, Steve!

Steve,

I've always thought it was a big arrogant of advertisers to assume that it was their ad, direct mail, day glow coffee mug etc. that triggered the purchase.

Just because I saw something on TV, got a postcard in the mail or clicked on a banner ad doesn't mean that was the triggering event. I might have already decided to buy a Toyota Celica and merely clicked on the banner ad to show a friend the car.

You get my point. Even the most measurable of tactics is at best, sort of measureable. Truth be told, human beings are way more complex than our abilities to accurately measure why they do or don't do anything.

Drew

Steve,

What I meant is that a much of accounting is not as scientific as you would think but the names of things in accounting never reflect that.

My point was that even though Return on Whatever is a good concept it should be given a more officious name. Accountants have lots ambiguity, just like marketing, but they always have a name for something that has gravitas.

Marketing should pick names for things with gravitas as well even if there is abiguity (Return on Whatever).

You would never go to a CEO and say our Return On Whatever (ROW) was X. You would come up with a better way to say it. Learn from the accountants. They have refined the art of making ambiguity sound credible enough for an annual report. Now, that's good marketing!

The problem is, the RoW mindset can inhibit people from making sound business decisions for the simple reason that something is the right thing to do. The green-tinted RoW glasses can be like handcuffs, preventing businesses from implementing healthy long-term strategies because of a compulsion to show short-term tactical dollar returns.

So, I guess it boils down to this: we do as much good stuff as we think will help advance our brand, and we look for Increased Business Over Time (IBOT)!

Well you certainly make a compelling argument for IBOT!

But I can't help thinking that all those CEOs who were told that marketing 2.0 was more measurable and cost-effective are eventually going to dig out those old emails with budget justifications and start asking some awkward questions. And when salespeople and account managers take the credit for the IBOT, the marketing leaps of faith might be cut tragically short.

I take your point about keeping your eye on the touchline (and being prepared to dodge the tackles and change course along the way). But aren’t the yardage markers are important too - there are always signs you can set upfront and, if you are consistently missing them, then you know not to hide from the uncomfortable truth that you're heading off track. Not necessarily hard returns in terms of money – but if you’re planning to engage customers, how many have you actually reached 6 months in? And the benefits aren’t only about helping shape the programme and keep it on track - our longest-running, most successful programmes are still going because we've been able to justify them in these kind of terms - right from month 1.

Steve,

Amen. And Drew, you too.

I often have thought the relentless pursuit of ROI was at times misguided, because it forces businesses to try and cram the immeasurable into a neat and tidy framework.

Business development, relationships, trust, respect, affection. They're all based in human elements that at times take a winding path to a sale, but as you so deftly put, are "articles of faith". Which makes them no less valuable, but harder to quantify on a spreadsheet.

Thank you, thank you. I'm saving this one.

Amber

@lindsay - good points. We need to keep a both/and perspective - the measurements that CAN be made SHOULD be made, but the square (& long-term) intangibles should not be beaten into a round hole.
@amber - so I guess we have a new way to apply the term "faith-based initiatives"! ;>}