For years, we’ve had ROI (Return on Investment), which has been applied – with mixed success – to various endeavors. And I’m all for calculating a financial return on a specific investment – WHEN IT IS POSSIBLE to actually show that a specific endeavor led to a specific business result.
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. Calculating financial returns on specifics, in other words, can be a murky science at best – and a ball-and-chain at worst.
For years, people have tried to pin the ROI monster on training and development endeavors. And while there are a relatively few instances where you can make an accurate calculation of return on specific training interventions, by and large, training remains an article of faith in business – you simply know that trained people will do better than folks left to themselves. It’s the right thing to do.
Companies that are joining the conversation in social media are making a step of faith. Metrics are pretty immature in this field, but: does it make sense to listen to individuals in the marketplace? Is it smart to adopt a long-term strategy of engagement with customers at every level (including social platforms)? Is using every targeted means of communication an (overall) wise thing to do? The answer to all of the above, for many companies, is YES. So what if you can’t count which blog post or tweet led to which nickel in the bank??
There are some things that you simply believe are productive and effective even if you can’t prove them with a calculator. And, like Nike, you just do it.
What’s the ROI of investing an hour or two helping someone out who is on a job hunt? Maybe nothing. Or maybe, that person will open up a fabulous business opportunity downstream because they remember you. If you believe there is a return on helping people, because it’s right and because that’s how you’d like to be treated, then you make that investment without counting the nickels.
The fact is, sales happen and business grows primarily through long-term, multi-channel delivery of customer value and the marketing message. That’s the brand. It’s very difficult, in many cases, to calculate the ROI of one or more specific tactics. One incident of pleasing a customer may cost the company a few bucks in direct ROI, but another incident may lead to $100,000 of downstream value. Nordstrom’s prospered by going overboard on valuing the customer, even at the cost of a few dollars here and there…and that’s the point. They prospered.
What’s the ROI for Chick-Fil-A choosing not to open on Sundays, providing a day of rest for all employees? We don’t know, because it’s a decision based on doing what’s right, not based on spreadsheets and metrics. One thing’s for sure, though – you don’t find Chick-Fil-A looking for a financial bailout. Instead, they are growing (and, incidentally, doing a lot of social and charitable good as well). Perhaps more focus on the ROI in doing right should trump some traditional categories of financial calculation – as we are now painfully aware with the mortgage industry.
If you’re delivering quality, adding value, communicating effectively, trying new ways to reach people, and creating a growing reputation of excellence in the marketplace, you’re likely to get a good RoE (Return on Everything). Because all of it matters. Give out creative swag, use good technology, make all your communications top notch, and don’t get too uptight about calculating ROI for every bit and piece. Measure what you can, but embrace the intangibles also. If you’re running for the touchdown, you don’t need to be too distracted with counting the yardage markers!