Two Ways to Measure Marketing ROI

Today's marketing triple is actually a marketing double, because I want to talk about return on investment - ROI. I've found that there are two ways that you can measure marketing ROI and which you choose makes all the difference in the success and the ease of doing it.

Financial ROI

The first one you're already familiar with I'm sure, and that's the classic financial ROI, and that's measuring the return on investment of your marketing. In financial terms - currency, usually focused on profit or margin - very important of course, but it's also very difficult in marketing. And the main reason why is you're starting in terms of dollars, let's say, that dollar investment in your marketing. You need to convert that into the actions that you take in the market. And then the behaviors that occur because of what you did - which are not initially usually financially based - and then you have to convert it back into dollars and cents in order to complete the equation.

Now, there are exceptions. If you have a very transactional B2B sale, there might be a way to measure those sales as your ROI. And in that case, financial is a really good way to go. Also, if you're looking at your overall program and you want to see the cumulative impact of your marketing program over a long period of time, financial ROI is probably the best way to do that, and it's worth the effort and time to put together that complex, equation, translation to, and conversion to get that information.

Behavioral ROI

But if you're measuring a program - a campaign, an event, an advertisement - I would like to suggest that you use another form of ROI, and I'm gonna call it behavioral ROI. You could also call it tactical ROI. And this is saying that if the goal of my marketing program is to get a change of behavior in my customer - my prospect - then the best thing to measure, or the most efficient thing to measure, and maybe the most effective thing to measure is the change in behavior, what happened, right? So in that case you're not going to have decimal points after this. It might just be an observation. Did they do this or did they not do it? Or it could be a very simple collection of leads, or something like that.

The focus is on what your prospect or customer is actually doing. This measurement can often be a pass/fail measurement, But again, the purpose is not to tell your financial team how this affected the bottom line. The purpose is to say, "This thing we're doing right now, I can measure to see if it was effective or not, and I can adapt and change quickly to make it work."

Because let's face it, in B2B, your sales cycle could be a year or longer. And if you wait to see the impact on the bottom line of the marketing you do, you will constantly have a huge lag in your feedback to your program, and you won't really have an effective way to adapt and improve it.