How Do You Spell ROI?

Return on Investment: Everybody’s talking about ROI, but not everyone agrees on what it is. Given the various ways that I’ve heard marketers bandy about the term ROI, I wonder how many of them really understand the concept, and how many just use the term as a buzzword. There’s certainly a disconnect between the way many marketers use of the term and the traditional definition embraced by CEOs and CFOs.

Return on Investment: Everybody’s talking about ROI, but not everyone agrees on what it is.

Given the various ways that I’ve heard marketers bandy about the term ROI, I wonder how many of them really understand the concept, and how many just use the term as a buzzword.

There’s certainly a disconnect between the way many marketers use of the term and the traditional definition embraced by CEOs and CFOs.

A study by The Fournaise Group in 2012 revealed that:

  • 75 percent of CEOs think marketers misunderstand (and misuse) the “real business” definition of the words “Results,” “ROI” and “Performance” and, therefore, do not adequately speak the language of their top management.
  • 82 percent of B-to-C CEOs would like B-to-C ROI Marketers to focus on tracking, reporting and, very importantly, boosting four Key Marketing Performance Indicators: Sell-in, Sell-out, Market Share and Marketing ROI (defined as the correlation between marketing spending and the gross profit generated from it).

So CEOs clearly want marketers to get on board with the true definition of marketing ROI. You can calculate marketing ROI in two different ways:

1. Simple ROI:
Revenue attributed to Marketing Programs ÷ Marketing Costs

2. Incremental ROI:
(Revenue attributed to Marketing Programs – Marketing Costs) ÷ Marketing Costs

Either of these definitions is consistent with the classic direct marketing principles of Customer Lifetime Value (the “R”) and Allowable Acquisition Cost (the “I”).

Back in 2004, the Association of National Advertisers, in conjunction with Forrester Research, did a survey on the definition of ROI where respondents could select from a menu of meanings. The results showed that there was no definitive definition of ROI, but rather, that marketers attribute up to five different definitions of the term and many use it to refer to many (or any) marketing metrics.

Member Survey of Association of National Advertisers on meaning of ROI
(multiple responses allowed)

  • 66 percent Incremental sales revenue generated by marketing activities
  • 57 percent Changes in brand awareness
  • 55 percent Total sales revenue generated by marketing activities
  • 55 percent Changes in purchase intention
  • 51 percent Changes in attitudes toward the brand
  • 49 percent Changes in market share
  • 40 percent Number of leads generated
  • 34 percent Ratio of advertising costs to sales revenue
  • 34 percent Cost per lead generated
  • 30 percent Reach and frequency achieved
  • 25 percent Gross rating points delivered
  • 23 percent Cost per sale generated
  • 21 percent Post-buy analysis comparing media plan to actual media delivery
  • 19 percent Changes in the financial value of brand equity
  • 17 percent Increase in customer lifetime value
  • 6 percent Other/none of the above

While I couldn’t find an update of this study, clarity around the definition doesn’t seem to have improved in the last 10 years, given the results of The Fournaise Group survey. And the increased emphasis on digital and social media marketing in the last 10 years has probably made it worse. The Fournaise Group found that 69 percent of B-to-C CEOs believe B-to-C marketers now live too much in their creative and social media bubbles and focus too much on parameters such as “likes,” “tweets,” “feeds” or “followers.”

It’s time for marketers to stop using ROI as a buzzword for any marketing metric. You can’t measure and improve something if you don’t clearly define it.

Ladies? Who You Calling a Lady?

The email subject line had so many things wrong with it that I just had to investigate further. “Advertising to ladies is easier then (sic) you thought.” The offer was for an email list (I think—the email itself was so poorly designed it was hard to tell) but the term “ladies” felt offensive somehow. Perhaps the problem was in my head

The email subject line had so many things wrong with it that I just had to investigate further.

“Advertising to ladies is easier then (sic) you thought.”

The offer was for an email list (I think—the email itself was so poorly designed it was hard to tell) but the term “ladies” felt offensive somehow. Perhaps the problem was in my head. A previous employer had always approached any group of women gathered in one place and would slowly say, “Well… hello.. ladies…” in such a derogatory tone, that we would all cringe.

Or perhaps the problem is that my fairly strict British/Canadian upbringing always led me to think of the term “ladies” as a throwback to the 18th Century.

The email continued its pitch for the availability of lists of individuals “… awaiting offers related to ladies, men, zoomers, students, sports …”—and there was that term “ladies” again. Is it just me who finds that term offensive?

I checked out the definition at freeonlinedictionary.com, and it seems my negative reaction may be well justified. While there were 15 different descriptions, the first was that a lady is, “a well-mannered and considerate woman with high standards of proper behavior.”

While not offensive, I’m pretty sure that doesn’t describe the available target audience because that would be a pretty small list circ. But wait … there’s more …

Perhaps this particular marketer felt they had a list of women who met one of the other definitions of lady:

  1. A woman regarded as proper and virtuous.
  2. A well-behaved young girl.
  3. A woman who is the head of a household.
  4. A woman, especially when spoken of or to in a polite way.
  5. A woman to whom a man is romantically attached.
  6. A wife.
  7. A general feminine title of nobility and other rank
  8. The Virgin Mary. Usually used with Our.

No, I’m fairly confident that none of these applied (unless it was lucky No. 3)—but the most interesting insight was in the Usage note: The attributive use of lady, as in lady doctor, is offensive and outdated. When the sex of the person is relevant, the preferred modifier is woman or female.

Whew … so it wasn’t just in my head!

As marketers, we need to choose our words carefully. Make sure they adequately and accurately express our intended meaning and, most importantly, don’t offend anyone.

Especially us ladies …

What Is ‘Omnichannel’? And Is It Different From ‘Multichannel’?

This is the year of “omnichannel” based on the amount of occurrences that I’ve heard this term. I’ve never been a fan of jargon—but I sure use it enough in some of my clients’ communications, often at their request. When I comply, I usually advise that a short explanation may be in order upon first reference to help define whatever the term is and to set a marketplace expectation. So what does “omnichannel” mean to me?

This is the year of “omnichannel” based on the amount of occurrences that I’ve heard this term.

I’ve never been a fan of jargon—but I sure use it enough in some of my clients’ communications, often at their request. When I comply, I usually advise that a short explanation may be in order upon first reference to help define whatever the term is and to set a marketplace expectation.

Often enough, analyst firms rush to fill the void too, explaining such terms as “big data,” “customer experience,” “customer engagement” and the like.

The good thing about being marketers and communicators is that we are all also consumers and business people and are able to put our own perspectives on the customer side of the equation. We all recognize we have more power now as consumers (though we’ve always had ultimate power in the wallet), and that what was once pure hit-or-miss with advertising (the consumer side of spray-and-pray) is more often, today, data-driven dialogue with the many brands we use.

So what does “omnichannel” mean to me, as a consumer?

  1. That a brand that I choose to use—and possibly have a data-based relationship with—will recognize me uniquely as a customer, no matter what the channel.
  2. That the data such brands may have about me is shared throughout the organization, so that all parts of the organization—sales, marketing, customer service, finance, in-store, Web, mobile, social, partners, service providers—can act in coordination.
  3. That I am respected as a customer and treated royally. Of course, this is about the products and services I buy and use. It is also about extending to me notice and choice about channel preferences, and possibly subject preferences, and that all data about me is secured.
  4. That I actually expect (and in some cases, demand) that brands actually use data about me to make brand messaging and content more relevant to me. If you collect or track information, please use it—wisely!
  5. That if I’m not yet a customer—that is, if I’m still a prospect—that points 3 and 4 still apply from a prospect’s perspective. I understand points 1 and 2 are about customers, but even here, some elements of prospecting require careful coordination to respect my time.

On a practical level, this “omnichannel” expectation requires brands to remove channel and function silos on the brand-side and walk the talk on customer relationship management, customer-centric marketing, customer experience, lead nurturing and other advertising and marketing processes that reflect today’s brand-customer dialogue.

It also requires that marketers invest in data governance, data quality, data-sharing technology platforms, analytics, preference centers, multivariate testing, employee and partner training and strategies to work toward this omnichannel vision, that is, from this consumer’s perspective.

Suffice to say, multichannel—interacting with customers in multiple channels—is a journey stop to omnichannel. Omnichannel is smart marketing, realized—and very hard work. As a communications professional, I’ll be attending several omnichannel learning venues this Spring to see how brands are trying to make this vision happen.

For those in the New York area:

On April 23: http://www.dmcny.org/event/2013-breakfast-series-3 (Direct Marketing Club of New York)

On May 22: http://www.dmixclub.com/CMS_Files/index.php (Direct Marketing Idea Xchange: This is an invitation-only event for qualified senior-level marketers. Please reach out to me if you would like to be invited.)

On June 10: http://www.imweek.org/ (Direct Marketing Association, in cooperation with eConsultancy)

Craig Greenfield’s Redefining Performance Marketing: 3 Ways to Turn Earned Media Insights Into Paid and Owned/Organic Gold

It’s quickly becoming common knowledge that earned media outlets, if properly mined, can provide unique insights into what resonates most with marketers’ audiences. With the proper tools and techniques, marketers can begin to answer questions such as the following:

It’s quickly becoming common knowledge that earned media outlets, if properly mined, can provide unique insights into what resonates most with marketers’ audiences. With the proper tools and techniques, marketers can begin to answer questions such as the following:

  • Who’s talking about your brand?
  • How’s your audience discussing your brand?
  • What themes, topics and links permeate the conversation?
  • What are users querying about your brand or the vertical in general?
  • What’s the phraseology they’re using?

Simple collection methods include using social listening tools to understand customer conversations on social sites; managing profile pages on Facebook and/or Twitter to gain customer feedback; and mining query data to get a better idea of customer intent. However, to turn earned media insights into paid and owned/organic gold, brands need practical tactics for leveraging and applying the information.

Moving from insights to action

Earned media can create more effective paid media campaigns through the use of social listening tools to build out keywords for a client’s paid search campaign. Performics has done this for a number of clients, specifically in the apparel vertical. After a retailer’s recent product launch, Performics used its proprietary social listening tool to identify top themes that its client’s customers were discussing on social sites.

Performics focused analysis on brand-related conversations, and then filtered those posts by topic to only view conversations around the new product line. The retailer was able to identify all relevant phrases and terms, such as “military jacket” and “bf blazer,” that customers associated with its new product launch.

To assess the value of these newly identified phrases/terms, the retailer took into account the sentiment, frequency and reach of each. Performics’ listening tool assigns sentiment — positive, negative and/or neutral — to every customer post collected. Any customer post or tweet, for example, that included the term “military jacket” was assigned a sentiment value. The posts referring to “military jacket” were generally positive; therefore, that term was assigned positive sentiment.

The social listening tool also helps evaluate the influence of those selected phrases/terms. The retailer was able to assess the value of “military jacket” compared to other terms by understanding the number of customers using this term (frequency) and the number of followers exposed to the term (reach). The tool helped to quickly identify the most valuable phrases/terms relevant to the brand and product that were appearing within customer conversations. The phrases/terms then became the baseline for building out additional keywords for the new product launch.

Varied application of insights

How can marketers apply information gained from earned media? Three suggestions to get started include the following:

  • keyword buildout for search campaigns (paid and organic);
  • content campaign development; and
  • creative development.

As more consumers take to social sites to converse, performance marketers should continually be mindful of ways to make insight from these conversations actionable.