Optimizing ROI is the name of the game for businesses because ROI is the metric most often used to evaluate employees, as well as the way the market evaluates firms.
Return on Investment is a function of both the returns from business activities and the cost of those activities. So, you can optimize ROI by either reducing costs, improving returns, or a combination of both. When we talk about optimizing ROI from a marketing perspective, we are commonly most concerned with improving market returns over reducing costs. This reflects a statement I once heard:
No business ever shrank to greatness
which is the mantra of a book by Dwight Gertz and João Baptista, Grow to be Great.
So, let’s make a list of those marketing actions likely to optimize ROI, shall we? (BTW, I’m listing these in terms of the impact on ROI, in my opinion, you’re welcome to disagree in the comments. I also may have left out a few of your favs, so add those as well.)
- A sound marketing strategy and flawless execution
- Contingency plan for when implementation of product isn’t flawless
- Right metrics to guide decision-making
- Superior product/ service
- Right price, right time, right place
- Superior customer experience
- Effective brand communication
- Optimized channel performance
Are you optimizing ROI with these 8 tools?
In my 20 years of experience, I find most business aren’t optimizing ROI — that they only use a handful of these tools, mainly focusing on those toward the bottom like advertising and channel metrics, or they spread these 8 tools over different functional areas and they aren’t well-coordinated.
Let’s take a look at the top ways for optimizing ROI:
A sound marketing strategy and flawless implementation
The marketing plans for many firms are pretty basic.
In some cases, it’s because firms don’t really understand marketing and don’t realize that marketing is SO much more than advertising and sales.[Tweet “Marketing is SO much more than advertising and sales”] In other cases, it’s because they didn’t do a good job with research, so they’re developing plans based on what they think, rather than what is.
Finally, sometimes businesses do a great job of planning, but implementation falls apart because they either never PLANNED sufficiently for flawless implementation effectively or because there weren’t effective in coordinating efforts so everything came together seamlessly.
If you’re not optimizing ROI with effective marketing strategy, here’s a guide to get your going in the right direction when it comes to developing strategy.
A contingency plan
Things aren’t always going to go right — it’s just a fact of life. But, there’s no excuse for not making plans to overcome failures so you mitigate the damage.
The faster and more effective you are in making customers whole after a failure, the better off you are.
With the rise of digital, everyone works 24/7 365, at least in the minds of your customers. Many businesses set up hours on Twitter (and maybe Facebook) when someone is available to handle questions or complains. Better yet, some businesses are proactive in seeking out negative comments or queries to handle them — most complaints are made in a social context rather than to the company.
Thorough contingency planning is #2 on my list of tools to optimize your ROI because it has a huge impact on customer evaluations. Let me give you an example:
A flight heading to a resort in Mexico encountered serious delays. Then, the crew discovered they didn’t have enough food for all the passengers on board. Near riots broke out on the plane with lawyers signing passengers for future class action lawsuits against the resort, even though the actions were beyond their control.
Getting wind of the problem, the resort manager rounded up a mariachi band and food to greet passengers as they disembarked from the plane. Passengers were then whisked to the resort in a fleet of limos, all courtesy of the resort.
Instead of suing the resort, passengers reported this as their best vacation ever.
As you can see, contingency planning often involves going beyond to make up for errors, even when they were beyond your control, and empowering employees to make arrangements for compensation without lengthy approvals and bureaucracy.
Using the right metrics to guide decision-making
First, your marketing plan includes goals and objectives. Your metrics should mirror those goals and objectives.
For instance, here’s a list of KPIs (Key Performance Indicators) designed to monitor a firm’s social media performance based on likely goals and objectives for the campaign.
Social Media KPI's
A first step in assessing the performance of your social media campaigns is having a list of metrics to monitor and KPIs (Key Performance Indicators) top the list of metrics to follow.
Share of Voice
Reflects the percentage of mentions in your industry are your brand. Use a tool such as social mention to track your mentions and those of your major competitors.
Remember, goal achievement likely results when customers successfully perform a series of actions.
For instance, in the graphic to the left, notice the visitor likely visits several pages before becoming a lead. At each stage, the prospect may decide this just isn’t for them and leave. So, you want metrics on how visitors move through the site, stages where they drop off, and time on pages to help guide you to effective decisions that optimize ROI for this effort.
So, you want metrics reflecting intermediate steps leading to goals.
But, metrics aren’t enough. You need to ask the right questions to optimize ROI. As an example, I always check client’s metrics first thing in the morning. Today, I noticed a serious spike in visits to one client’s site. Instead of just being grateful for the spike, I investigated what worked so well that it increased visits so I can product more of what’s working in the future.
First, I investigated the source of the spike — notice the table. This is a relatively new site, so the traffic is low and we’re not getting much from social yet. But, the sources of traffic fit the pattern for prior days, with the very big exception that organic search was SOOO high. That explains the spike in traffic.
But, why did we get so much organic traffic — thank you Google?
Since Google no longer provides the keywords sending traffic to your site, it takes a little detective work to discover why you’re showing up in organic search more frequently. So, I headed over to view visits by page. What I saw was that each page was getting a little more traffic rather than any single page accounting for the entire spike.
So, digging deeper I think I found the reason for the spike. Site speed. I’ve been working on optimizing images and such to improve the speed and it looks like it’s working — the page now loads in less than 6 seconds, except on Internet Explorer, which isn’t used much any more.
Now I can demonstrate to my client that all the money he paid for site optimization paid off. Happy client.
Superior product/ service
Too many businesses leave marketing out of discussions of product/ service, especially when the product is tech. They figure marketing people don’t have anything to contribute to that discussion.
You can’t make a silk purse out of a sow’s ear — or so the old saying goes and it couldn’t be more true than in product design. No amount of marketing, no matter how much you spend or how good you are, will overcome a serious problem with your product or service.
So, marketing needs a seat at the table early in the product/ service design process to ensure the resulting product performs to meet customer expectations. And, that doesn’t mean it work, it means customers find the product useful, easy to understand, and easy to use.
Years ago I worked for a company where marketing was expected to support a new product after it already existed. We queried current customers who said they didn’t want the product, even though it was a vast improvement over their existing product, because they viewed the improvements as over-engineered — adding additional costs and chance for breakdown without provide any benefits to the buyer. Not believing us, the company produced and sold the product. It never hit break-even.
Well, I knew we’d never make it through all 8. But, I think we hit the biggies. I’ll try to pick up on the next batch in a future posts.
Let me know your thoughts in the comments below.
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