One of the biggest objections to working with ROI strategies in our business is that the mathematical formulae involved are so complicated—not just to calculate, but to explain. Glassy-eyed clients are never a good thing. Like us, they want the benefits of ROI measurement without the brain-stressing work that goes along with it.
So what is the answer? How do you provide an advertising or marketing return on investment to your clients that won’t leave you all tired, cranky and confused?
Return on Objective
This is a great method for agencies and their clients. Why? Because it is easy to explain, simple to understand, and much less burdensome to track and verify.
ROO is all about planning. You begin by talking with your client about campaign or project objectives. Do they want to increase traffic in stores? Are they looking to move more volume over the Internet? Do they need to boost dealer participation in pushing a new product? Whatever their goal, the marketing strategy should be tailored to help them meet it.
Once you understand the client’s goal, you can discuss what the agency’s goals should be. Don’t commit until you have time to research and gather some essential background info. Do your homework so you can commit to delivering specific objectives with confidence.
Say store traffic is the client’s goal. Learn what the level of store traffic was in July; you can’t tell how far you’ve traveled if you don’t know where you started from. How much does store traffic typically increase during a promotion? You also need some idea of what the typical sales curve looks like. Is a month enough time to increase traffic by a measurable degree? Would three weeks or six weeks be better measurement periods?
When you have the necessary background, don’t make vague promises about increasing store traffic. Say, “We will increase store traffic at these particular stores by 15 percent by August 30, measuring from the campaign launch date of August 1.” Never promise sales increases. Unless you plan to be personally in the store selling, you have no control over how well the merchandise will move, or how efficiently the sales staff will generate sales. It’s the client’s job to see that their sales people take full advantage of the increase in traffic. Above all else, be realistic. Set a goal you can confidently achieve through advertising.
After establishing your objective, build a marketing and advertising strategy that will meet the goal. Pick the correct media and promotion methods for your target audience. Research the competition to see if you will be competing for the same audience over the same period. Do in-store customer audits to learn what brings people to the store. And develop a creative approach that will act as the “bait” on the client’s hook. Then execute.
On the Right Track
Once the campaign is underway, you need access to traffic figures for those stores where you want to generate traffic. Make that clear in the initial meeting, when you set agency goals! If the client can’t collect this information or won’t share this critical information, don’t tie compensation to meeting objectives. Or, elect to track traffic yourself. You need this vital information to confirm ROO.
Here’s another tip: If you exceed the objective, the next time you set objectives, request a bonus scale for exceeding the objective by 3, 5 or 7 percent. And, if you really want to impress the client, help them coach sales people in how to make the most of the increased store traffic. If you can deliver sales as well as traffic with this “assist,” the client will be more willing to ask for your help in the sales channel in the future. Just don’t let them tie agency compensation to sales—too many outside factors can impact sales totals, from bad weather to insufficient inventory.
Properly executed, return on objectives is a win/win for clients and their agencies. ROO is a successful measurement method because it is entirely strategic. Other methods are merely reactive. ROO looks forward; ROI is always looking backward. Finally, ROO helps clients develop a mindset or cultural focus on objectives and planning, not on “fixing what didn’t work last time.”
See also ROO – And I Don’t Mean A.A. Milne