ROI: Do Not Wait Too LongDo not wait too long to get started using ROI metrics. Start small and build gradually, but do get started. I emphasize this because not measuring your ROI can pose a risk. It is the risk that management may unexpectedly ask you about your ROI. Ideally, you go to senior management when you are ready. If senior management comes to you, it could result in embarrassment or worse. One of the reasons I put up this web site was to give this particular warning to my fellow marketers. To try to make it more likely that you do not wait too long. Learning about AmbushesMany years ago, an advertising agency hired me to conduct a private, in-house seminar on advertising metrics. After my presentation, I took questions, as usual. One account executive asked, "After you've set up a measurement system, how soon can you prove that your advertising program is profitable?"I answered, "From a few months to two years, depending on the nature and scale of the ad program." Then she asked a totally unexpected follow-up question: "What could you do in two days?" "Almost nothing," I answered. "But why would you give yourself only two days?" She explained that the president of a client company had suddenly asked if the advertising program was profitable, and he had demanded an answer in two days. The advertising director couldn't respond in only two days. The agency, as much as it wanted to protect its client, couldn't respond in two days. When the two days had passed, the president immediately slashed the advertising budget by two thirds. When I heard this story, I didn't know if it was unusual or typical. But I wanted to find out. A Pattern Is RevealedSo, for the next two years, every time I gave a speech, I asked my audience this question:"Have any of you ever been asked to prove that your advertising or PR program was profitable? Raise your hand if you have." In every audience, there was at least one person with a story to tell. I asked that person (or those persons), "How much time did management give you to come up with the profitability numbers?" Audience after audience, the answers always ranged between "one day" and "one week." None of these people were able to respond. Like most ad/PR people, they had not accumulated any raw measurement data over the years. They could make up for that, but not in one day or even one week. Why do senior managers want these profitability numbers so fast? Why don't they give you at least a few months to accumulate some raw data? Because. . . They Think You Already HAVE the Data!When senior managers ask for profitability numbers, they assume you have years of raw data on hand, and all you have to do is analyze the data and write a report. One day's work, they think. They do not wait patiently.In a typical company, most departments actually do routinely accumulate results-measurement data of some kind. For example, suppose the president of an industrial company suddenly asks: "How much aluminum scrap did we sell last year, and how much did we get for it?" The manufacturing VP or the CFO may not have the answer on his desk at that moment, but his department does have the raw data that would enable a prompt response. So, senior managers just assume that everyone has raw data. They don't know that most advertising and PR people are exceptions to this rule. Do you see the danger in this? If some day your president wants to hear about your profitability, you might not have time to respond. That's why I'm urging you: do not wait. Start building a measurement system before you are asked.
Dig the well before you are thirsty. ~Chinese Proverb For more insight into the CEO's perspective, see
CEOs
and
Attitudes.
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