Tuesday, December 7, 2010

Measuring ROI (or in other words... Did it Work?)

John Wanamaker of Wanamaker's Department Stores in Philadelphia is credited with the famous quote decades ago,

"Half the money I spend on advertising is wasted. The trouble is I don't know which half."

Since that quote marketers have spent billions of dollars trying to measure the ROI (return on investment) of their marketing and advertising efforts. Do not follow in their footsteps.

I repeat, Do Not Follow In Their Footsteps!

Trying to calculate the ROI on your advertising is like trying to decide which butterfly in Mexico caused the tornado in Texas. The variables would make a meteorologist's head spin.

Oh, but the experts say measuring ROI for an event or coupon is easy. Oh yeah?

Cause of Success
Was the success of your last event because you posted it on Facebook?
Or was it because you posted on FB at the optimal time; two hours earlier or two hours later and no one of any influence would have seen it.
Or was it because you ran into a friend at the gas station and mentioned the event to her while she was heading to lunch with her very influential girlfriends?
Or was it because you put up the in-store signs just in time for the newspaper reporter who happened to be out shopping on her lunch hour to see them?
Or was it because the road two blocks over was closed for temporary repair and all the traffic came down your street all three days the tent-sign was out on your sidewalk?
Or was it... you get the idea.

(Look, you can come up with a list of excuses twice that long for why you failed, why are you so willing to credit your success to one thing?)

(Note: I didn't address coupons because I don't believe in them, but a similar list of variables can come into play making one coupon offer work while a similar offer fails.)

Marketing doesn't happen in a vacuum. Nor should it.

Cover Your Bases
If you are hosting an event at your store, you need to be plying every avenue you can muster to draw your crowd. Facebook, Twitter, email, in-store signs, and press releases at a minimum (because they are basically free). Radio, TV, newsprint, direct mail as the budget allows. And networking, networking, networking. Get your butt out in public and talk. The more you do, the more success you'll see. And the harder it will be to determine which method made the most difference.

So don't worry about figuring out which method worked best.

First, you never really know. I have on my sign-up-to-win forms a question, "How did you hear about this event?" At one event 30% circled newsprint - even though there wasn't a single mention in any newspaper!

Second, it doesn't really matter, because you can't fully factor all those variables listed above. So anything you learn above and beyond the simple lessons that have already smacked you in your face is no guarantee to move the needle the next time.

Third, you don't have the budget to properly test your ROI.

Lies, Damned Lies, and Statistics
Let the MBA's falsify their stats to prove whether one form of marketing works better than another. The reality is that if you use your chosen media right, they all work. And if you use them wrong, they all fail. And the best laid plans can be derailed by a snowstorm, an orange cone, a bad news day, or a butterfly in Mexico.

Don't waste too much time trying to calculate ROI. If you're hosting an event, pick the marketing where you feel most comfortable. Put your energies there with all your conviction and the results will follow.

Then get out there and sell the dickens out of the crowd you draw!

Merry Christmas!

-Phil

PS Some of you might think this runs counter to my discussion of mixed media. That discussion was geared towards long-term branding. This is about short-term event marketing. Different beasts requiring different methods.

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