4 Traps Marketers Fall Into When Trying to Measure ROI

January 4, 2018 Sam Melnick

There’s just no way around it: measuring ROI is one of the most challenging — and even mysterious — parts of a marketer’s job. Virtually every marketer needs to do it, but far fewer have it fully figured out.

In a recent webinar entitled Solving the Mystery of ROI, my colleague Jocelyn Brown and I attempted to do a little myth-busting and make ROI just a little less mysterious.

In this post, I’ll dive deeper into some of the most common traps I’ve seen marketers fall into when thinking about marketing ROI measurement. 

#1: Attempting to arrive at a single ROI number

The number one misconception that marketers have about measuring marketing ROI is that it’s possible to arrive it just one magic ROI number — a single general-purpose measurement that will be appropriate in every situation. 

That’s just not the case. To properly measure performance, marketers need multiple flavors of ROI measurements. 

This partial list of different types of marketing ROI measurements illustrates how there’s no such thing as a “one size fits all” number:

  • Aggregate ROI 
  • ROI by channel
  • Cost-per metrics
  • ROI by campaign
  • The overall return on marketing investment (ROMI) for the entire marketing department

We recommend that every marketing organization invest the time in defining a suite of ideal ROI measurements that makes sense for your business over the long term. 

#2: Forgetting the “i” in ROI

“Cool, but what did it cost us?”

Another very common trap many marketers fall into when measuring performance is focusing exclusively on the results side of the ROI equation. 

This might seem obvious — after all, ROI is a simple equation: results divided by investments. 

Yet most marketing organizations spend inordinate amounts of time and dollars on measuring the results side of the equation. And most marketing technologies simply can’t measure anything beyond the results side; they don’t have visibility into the investments side.

Measuring results is a worthy pursuit, but a measurement can’t be called ROI unless you consider costs.

#3: Not aligning with Finance

There are lots of reasons why marketers need to maintain a solid working relationship with their counterparts in Finance. ROI measurement is one of them.

Marketers rely on a strong alignment with the Finance side of the house to ensure their investment data is accurate, properly structured, and delivered in a usable way. After all, finance pros are the keepers of the company’s dollars and cents — the all-important “i” in ROI.

If you’re setting out to measure ROI, enlist the help of Finance early, and ensure to get their buy-in every step of the way. Having ROI numbers that are Finance-backed will go a long way towards building and maintaining marketing’s credibility within the company. 

Hortonworks is one company that’s got this figured out — read more here.

#4: Expecting technology to be a magic fix 

No marketer can succeed without the right mix of technologies. In our Marketing Performance Maturity benchmark research, one of the clear drivers of growth we identified was the integration of data across marketing technologies.

Still, it can be tempting to over-rely on these technologies. I’ve seen it happen many times: marketing leaders find themselves needing to prove the effectiveness of the money they’re spending, so they reach for a new technology. 

This might seem like a logical approach, but the new technology will probably not be the silver bullet they’re hoping for. 

That’s because marketing technologies are interdependent. No single platform does it all. Success of the technology you use to measure ROI depends on whether it can properly integrate with the other tech you use.

BI solutions, marketing attribution software, marketing automation and marketing performance management solutions like Allocadia are all examples of non-magical technologies that hinge on integrations with other marketing systems of record in order to be fully effective.

A typical trio of technologies for effective ROI measurement includes a CRM system (to measure results, such as closed deals); an MPM system like Allocadia* (in which costs are captured); and a marketing automation system (for customer engagement). 

*While I’m naturally a little biased, I think it’s worth noting that for any company serious about measuring ROI, spreadsheets are an outdated, inadequate tool to house the “i” (investment) data. 

Summing up

Microsoft and Red Hat are two Allocadia customers who’ve successfully tackled the ROI measurement challenge. Here are their stories:

In these articles, you’ll notice that even for billion-dollar tech powerhouses like these, ROI measurement is a matter of continuous evolution, with some work yet to be done. 

So, not to fear! ROI measurement isn’t simple, but it definitely is a goal well worth pursuing.

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