November & December theme:
“Choose One Thing”
Posted in :  Brain Waves

If you work in a communications capacity for a B2B company with a complex sales cycle, you know how hard it is to find evidence of success for communication activities. Many companies believe that if it can’t be measured it doesn’t matter. These folks miss out on opportunities to build their businesses through tactics that are directionally right-on but are hard to measure with ROI.

Thankfully, there’s a better way to gauge the success of marketing communications than with ROI alone. You need to know about ROO or Return on Objectives.

First, Know What You’re Measuring

At Fathom, many of our first-time clients come to us for tactical execution. Maybe, they want a website redesign, trade show booth graphics or a new logo. No matter what the request is, we always ask how these tactics are contributing to a larger goal.

Fathom only takes on projects that we know will make a difference for our clients. Sometimes that means tying a tactic to a known objective. Other times, it means working with our clients to co-create ways to meet the company’s goals. Let’s use these helpful definitions from Forbes, and an example of how this works, to illustrate the differences. The following lays out a fictitious example from a civil engineering firm.

  • goal is a broad primary outcome. Example: Grow the firm’s bridge design business by 50% within the next 3 years.
  • strategy is one approach the firm will take to achieve that goal. Example: Persuade buyers in New England that their bridge building approach is the most effective solution for the Northeast.
  • An objective is one of many measurable steps the firm will take to achieve a strategy. Example: Being short-listed for 75% of the bridge building projects in New England.
  • tactic is one of many tools the firm will use to pursue an objective associated with a strategy. Example: Speak at industry events within New England to showcase the firm’s innovations.

The effectiveness of some tactics can be measured in dollars and cents while others can’t, and that’s okay. What matters is whether or not the combined outcomes of the tactics meet the objective.

Marketing By the Numbers: ROI

As mentioned earlier, ROI should not be the only way you measure the effectiveness of your marketing activities. To understand why, let’s take a look at the mechanics behind marketing ROI.

As you can see from the math and the example in the side bar below, the ROI formula is a simple ratio of investment v. return.

Being able to complete this formula is the Holy Grail for most marketers. But what if you don’t know what the “Incremental Revenue Attributable to Marketing” is? And frankly, we don’t know that number most of the time. There are so many factors that contribute to a successful sale, in a complex B2B environment with a long buying cycle, that it’s hard to give direct attribution to any one thing.

The ROI formula works, as long as it measures the right things.

Marketing by Objectives Met: ROO to the Rescue

Thankfully, we have ROO or Return on Objectives for situations when we don’t know what the “Incremental Revenue Attributable to Marketing” is. Let’s examine the civil engineering example again to illustrate how ROO works.

This firm is trying to figure out whether or not it’s worth spending the money to send a bridge engineer and a business development person to an industry conference.

After a little research, they discover that 5 out of 6 of New England’s DOTs will be attending the event. They also discover that there’s a call for speakers in which they’ll be able to showcase a new rapid method for building bridges that the firm has successfully employed.

Taking a look at their objective of being short-listed for 75% of the bridge building projects in New England the team starts filling out the presentation proposal form.

Measure What Matters

Even though it’s difficult to track some marketing efforts, it doesn’t mean they’re not worthwhile. You just need to think about measurement differently. Leveraging your experience, creativity and careful consideration of what matters is key.

The most successful companies take the time to understand what they want to achieve and what really counts toward achieving their goals whether it be quantitative or qualitative. They focus on reaching their objectives and measure tactics based on ROI and ROO.

How do you measure success in your company? I’d love to hear what you think.

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Posted by: Steve Machesney
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